NC Republicans unveil final budget with pay raises, tax cuts
Republicans at the North Carolina legislature on Monday rolled out their final two-year budget bill, hopeful that sweeteners on employee pay raises, infrastructure and tax cuts for individuals will attract enough Democratic support so the long-delayed plan can become law.
The consensus agreement from House and Senate leaders was negotiated with input from Democratic Gov. Roy Cooper, who left the door open last week to signing the final plan after General Assembly votes this week.
The measure would give public school teachers average pay raises of at least 5% over the next two years and one-time bonuses reaching about $2,800, according to news releases from GOP leaders. That teacher pay average could reach 6.7% when a new salary supplement favoring low-wealth counties is included. Rank-and-file employees would get roughly 5% raises and at least $1,000 bonuses. There would be close to $6 billion for state agencies and higher education building projects and $800 million in lottery funds for public school construction.
But Cooper also would have to swallow many provisions — some that he's vetoed before — or omissions he probably won’t like.
They include inserted language that would increase scholarship funds for K-12 students to attend private schools, eliminate the state's corporate income tax over time and rein in Cooper's emergency powers, such as during a pandemic. And while, as expected, a broad expansion of Medicaid to cover hundreds of thousands of additional adults — a goal of Cooper's since taking office in 2017 — isn't included, the budget would authorize a legislative committee to study health care access and recommend a bill next year. There is no commitment to pass any legislation, however.
A stalemate over Medicaid expansion two years ago prompted Cooper to veto the GOP's budget, leading to a deadlock that never got fully resolved. This year, House Speaker Tim Moore, Senate leader Phil Berger and Cooper have held more earnest dialogue toward a budget everyone could accept.
“We have made significant progress over nearly two months of good-faith negotiations with the governor, and I’m optimistic that the budget will have a strong bipartisan vote and that Gov. Cooper will sign it into law," Berger said in a news release.
Cooper and his staff were reviewing the budget bill Monday, spokesperson Jordan Monaghan said.
Cooper also could be influenced by how many House and Senate Democrats vote for the GOP plan. Republicans probably would only need the votes of three House Democrats and two Senate Democrats to override a Cooper veto. He could also let the bill become law without his signature.
Many lawmakers are eager to enact a budget that was supposed to be approved before the new fiscal year began July 1. North Carolina is now the only state in the nation without an enacted budget, according to the National Conference of State Legislatures.
The plan spends $25.9 billion in state funds this fiscal year and $27 billion next fiscal year, as well as distributes billions in federal COVID-19 relief funds. About $1 billion in federal dollars would go to high-speed internet expansion. The measure also would provide COVID-19 relief grants to specific industries and give additional state tax breaks to businesses that took federal loans to weather the pandemic.
On taxes, the bill would lower the personal income tax rate from 5.25% to 3.99% over six years, increase standard and per-child deductions and eliminate taxes on military veterans’ pension income. A phase-out of the corporate income tax, currently at 2.5%, would start in 2025, reaching zero by the end of the decade.
The measure also designates Fayetteville State University, a historically Black college, as the fourth University of North Carolina system campus in the state’s public college system where in-state students pay just $500 in tuition per semester. There would be an extension of Medicaid coverage in the budget to pregnant women who have recently delivered.
Under the provision limiting gubernatorial emergency powers, which would take effect in January 2023, a governor would have to receive support from a majority of Council of State members to expand an emergency declaration beyond 30 days. The General Assembly would have to act for one to go beyond 60 days.
Another provision would prevent Attorney General Josh Stein, another Democrat and possible 2024 candidate for governor, from entering into certain legal settlements without the OKs from the Senate leader and House speaker when they are named parties. GOP legislators are still unhappy about an agreement that Stein's office helped finalize ahead of the 2020 election that expanded the number of days that mail-in ballots could be collected.