Teachers would get a pay raise of up to 5 percent and most other state employees would get a 2 percent raise under the House budget plan released Monday night – a proposal more generous than Gov. Pat McCrory’s original budget.
House Republican leaders also included a tax cut proposed by Senate leaders. The standard deduction for personal income taxes would increase by up to $2,000. The standard deduction is the base amount of income that isn’t taxed unless a taxpayer chooses itemized deductions.
But unlike the Senate proposal, the House would phase in the tax cut more slowly – raising the standard deduction gradually over a period of four years starting in 2017. That would bring the standard deduction for a married couple filing jointly from $15,500 this year to $17,500 in 2020. Budget writers say the gradual tax cut is a better fit for the state’s revenue needs.
In addition to 2 percent raises, state employees would get a $500 one-time bonus that wouldn’t count toward their retirement. State retirees would get a 1.6 percent cost-of-living increase – a boost that wasn’t included in the governor’s spending plan.
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McCrory’s budget would give state employees a one-time bonus averaging 3 percent. He did not include an across-the-board raise for state employees but instead called for targeted raises for hard-to-fill jobs. Both the governor and the House are calling for bigger pay boosts to corrections officers, prosecutors and State Bureau of Investigation agents.
Teachers would get more than other state employees under the House plan. The teacher raise would average 4.1 percent and bring the average teacher salary to $50,000 over the next two years – a goal McCrory stressed in his proposal.
Teachers with less than five years of experience wouldn’t get a raise this year, and teachers with 25 years or more would get 2 percent – the smallest raises. Teachers in both those categories would instead receive a $1,000 bonus that would count toward their retirement.
The biggest teacher raises – 5 percent – would go to teachers with 10 to 14 years of experience. Teachers with five to nine years would get 4.1 percent, teachers with 15-19 years would get 3.4 percent, and teachers with 20-24 years would get 3.2 percent.
“For the last two years, we have worked to bring starting teacher pay up,” said Rep. Nelson Dollar, a Cary Republican and the House’s lead budget writer. “Now we’re working on addressing the middle ranges of teacher experience and continuing to make sure that we can be competitive and retain those experienced teachers. Ultimately, the House’s goal is to see us be at or above the average teacher salary for the Southeast.”
In order to add the state employee raises to the teacher raises, the House would spend less on teachers than McCrory’s plan – a total of $150.5 million in the House, compared to $246.6 million in the governor’s budget.
Overall, the House budget would spend $22.225 billion – a target that Senate leaders have already agreed to and one that represents a 2.3 percent increase over the current fiscal year.
“This is a responsible budget that funds critical needs, plans for the future, and moves our state forward,” Dollar said.
The budget plan is already facing criticism. The liberal N.C. Justice Center issued a news release Monday night criticizing the proposed increase in the standard deduction.
“The increase in the standard deduction is not an effective way for policymakers to address the upside down tax code,” Budget and Tax Center director Alexandra Sirota said. “More than half of taxpayers who make more than $95,000 a year get a tax cut under such a proposal.”
Sirota also said the overall spending level is too low. “The House budget will not meet the needs of North Carolina, such as improving classroom experiences for every child, revitalizing the main streets of every community and promoting the health and well-being of families and seniors,” she said.
The House Appropriations Committee will review the budget proposal Tuesday, and the full House is expected to vote later this week. Then the Senate will develop its own version of the budget bill.