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Business & Economy

House Unveils North Carolina Budget Proposal



Updated at 3:08 p.m.

North Carolina House Republicans rolled out their full proposed state government budget for the next two years Tuesday, providing additional funds to address school safety and student mental health and to give teachers pay raises.

The GOP plan would spend $23.9 billion in the fiscal year starting July 1, which is 3% higher than current-year spending, according to the General Assembly nonpartisan fiscal staff.

Not included in the bottom-line number is hundreds of millions of dollars for state building repairs and construction. Republicans are proposing a small personal income tax cut and some business tax reductions, spread out over several years. They'd also attempt to collect more sales taxes from consumers buying online.

The proposal distributes more money already set aside last year to address Hurricane Florence recovery and begins to build back up the state's current $1.2 billion rainy-day reserve fund. Lawmakers took nearly $800 million from the fund right after the storm for aid.

Budget writers were expected to describe publicly the pay raises for teachers and government employees later Tuesday. The House wants to give final approval to its plan by the end of the week. The Senate, also controlled by Republicans, should pass a competing proposal by late May, setting up negotiations between the two chambers.

Democratic Gov. Roy Cooper, who offered his own budget proposal in March that spends several hundred millions dollars more than the House, should have more leverage in comparison to the previous two years, when GOP lawmakers overrode his 2017 and 2018 budget bill vetoes. Democrats won enough seats in the fall to end the Republicans' veto-proof majorities.

Pay for teachers and school support staff will get special interest as public school teachers and their supporters planned a massive march and rally for Wednesday at the Legislative Building.

The North Carolina Association of Educators, which is leading the second annual rally and is a close Cooper ally, are demanding 5% raises next year for all teachers and support staff, while seeking an equivalent $15-per-hour minimum wage for all staff. The Republican-controlled legislature gave a $15 minimum wage to state employees last year. Cooper's budget wants average teacher pay to go up by 9.1% over two years.

NCAE leaders and Republican lawmakers have butted heads for years over GOP spending levels for the public schools. A policy provision in the budget bill appears to target future NCAE rallies, which this year caused 30 school systems to shut down because so many teachers took off. The budget language says local districts can't alter their school-year calendars once they are given final approval, save for bad weather or an emergency.

The House plan also doesn't include another initiative Cooper sought in his budget — expanding Medicaid through the 2010 federal health care overhaul law to hundreds of thousands of low-income people who currently make too much to receive the health coverage. While some House Republicans support the expansion idea , Senate Republicans remain adamantly opposed.

The House budget creates another $30 million in grants for local school districts to hire school-based police officers and mental health support personnel, pay for school safety equipment and training and help provide services for students in behavioral crisis. Another $53 million would be available beginning in July 2020.

On taxes, the standard deduction would increase by an additional $375 to $750 — depending on a person's filing status — starting in 2021. This means, for example, the first $20,750 of income of a couple filing jointly would be tax free. The corporate franchise tax rate would fall in 2020 and 2021. The two changes would decrease tax revenues by $370 million combined over the next two years, according to legislative staff.

Following up on a U.S. Supreme Court decision last year involving online transactions, the budget bill also directs companies like Amazon to collect sales taxes on consumers who buy products they offer through third-party retailers. Legislative analysts believe that change will bring in another $135 million annually by mid-2021.

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