5% raises, tax cuts, limits on emergency powers in proposed NC budget
Lawmakers released what could be the final North Carolina state budget Monday, proposing an average of 5% raises for teachers and state employees over the next two years, along with income-tax cuts and increases in education spending.
Gov. Roy Cooper has not said if he’ll sign the budget, which would put some limits on the governor’s powers during an emergency.
Republicans, who have majorities in both the House and Senate, are proposing a compromise budget with some proposals that Democrats oppose but claim that they have enough Democrats on their side to pass it even without Cooper’s signature, which could mean the state will have a full budget for the first time in years.
The budget dropped some controversial policy provisions from earlier versions, including one requiring teachers to post all lesson plans online.
Votes are expected over the next three days in the Senate, then the House, with the Republican-majority General Assembly sending a comprehensive budget bill to the Democratic governor by Friday. That could mean North Carolina has a budget that becomes law by the end of November, nearly five months into the fiscal year. If the governor doesn’t sign it or veto it, the budget would become law after 10 days.
The state budget would spend $25.9 billion in the current fiscal year, which already started July 1, and $27 billion in the 2022-2023 year, according to Senate leadership. The Rainy Day Fund balance will have $4.25 billion by the end of next year.
Rep. Jason Saine, chair of the powerful House Appropriations Committee and a head budget writer, said that teachers and state employees will get an average 5% raise over the next two years. Also, teachers in 95 counties described as “low wealth,” all outside five urban counties, will get additional state funding to supplement teacher pay. The five counties not included are the urban counties of Wake, Durham, Mecklenburg, Guilford and Buncombe.
“It’s going to be a good addition and a good thank-you to the teachers across the state,” Saine said. He said it adjusts some for the discrepancy between rural and urban counties. The total spending on that new supplement is $100 million in recurring funds.
”Is it ever enough? Probably not, but it is a nice way forward,” he said.
Teachers and state employees will also all get bonuses of at least $1,000. Non-certified public school employees, which includes cafeteria workers and custodians, as well as community college staff would make a minimum of $15 per hour after two years.
Cooper and Republican legislative leaders negotiated for two months in secret before finally leaving the table — not with a deal, but with enough negotiations to include some priorities from Cooper and other Democrats. Saine told The News & Observer on Monday that Republicans have enough Democratic votes to override a potential veto, and then some.
Both the House and Senate passed earlier versions of the budget with veto-proof majorities, but that didn’t necessarily mean Democrats would override a veto later.
Taxes
The compromise budget mirrors the Senate’s earlier tax plan, which would reduce the personal income tax rate to 3.9%, starting with a reduction to 4.9% next year.
It would completely phase out the corporate income tax over six years.
Republicans said the tax cuts also include a provision that would eliminate the tax on military veterans’ pensions.
Emergency powers
One issue that the governor doesn’t like but Republicans do is a policy provision to put limits on states of emergencies and related executive orders, which stems from the long-running coronavirus pandemic.
Saine said the powers provision is not a poison pill.
“Limiting the powers couldn’t be soon enough for many in my caucus. We don’t believe any one person should have that much control and that much power over an extended period of time,” he said.
The budget includes a provision that would require agreement from the rest of the Council of State, who are the 10 statewide elected officials in the executive branch, within 30 days of an order. After 60 days, the General Assembly would have to agree to an extension. Both of those time frames are longer than what had been proposed by Republicans in previous legislation.
Saine said that while the pandemic’s not over, the provision says “we’re not trying to impact what you’re doing currently today, though many of us would like to see that shortened, but it does give us some time frame, some understanding that by the time we get to Jan. 1, 2023, that we have changed that law,” he said, describing it as antiquated.
North Carolina is still under a state of emergency.
Compromise
Comprehensive Medicaid expansion is not in the budget, an issue that did not make it through final negotiations. Saine said Monday, and House Speaker Tim Moore has also said repeatedly, that there are not enough Republican House votes to support it as part of the budget. However it will be studied in a committee between legislative sessions. Saine described it as “a step forward” and that people’s attitudes on expansion change over time.
There is a lot of money in the budget that all sides agreed on easily — broadband expansion funding, water and sewer infrastructure and capital projects.
In 2019, the budget battle dragged on for months until the House overrode it successfully because most Democrats weren’t on the floor, and the Senate never called the vote because leaders knew they didn’t have the Democrats for a successful override. So the end was a stalemate and a series of piecemeal budget bills that Cooper signed in law, not making anybody very happy, including teachers, who didn’t get any raises.
Saine said the drawn-out budget negotiating process with Cooper was “ultimately was worth it because we got to a good conference budget, a good compromise, good bipartisan work for all involved.”
“We’ll see what the governor does with the budget, but I do believe he can walk away and say he had some influence in it, he got some victories,” he said.
House Democratic Whip Rep. Amos Quick, of Guilford County, said Monday afternoon that while he was still reviewing the budget he is “pleased to see that many of the Democratic Party’s long-term priorities are included.”
Quick also said that he is “very concerned that harmful policies which could not pass the legislative process have been included in the budget.”
Rep. Marcia Morey, a Durham Democrat, said she was concerned about the lack of Medicaid expansion and policy provisions limiting the governor’s and attorney general’s authority, calling it a “Republican legislative power grab.”
Morey also said Democrats have to “digest this basically in a blink of an eye,” given that it was public on Monday and votes will be taken 48 hours later.
She also said she is against eliminating the corporate income tax.
In a statement Monday, Senate leader Phil Berger said that they “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.”
Moore echoed Berger’s statement about “good-faith negotiations” between Republicans and Democrats in both chambers as well as Cooper.
“Although we have many differences, we each had the common goal of coming together to create a spending plan for the state, one of the General Assembly’s most important constitutional obligations. In the end, I am confident that we have come together to design a budget that truly meets the most critical needs of all North Carolinians,” Moore said.
A Cooper spokesperson said Monday afternoon that the governor and his staff are reviewing the budget.
For more North Carolina government and politics news, listen to the Under the Dome politics podcast from The News & Observer and the NC Insider. You can find it at link.chtbl.com/underthedomenc or wherever you get your podcasts.
This story was originally published November 15, 2021 at 4:07 PM with the headline "5% raises, tax cuts, limits on emergency powers in proposed NC budget."
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