Governor's budget calls for large raises, limited tax cuts
Governor Roy Cooper is calling for teachers and state workers to get the biggest raises in decades in his budget proposal.
Facing high inflation and a labor shortage, Cooper’s budget recommendations include teacher raises averaging 18% over two years. Other state employees would get 8% raises over two years and a bonus of at least $1,000.
In a Wednesday press conference, Cooper and his budget director, Kristin Walker, cited a 17% turnover rate among state employees last year and noted that 23% of state government jobs are vacant.
"This is a moment in time that we have to respond to," Walker said.
The Republican-controlled state legislature will ultimately craft the final budget, and House and Senate leaders want to spend less than Cooper’s proposal.
House Speaker Tim Moore and Senate Leader Phil Berger announced last week that they’ll increase spending by 6.5% in the fiscal year that begins in July — to a total of $29.7 billion — and 3.75% the following year.
Cooper, however, wants an 18% spending increase in the next fiscal year and a 3.9% increase the following year.
"We need to make historic investments right now," he told reporters at the news conference.
The governor says North Carolina is in a unique financial situation.
“We have an unprecedented amount of funding to invest for the next two years from state and federal funds, yet the revenue projections for the following years level off dramatically, showing there will likely be insufficient funds to meet the needs of our rapidly growing state. “
Cooper wants to cancel scheduled corporate income tax cuts and limit personal income tax cuts to families making less than $200,000.
That would mean the income tax rate would drop to 3.99% for those families over several years. But households earning more than $200,000 would continue the pay the current 4.75% rate. Current law calls for the future cut to apply to all income taxpayers.
We want to give the income tax breaks to working families, the people who need them. Not the wealthy and not the corporations. This budget recommends a personal income tax cut for families making less than $200,000 a year.— Governor Roy Cooper (@NC_Governor) March 15, 2023
Berger issued a statement Wednesday blasting the governor's proposal.
"This is an irresponsible, unserious proposal from a lame-duck governor who wants future North Carolinians to pick up his tab," Berger said. "Gov. Cooper wants to go on a reckless spending spree by raising taxes, raiding the state's savings account, and proposing the largest increase in year-over-year spending in the state's history."
Here are other notable spending proposals in Cooper's plan:
- The governor wants to use $1 billion of the federal government's "signing bonus" that North Carolina will receive for expanding Medicaid on a new program for addressing mental health and substance abuse. "Funds will be used to expand access to care, increase the number of providers, and improve critical infrastructure," the budget proposal says.
- $5 million for a new fund to help the town of Canton near Asheville, which is reeling from the planned closure of a paper mill that employs 1,200 people.
- A change to vacation time policies for state employees so that they'll receive additional time off earlier in their government career, as well as become eligible for longevity pay more quickly
- $459 million to fully fund the court-ordered Leandro education funding plan
- $1 billion for public K-12 school construction needs
- More than $700 million for early childhood education programs
- $100 million to develop new industrial "megasites" to house major new employers