Politics

A Look At The Final Budget And How It Compares To House, Senate Proposals

WUNC | By Jason deBruyn,

Published May 12, 2017 at 2:03 PM EDT

State Senate chamber — File photo of N.C. General Assembly in Raleigh, 2021.

Updated at 12:53 p.m., June 21, 2017

North Carolina state senators are expected to give final approval to a $23 billion dollar state budget Wednesday afternoon.

The plan grows government spending by 3 percent. It includes a $530 million dollar tax cut, an average 3.3 percent raise for teachers, and allocates more than a quarter billion dollars for the state reserves.

Republicans say it continues an effort to reduce taxes and invest in education.

Senate leader Phil Berger believes it’s a better approach than when Democrats were in charge.

"We think we’ve done it in a way that we’ll be able to sustain keeping North Carolina in that range as opposed to having a situation where we celebrate one day, because we say we’ve hit the average and then three years later we’re at the bottom again."

Many Democrats disagree, contending the fiscal blueprint doesn’t do enough for schools, teachers, and retired state employees. Senate minority leader Dan Blue criticized the bill for too many localized projects, so-called pork.

"We ought to all go out and have some fun because there is enough pork in it to make barbecue last a long time," he said.

In addition to pet projects, this budget provides money for the film industry and commercial airports, and cuts funding for the Governor and Attorney General – both Democrats. Lawmakers are expected to send this budget to Roy Cooper tomorrow. He has signaled he will veto it.

Here's how the compromise budget compares to what was proposed earlier this spring:

Total General Fund Budget

2017-18

2018-19

Governor: $23.85 billion
Senate: $23.45 billion
House: $22.8 billion
Compromise Bill: 23.65 billion

Income Taxes

Governor: No tax reduction
Senate: Lowers both the corporate income and personal income taxes. Personal income tax rate would decrease to 5.35 percent from 5.5 percent and the standard deduction for married filing jointly would increase to $20,000 from $17,500.
House: No cuts to corporate and personal rates. An increase in standard deduction to $18,500 for married couples filing jointly, as well as increases in the zero-percent bracket for individuals and Heads of Household.
Compromise Bill: An increase in the standard deduction. For married couples filing joint this would mean the amount of income they do not pay state taxes on would increase to $20,000, from $17,500 beginning in 2019. The personal and corporate tax rates also drop in 2019. The individual drops from 5.499 percent to 5.25 percent, while the corporate goes from 3 percent to 2.5 percent. This final tax cut, or reduction, amounts to an estimated $530 million dollars. This compromise is less than half of the $1.1 billion cut Senators proposed earlier this year. It does, however, include rate decreases, which the House has been opposed to.

Raises For State Employees

Governor: 2 percent raise or $800, whichever is greater. Also includes cost-of-living raise for retired state employees
Senate: 1.5 percent raise, or $750, whichever is greater
House: $1,000 for most state employees.
Compromise Bill: $1,000 for most state employees; 1 percent increase in cost of living adjustment for retirees. The budget does not provide raises for elected judges and justices (administrative law judges do receive the increase), the Governor, or members of Council of State.

Education System Pay Raises

Governor: Provides the greater of 2 percent of $800 for teachers; also offers a $150 annual stipend to offset school supplies teachers pay for out of pocket. For principals and assistant principals, provides $20 million for pay raises
Senate: Provides the greater of 1.5 percent or $750 for teachers. For principals and assistant principals, provides $28 million in the coming year and $33.7 million in the following year for pay raises
House: Provides an average 3.3 percent for teachers in 2017-18; average 9 percent for teachers in 2018-19.
Compromise Bill: An average 3.3 percent raise for teachers.

Disaster Relief

Governor: Transfers $100 million to the Disaster Relief Fund
Senate: Transfers $150 million to the Disaster Relief Fund
House: Same as the Senate
Compromise Bill: $100 million for Hurricane Matthew relief

Medicaid

Governor: Recommends expanding Medicaid to cover an additional 624,000 low-income residents
Senate: No expansion
House: No expansion
Compromise Bill: No expansion

Raise the Age:

A policy change within this budget would mean that 16 and 17-year-olds would no longer be automatically tried as adults in criminal courts. North Carolina is the last remaining state in the Union to approve language to "raise the age". Teens charged with felonies, class A-G, would still be prosecuted as adults. Felonies in the H and I classification, as well as misdemeanors would send defendants forward in the juvenile justice system. This budget provides funding for a new youth development center in Rockingham County ($13.2 million) as well as additional funds for assistant district attorneys. The House is pursued this policy change for years, and this language signals one of the chamber's biggest victories in the final budget. These judicial changes take effect in 2019.

Other items in the compromise bill:

State Reserves/Rainy Day Fund: $263 million
Provide funding to more than 3,500 slots of public pre-kindergarten, reducing the state’s waiting list by 75 percent
Provide $100 million for rural school districts using lottery funds
$40 million for commercial airports
A $500,000 cut to the UNC Law School; this amounts to about a 4 percent cut. Senate Republicans has proposed a 30 percent cut to the flagship law school in the state.
$15 million grant for the film and entertainment industry
$250,000 for an Opioid Pilot Project in Wilmington
$275,000 for a Human Trafficking Grant
This budget cuts funding to the Governor's administrative budget by 19 percent over the next two years. This plan also reduces legal services and administrative staff funding in the Attorney General's office by $10 million, requiring as many as 123 positions to be eliminated. Roy Cooper and Josh Stein, both Democrats, were elected to those offices in November. On Tuesday Cooper said, "I'm sure that's political spite or something." House Representative Justin Burr (R-Stanly) countered that he and colleagues "believe there are areas to improve efficiency" in both offices.