N.C. Senate Republicans have major disagreements with Gov. Roy Cooper on how much to spend in next year’s budget and whether to cut taxes.
Cooper, a Democrat, released his budget proposal in early March and touted its plans for teacher raises, Medicaid expansion and other major projects. But even when the legislature and governor’s office are controlled by the same political party, the governor’s budget is more of a symbolic document – the House and the Senate start their budget proposals from scratch and then negotiate the differences between them before sending a final budget to the governor.
The Senate voted 34-15 along party lines to pass its budget Thursday, with a final vote set for shortly after midnight Friday morning.
Republicans have a veto-proof majority in both chambers, which means Cooper has little leverage to push for his spending priorities in the final budget.
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Still, Cooper is making a lobbying push for many of the items in his budget and has criticized the Senate budget. “Gov. Cooper’s budget offered a blueprint to invest in middle class families, expanding opportunity and building an economy that works for everyone,” Cooper spokesman Ford Porter said in a news release. “The Senate budget simply keeps prioritizing the wealthy over the middle class and falls short.”
Senate leader Phil Berger, in turn, has been critical of Cooper’s plan. “We’re more interested in giving money back to the taxpayers than the governor,” he said during a news conference this week, noting that the two plans do share some priorities. “We have found ways to meet those priorities by not spending as much money as the governor proposed.”
Here are the key differences in the two budgets:
How much to spend: Cooper’s $23.4 billion budget for the fiscal year beginning in July would be a $1.1 billion increase over the current budget, amounting to a 5.1 percent increase. The Senate’s $22.9 billion spending plan represents a 2.5 percent increase over the current budget, or about $560 million. If previous budget cycles are any indication, expect the House’s proposed spending increase to be somewhere between the Senate and Cooper numbers.
Taxes: While Cooper’s budget makes no changes to the current tax system, the Senate budget would reduce the personal income-tax rate from 5.499 percent to 5.35 percent while increasing the standard deduction, the base amount of income that isn’t taxed unless a taxpayer chooses itemized deductions. The standard deduction would go from $17,500 to $20,000 for a married couple filing jointly, with similar increases for other tax-status categories. The corporate income tax rate would drop from 3 percent to 2.75 percent in 2018 and to 2.5 percent in 2019. The tax plan is estimated to reduce revenue by $324 million in the first year and $710 million in the following year.
The governor’s staff describes the tax cuts as “handouts to the wealthy” that “blow a $600 million hole in future state budgets, jeopardizing our state’s ability to invest in our people and respond to disaster, especially given the uncertainty in Washington.
Teacher raises: Cooper wants to increase starting teacher pay from $35,000 to $36,750, providing raises to teachers at every experience level, ranging from 3.1 percent to 6.1 percent. The Senate budget would keep starting pay at $35,000, and teachers with 25 years experience or more would not get a raise. The biggest raises – up to 4.8 percent – would go to teachers with nine to 14 years of experience. Teachers with one to three years and 20 to 24 years experience would see the smallest raises of less than 2 percent.
State employee raises: Under Cooper’s budget, state workers who are not teachers would receive raises of 2 percent or $800, whichever is more, and a $500 one-time bonus. The Senate budget calls for smaller raises, $750 or 1.5 percent of each employee’s salary, whichever is greater.
State retirees: Cooper’s budget proposal would provide a 1.5 percent, one-time cost of living adjustment for retiree pensions. The Senate budget does not include a cost-of-living adjustment, citing concerns about an increasing pension liability.
‘Rainy day’ fund: The Senate wants to add more than Cooper to the state’s “rainy day” reserves, which can be used to fund state government in an emergency or economic downturn. The Senate budget would put an additional $363 million into savings, bringing the fund to its highest level ever. Cooper’s budget would add $300 million to savings.
Hurricane Matthew relief: Cooper’s budget includes $100 million for disaster relief, while the Senate budget would provide $150 million.
Preschool programs: The Senate budget would add 2,350 additional spots in pre-kindergarten programs for low-income families, in an effort to cut the waiting list for the program in half. Cooper’s budget aims to eliminate the waiting list, adding 4,668 children over two years. Both budgets propose $18 million in additional spending on the program over two years, so it’s unclear how Cooper’s proposal would serve more children.
Private school vouchers: The Senate budget includes an additional $20 million for the private school voucher program known as “Opportunity Scholarships,” an amount that was set in a previous budget bill. Cooper’s budget calls for reducing funding for the program because he believes it takes funding from traditional public schools. His budget includes $4.8 million to fulfill existing voucher commitments without issuing new ones.
Recruiting jobs: The Senate budget includes $2.5 million to create a new Site and Building Development Fund, which would be used to develop sites and infrastructure for a major manufacturing facility, such as an automaker. Cooper’s budget includes $30 million for what he calls “ready sites,” which are infrastructure projects for 50- to 200-acre tracts being marketed to employers.
After the budget clears the Senate, the House will roll out its own spending proposal. The chamber’s budget writers say they hope to unveil the budget during the week of May 29.
Once the House passes its budget, Republican leaders from the two chambers will meet behind closed doors to negotiate a compromise budget. They’re hopeful that will happen by mid-June, sending a bill to Gov. Roy Cooper’s desk before the current fiscal year ends on June 30.
If there’s no budget deal by June 30, legislators will have to pass a temporary budget to keep state government running. That happened several times in 2015, when the final budget wasn’t signed into law until late September.