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NC legislature advances budget agreement closer to governor

Image of the North Carolina Legislative Building in Raleigh, North Carolina

North Carolina's Republican-controlled legislature advanced its proposed state budget adjustments in bipartisan fashion Thursday, each chamber voting separately by comfortable margins for a plan that would spend or salt away billions more without added tax cuts.

The measure, which was agreed to in private negotiations between House and Senate GOP leaders and released earlier in the week, received significant support from House and Senate Democrats during the first of two required affirmative floor votes in the chambers. Final votes on the plan were anticipated Friday, when the General Assembly hopes to wrap up this year’s primary work session that began in mid-May.

The approved bill would then go to Democratic Gov. Cooper. He hasn’t yet said whether he would sign the budget bill, veto it or let it become law without his signature. His office didn't immediately respond to an email seeking comment late Thursday. But the votes — 85-27 in the House and 38-9 in the Senate — signal that Cooper could have a difficult time upholding a veto should he choose to use his stamp.

Republicans have portrayed the plan as a fiscal fortification against inflation and recession that threaten to pick apart their stable budgetary policies over the past decade. The plan parks an additional $1.5 billion in state coffers for use should tax revenues decline and prices keep going up.

“We’ve increased our cash reserve despite some insisting repeatedly that we spend that money. We have put our house in order,” said Rep. Dean Arp, a Union County Republican and one of the chamber's top budget writers. “This is a responsible budget that responds to our current needs and plans for an uncertain economic future.”

But Democrats argue these adjustments to the second year of the already enacted two-year state government budget fails to take advantage enough of $6 billion-plus revenue surplus through mid-2023 to address education needs and help state workers who are hurting.

“We had a real opportunity to invest in people,” House Minority Leader Robert Reives, a Chatham County Democrat. “We've could have done more than what we've done.” Still, Reives voted yes on the plan.

Cooper signed the two-year budget into law last November — marking the first time he signed a comprehensive budget bill since taking office in 2017. Thursday's measure would spend $27.9 billion for the next fiscal year that begins Friday, but also would set aside another $7.7 billion in reserves and for items like state government construction and local water and wastewater projects, as well as incentives to bring more companies to North Carolina.

The adjustments would increase next year’s 2.5% raise for rank-and-file state employees already in place to 3.5%, while average pay raises for teachers for the upcoming school year would grow from roughly 2.5% to 4.2%, with first-year teachers seeing $37,000 base salaries.

Those pay increases don't match those sought by Cooper in his $29.3 billion budget proposal that he released in May.

The proposal spends another $56 million more annually on taxpayer-funded scholarship for children to attend private schools — a program Cooper strongly opposes. Democrats contrasted this action while they said the budget bill failed to fund fully a judge's directive for K-12 public schools that would meet the constitutional mandate of giving all children the opportunity to receive a “sound basic education.”

Still, Senate Minority Leader Dan Blue of Wake County, who voted no Thursday, said many of his Senate colleagues would vote yes, even while many of their localities would miss out on additional public school education and transportation money: “Notwithstanding all of that, they believe that there are good things in this budget that justify defending.”

Like Cooper's proposal, Republicans don't reduce individual income tax rates beyond what the two-year budget law already directs will happen in 2023.

The measure doesn't contain language directing the state to accept federal money so that hundreds of thousands of additional low-income adults can be covered by Medicaid under the 2010 Affordable Care Act.

The House and Senate have approved competing Medicaid expansion bills — a significant advance for the issue in a state where Republicans have been adamantly opposed to the idea. But prospects for compromise waned as House Speaker Tim Moore and Senate leader Phil Berger dug in for their respective proposals. Cooper has been seeking Medicaid expansion for years.

Other provisions in the budget adjustment measure would:

  • Provide an additional $71 million to local school districts for school safety and resource officer grants and funds.
  • Earmark $193 million in sales tax collections to help pay for transportation projects as gasoline taxes used for such construction declines. The portion of sales tax going to two highway funds would triple by mid-2024.
  • Give $15 million to a “collegiate sports employer” if it decides to build a new headquarters in North Carolina. The language is designed to keep the Atlantic Coast Conference, based in Greensboro, in the state.
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