State Politics

NC House backs budget with teacher raises, income tax cut

From left, state Reps. Chuck McGrady, Nelson Dollar and Donny Lambeth chair the House budget process.
From left, state Reps. Chuck McGrady, Nelson Dollar and Donny Lambeth chair the House budget process.

The N.C. House voted 103-12 Wednesday in favor of its $22.22 billion budget that provides an income tax cut and raises for teachers and state employees.

While some Democrats said the spending plan – which represents a 2.3 percent increase over the current fiscal year – is too conservative, it drew more support from minority party legislators than any other budget since Republicans took control in 2011.

“I sense a great bipartisan agreement on this budget,” said Rep. Nelson Dollar of Cary, the House’s lead budget writer. “This budget is a responsible budget that does fund our critical needs, it does plan for the future, and it does most assuredly move this state forward.”

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.

The budget also would increase the standard deduction for personal income taxes would increase by up to $2,000, 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.

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.

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.

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.

House Democratic Leader Larry Hall of Durham said the state needs to do more for teachers. “We do not have a discernible plan to get our teachers and our education personnel to or above the national average” in pay, he said. “At this rate, we won’t make it there anytime soon. ... We artificially starved ourselves. We have funds available, and we decided not to invest.”

But Rep. Linda Johnson, a Kannapolis Republican, said the teacher pay raise represents major progress for the state as it could move North Carolina to 38th in the country in average teacher salaries. “This will be 10 national ranking (improvements) in four years and could secure our plan to move North Carolina equal to or higher than the top average teacher pay in the Southeast,” she said.

Rep. Mickey Michaux, a Durham Democrat, criticized the budget’s use of $300 million to add to the state’s rainy day fund. He said the money should have gone instead toward a bonus for state employees.

“It’s going to take a whole lot of rain in order to use $1.4 billion,” he said, referring to the total amount that would be in the fund.

Dollar said adding to savings is a wise move. “Whenever the next recession comes, we need to make sure we have sufficient funds so we’re not faced with tax increases or cuts to services,” he said.

Rep. Marvin Lucas, a Fayetteville Democrat who was among 30 members of his party voting yes, said he still had concerns about the budget.

“Overall, the document does a lot of good things,” he said. “Could we have done better? I think we could.”

The budget also would remove a $500,000 state funding cap on light rail funding that has harmed plans for a Durham-Chapel Hill light rail project. It would eliminate tolls on state-run ferries. And it would use $25 million in proceeds from selling the Dorothea Dix hospital property to the city of Raleigh to improve mental health care in rural hospitals.

The House will hold a final vote on the budget Thursday morning to send the bill to the Senate.

In other budget action Wednesday:

▪ SBI plane – The House agreed unanimously to drop a plan to divert $8.7 million in transportation funding to buy a new plane for the State Bureau of Investigation.

The SBI’s 40-year-old Beechcraft King Air plane has been used to catch criminals, extradite fugitives from other states, perform search and rescue missions and conduct drug investigations. But it’s no longer in condition to fly.

While most lawmakers supported funding the plane, some said using money intended for roads would be a “slippery slope” toward depleting transportation funding to pay for other needs.

Rep. Paul Tine, an unaffiliated legislator from Kitty Hawk, proposed an amendment to take the plane out of the budget and instead look to fund it when the House and Senate negotiate a final budget.

Transportation “might not be the best location” to find money for the plane, Tine said before his proposal passed unanimously.

▪ Tax break survives – Legislators rejected a Democrat’s plan to eliminate a tax break on high-end boats and planes.

Current law only requires sales tax to be paid on the first $50,000 of a boat or airplane purchases, and Rep. Paul Luebke of Durham said the system is “very, very unfair.”

“They’re getting this tremendous break, and we’re losing $17 million for the needs of our state,” he said.

Luebke’s amendment to tax the full amount of boat and plane purchases failed when the House voted 69-43 to kill his proposal.

“With all due respect, this is a problematic amendment,” said Rep. Jon Hardister, a Greensboro Republican. “It would have a very negative impact on the aviation industry in North Carolina.”

Colin Campbell: 919-829-4698, @RaleighReporter