NC budget could bring more tax cuts, raises as Berger, Moore set to negotiate soon
Taxpayers in North Carolina are likely to see more tax cuts, and state workers could see more raises this summer, on top of those already coming.
Leaders in the state House and Senate said Thursday the fast-tracked budget process is set to wrap up in the next few weeks.
When the new fiscal year starts July 1, state employees are already set to get 2.5% raises, with many teachers expected to get the same, on average. Now they are expected to get more than that, if the General Assembly soon passes another spending bill and Gov. Roy Cooper signs it into law.
There is a 20% vacancy rate for state employee jobs across North Carolina, and workers have said pay is a factor.
“I think one of the answers is having more people looking for work,” Senate leader Phil Berger, an Eden Republican, said on Thursday. “It’s not just government that is having trouble finding employees. In the private sector you’ve got the same thing.
“So I do think raises impact the decisions people make — that’s pretty much a given. But I don’t know that any particular raise is going to solve the problem we have. We just don’t have enough workers at this time, enough people to employ,” Berger said.
The total spending agreement between the chambers is $29.5 billion to $30 billion.
Unlike the past few years of long, drawn-out North Carolina state budget negotiations and stalemates, legislative leaders will soon meet to make the final decisions about a spending plan. House Speaker Tim Moore and Berger told reporters on Thursday they expect to pass a budget bill and adjourn the short session, too, by July.
“Things are actually going very well,” Moore told reporters Thursday, calling this year’s budget process a “good sign.”
While leaders have not discussed details until further along in talks, Moore said tax relief is coming and that they need to be able to show that it “actually helps those who are struggling.”
Rep. Jason Saine, who chairs the powerful House Appropriations Committee, said head budget writers in the House finished their work Thursday morning, as far as what that chamber wants.
Saine said this session’s budget talks haven’t included any fights over spending among Republicans.
“We’re in a good place. Nobody yelled at anybody,” he said.
Republicans in both chambers have already said repeatedly they support additional raises for state employees and teachers. The House typically wants larger raises, and Saine told The N&O previously they were amenable to Cooper’s proposal of an additional 2.5% raise for state workers. That would mean state employees could get as much as a 5% raise this year, if that is in the final budget.
“Everything is now ready to go to the corner offices,” Saine said. That means Moore and Berger, whose offices are in each corner of the Legislative Building in downtown Raleigh.
Saine said that the budget chairs will come back Tuesday to work with legislative staff, “see what we have and get ready for primetime.”
Cooper, Berger, Moore could meet next week
Berger told reporters on Thursday that he and Moore might meet on Monday. After they come to an agreement, they’ll meet with Cooper.
“I’m hoping it will not take us very long to work out whatever differences still remain,” Berger said. “We will then spend some time with the governor, and I think we’re talking about the next week before we have votes.”
Generally, the Senate prefers lower raises and higher tax cuts than the House. Berger said Thursday that the tax cuts he wants would not impact the amount of raises lawmakers agree on.
Neither Moore nor Berger have ruled out a one-time tax cut in the form of a gas tax rebate like Democrats have proposed. Both want permanent tax cuts.
“I would like to accelerate the step down in the personal income tax, and I would like to have a landing spot for the personal income tax that’s lower than what we’ve set as the current 3.99 [percent goal]. I’d like to see it go lower than that,” Berger said. He said an individual income tax rate of 2.5% “sounds fine to me.”
The state budget written by Republicans and signed into law by Cooper in November 2021 reduced the individual income tax rate to 4.99% this year, and lower in future years. They also reduced the corporate income tax rate, but have not said that is a priority for this year’s budget bill. Cooper opposes corporate tax cuts.
Moore said again Thursday that he didn’t want any one-time tax rebate to look like “a gimmick.”
For more North Carolina government and politics news, listen to the Under the Dome politics podcast from The News & Observer and the NC Insider. You can find it at https://campsite.bio/underthedome or wherever you get your podcasts.
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