The state Senate released its budget proposal on Monday afternoon, and the spending plan sets up a big disagreement with House Republicans over the size of state worker raises.
Senate Republicans want most state employees to get a 2.5% raise starting in July, with another 2.5% raise the following year. Average raises for teachers would be slightly less than that — 4.5% over two years — with the biggest increases for first-year teachers, as starting pay would increase by 11%.
Both the House budget and Gov. Roy Cooper have called for bigger raises. For example, the House plan calls for a 10% average raise for public school teachers over the two-year budget. The House wants state employee raises of 4.25% this year and 3.25% next year.
State government is facing a worker shortage, with nearly a quarter of positions vacant, and current salaries make it hard to compete with the private sector. But while legislative leaders agree that higher salaries are needed, Senate leader Phil Berger worries that big raises might make the private-sector labor shortage worse.
"One of the last things that we want to do is create a situation where state government raises pay so much that it exacerbates the larger economies as far as availability of workers," he said.
Both the House and Senate are calling for a new fund to increase salaries in the hardest-to-fill positions.
Senate budget writers also want to speed up a scheduled personal income tax rate cut to 4.5% next year. The rate is currently 4.75%. The House budget also includes the drop to 4.5%, and the Senate also wants to cut the rate further, to 2.49% by 2030.
The Senate’s budget includes several policy changes that set up a fight with hospitals. One would force hospitals to help the State Health Plan save money on health care services, threatening the loss of hospitals' operating licenses if they can't reach a deal on pricing. Another would scale back regulations that limit where new health care facilities can be built.
Sen. Ralph Hise, R-Mitchell, says that would increase competition and lower costs. "This budget unequivocally takes a sledgehammer to those archaic and unnecessary Certificate of Need laws that remain on the books," he said.
Votes are scheduled later this week after initial committee hearings set for Tuesday.
Other Senate budget highlights include:
- $1.4 billion directed to a nonprofit called NCInnovation. The group aims to "improve applied research outputs at UNC System schools and to help commercialize the results of that research." The group is led by former Truist bank CEO Kelly King.
- Funding to expand the private school voucher program known as "opportunity scholarships." The provision is similar to a standalone bill introduced in the House and Senate.
- A similar provision to separate legislation that removes the governor's appointments to local community college boards
- $10 million to help local governments develop new industrial "megasites"
- $370 million from the state's Medicaid expansion "signing bonus" for a new "NC Care Initiative" partnership between ECU and UNC Health, which will build three new regional health clinics.
