House Republicans are taking a turn in the budget spotlight as they detail their spending plan for the state. The $22.9 billion spending plan calls for about $350 million in tax cuts, provides teacher raises and more for state retirees. This budget is closer to the plan passed by the Republican-led state Senate, than the vision laid out by Democratic Governor Roy Cooper.
Lawmakers in the House and Senate have agreed to the overall spending figure, which represents growth of 2.75 percent compared to last year’s budget. House Republicans have slowly unveiled portions of their budget over the past week, and are expected to advance the bill by Friday.
The House budget proposal allocates $181 million for teacher raises, sets aside $150 for Hurricane Matthew victims and provides ‘most’ state employees with a $1,000 raise in each of the next two years. There is also a 1.6 percent cost of living adjustment (COLA) for retired state workers. Since 2009, state retirees have received just a 2 percent bump to their pensions.
Under this plan, tax policy would change as well. House legislators are seeking an increased to the standard deduction – money exempt from individual state taxes. This would take effect for individuals, heads of household, and married couples filing jointly. The House has also laid out changes to franchise tax, mill machinery tax, and the amount of mortgage interest that can be written off. In total House tax cuts would amount to an estimated $350 million over the next two years.
The Senate’s tax cuts offer the largest difference between these two budgets. Senators want to increase the standard deduction more than the House has proposed. In addition, their fiscal blueprint calls for a decrease to the individual and corporate tax rates. Those cuts would amount to more than a billion dollars by 2019. At this point the House does not plan to drop the rates, leaving the two chambers separated by more than $600 million on tax cuts.
Passing a state budget is an arduous process that began months ago. House legislators are vetting the plan Wednesday in an appropriations committee, before it moves to the full chamber for expected votes on Thursday and Friday. Selected members from both chambers will then hash out differences in closed-door negotiations. Leaders in the House are optimistic that they can have a budget on the governor’s desk by mid-June.