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NC House unveils budget with state worker raises, tax cuts

House Speaker Tim Moore joined fellow House Republicans on Wednesday for a news conference announcing their budget proposal.
Colin Campbell
N.C. House Speaker Tim Moore (R-Cleveland) and fellow House Republicans released their spending proposal for the coming year on Wednesday, March 29, 2023 in Raleigh.

Updated at 6:30 p.m.

North Carolina House leaders have released their $29.7 billion budget bill for the coming fiscal year.

The proposal spends less on raises than the spending plan proposed by Gov. Roy Cooper. Most state employees would receive an increase of 4.25% this year and 3.25% next year. Overall, the budget increases state spending by 6.5% in the fiscal year that begins in July.

Teachers, as well as law enforcement and corrections officers, would get more, with an average raise of 5.5% for teachers this year. All state agencies would get an additional 1% increase in their overall salary budgets to allow for bigger increases for hard-to-fill positions. State government retirees would get a 1% cost-of-living increase to their pensions in each of the next two years.

By contrast, 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.

The House plan calls for a 10% average raise for public school teachers over the two-year budget.

"That is huge," House Speaker Tim Moore said. "I don't know that we've ever given this large of a raise before."

That estimate breaks down to about a 5% raise each year, and it does include what teachers were already entitled to receive through annual step raises for experience. Next year, state base pay for beginning teachers will go up from $37,000 to $38,500.

The House is also proposing to reinstate additional pay for all teachers with master's degrees and to offer paid parental leave of 4 to 8 weeks.

The State Employees Association of North Carolina, or SEANC, wasn't impressed by the House pay proposal.

"When legislators write a budget that doesn’t keep up with inflation and assigns state employees a lower level of importance than other public servants, they are calling us expendable," Executive Director Ardis Watkins said in an email. "And state employees are hearing that message loud and clear. 37% leave in the first year of service."

House and Senate leadership's preferred spending level is less than the amount the state expects to take in. This year’s $29.7 billion budget compares to a forecasted $33.7 billion in revenue, while the $30.8 billion budget target for fiscal year 2024-2025 is less than the $33.6 billion in revenue expected that year.

"We have this conversation every year, it's about, you know, are you cutting taxes too much or you're not doing this too much," Moore said. "And every single year, I would submit to you that we've kind of got the recipe to the secret sauce, it's worked. We've come in with budget surpluses every single year."

The House also wants to speed up a scheduled personal income tax cut. That rate would drop to 4.5% — a change from current law that would drop the rate to 4.6% first before decreasing to 4.5%. The current rate is 4.75%; Cooper wanted to limit the rate cut to families making less than $200,000 a year.

The House budget would also cut franchise and privilege taxes paid by businesses.

Lawmakers want to spend $1 billion for roads and transportation needs, and $1 billion to upgrade water and sewer infrastructure. There's about $700 million to develop more sites for potential new employers, the largest of which are known as "megasites." Recent jobs announcements have depleted the number of large sites the state can offer manufacturers and other large operations.

The bill would block several of the governor’s environmental initiatives, including participation in a regional greenhouse gas initiative and a mandate for low-emissions trucks.

"It prevents our state from going down a failed energy policy that raises rates and reduces reliability," said Rep. Dean Arp, R-Union.

And it would remove the State Bureau of Investigation from the governor's administration, making it an independent agency separate from the Department of Public Safety. SBI Director Bob Schurmeier said in a legislative hearing this week that the governor's office tried to remove him and block his hires.

"There ought to be true independence for that agency," Moore said. "It should not be subject to political pressure from one side or another or anyone."

The budget bill also includes recently introduced legislation to ban state and local governments from requiring employees or college students from having a COVID-19 vaccination.

The House budget will get its first committee hearing on Thursday. Speaker Tim Moore has said he expects it will get floor votes next week. From there, the Senate will develop its own budget — likely in May — before leaders from the two chambers develop a final compromise bill to send to the governor.

WUNC education reporter Liz Schlemmer contributed to this report.

Colin Campbell covers politics for WUNC as the station's capitol bureau chief.
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