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Gov. Cooper signs new state budget into law following bipartisan votes

North Carolina State Budget
Bryan Anderson
North Carolina Democratic Gov. Roy Cooper holds a news conference in the state Administration Building on Tuesday, Nov. 16, 2021 in Raleigh, N.C.

Updated at 5:10 p.m.

Democratic Governor Roy Cooper signed a state budget Thursday afternoon, hours after the North Carolina General Assembly gave its final approval to the two-year plan.

North Carolina is the final state in the nation to get a budget. The budget designates nearly $26 billion in spending this fiscal year, and $27 billion the next.

A series of bipartisan votes for the plan won wide favor after Cooper recently announced he would sign the measure into law. The House voted 101-to-10 in favor of the measure, the day after the Senate gave the chamber's final OK to the bill by a vote of 41-to-7. Each chamber also held similar, preliminary votes backing the plan earlier in the week.

“This budget moves North Carolina forward in important ways,” Cooper said in a news release. “I will continue to fight for progress where this budget falls short but believe that, on balance, it is an important step in the right direction.”

The budget, which was unveiled Monday afternoon, provides 5% raises to nearly all state employees, reduces taxes, and saves billions in the rainy day fund. The measure was the result of several weeks of negotiations between Moore, Senate leader Phil Berger and Cooper.

“This will be a huge day for all of North Carolina,” House Speaker Tim Moore, a Cleveland County Republican, said while holding the over 600-page ratified bill just before it was sent to Cooper.

Budget breakdown

The spending plan is $25.9 billion, which represents a little more than a 4% increase compared to current spending levels. It includes raises and bonuses for nearly all state employees. For this fiscal year, a salary increase of 2.5% will take place retroactive to July 1st. Another 2.5% raise is included for the 2022-23 fiscal year. Community college, UNC System, and rank and file state employees with an annual salary of $75,000 will also receive a $1,500 bonus. Workers making more than $75,000 will receive a $1,000 bonus.

Public school teachers will see increases in their step schedule under this proposed spending plan. These increases will also result in an average 5% increase over the next two years, according to legislative staff. In addition, K-12 staff will receive the same bonuses as state employees, as well as a $300 additional bonus. Also, public educators receive a separate $1,000 retention bonus come January. This one-time lump sum is for teachers still employed who have also completed a COVID-19 training. This bonus amounts to something of a retention bonus, and will be paid with federal funds.

This budget also includes a one-time cost of living adjustments for retired state workers, and teachers. The amounts are 2% for this year and 3% for the next fiscal year.

State lawmakers include a change to the tax code in this budget. The plan phases out the corporate tax rate by 2029. Presently North Carolina has the lowest corporate rate (2.5%) of any state in the country with a corporate tax. The plan eliminates taxes on military pension income.

The vast majority of North Carolinians will see a tax cut under this budget. The standard deduction – your zero-tax threshold – will increase for all filers. Meanwhile, the personal income tax rate is cut (or reduced) in each of the next six years. Presently the personal income tax rate is 5.25%. In 2022 it will drop to 4.99%, and then eventually down to 3.99% after 2026.

Higher education funding

Earlier Thursday, UNC System President Peter Hans praised the state budget proposal's funding for higher education at a meeting of the UNC Board of Governors.

"The state budget that's passing this week and will soon be on its way to the governor is a remarkable start on a new era, in which we will lift up our faculty and staff, broaden our educational reach, revamp our campus facilities and make education more affordable to more North Carolinians," said Hans.

Like all state employees, UNC System faculty and staff will receive 5% raises over two years and will be eligible for bonuses of up to $1,500. The budget fully funds enrollment growth at public universities. It also dedicates $2 billion for building repairs and renovations across the UNC system.

Fayetteville State University would become the fourth university to join the NC Promise tuition program. Through additional state funding, the program reduces student tuition to $500 a semester.

Expansion of services for families for children with disabilities

Cooper did not get the full expansion of Medicaid sought by Democrats. However, the budget does include an expansion of services for families of children with severe intellectual and developmental disabilities, among other health initiatives.

More than 28,000 families in the state qualify for state funding for in-home care like speech or behavioral therapies, but there was funding for fewer than half of those families.

The budget expands funding for another 1,000 slots. It won't clear out the backlog, but is still a significant investment. There's also money to increase salaries of caregivers, says Dave Richard, deputy health secretary for Medicaid.

"No matter how many slots we have out there, it's hard for people to find workers right now. There are multiple things you need to do in that area, but having increased wages will go a long way in being able to find more workers," said Richard.

Read more about what the new budget contains here. Catch up on budget updates from this week here.

WUNC's Cole del Charco contributed to this report.

Jeff Tiberii covers politics for WUNC. Before that, he served as the station's Greensboro Bureau Chief.
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Liz Schlemmer is WUNC's Education Reporter, covering preschool through higher education. Email:
Jason deBruyn is the WUNC health reporter, a beat he took in 2020. He has been in the WUNC newsroom since 2016.
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