NC House Gives Initial Approval To Budget Bill

The North Carolina House gave initial approval late Wednesday to a two-year budget, after Republicans who wrote the legislation touted its teacher pay hikes, income tax provisions and massive infrastructure spending spree.

The chamber voted 72-41 for the proposal, which spends $25.7 billion in the year that began July 1 and grows by $940 million in the following year. The proposal contains several billion dollars in cash for erecting and repairing government, university and K-12 buildings, expanding broadband to rural areas and fixing aging water and sewer systems.

"This budget is just not about financial health, but compassion and caring and respect for each other," senior budget writer Rep. Donny Lambeth of Forsyth County said during the debate, which went on for several hours. He called the bill a "spending plan that we all can embrace to move North Carolina forward."

Like the Senate's competing budget approved in June, the House budget bill benefits from a large revenue surplus and billions of federal COVID-19 aid dollars sent by Congress. But the two chambers disagree on the size of tax reductions, government worker raises and capital projects and on how to help businesses and nonprofits still recovering from the 2020 coronavirus restrictions.

Following a second affirmative House budget vote on Thursday, the two chambers will shift to negotiating a final budget plan. Democratic Gov. Roy Cooper has said he wants to participate in the talks with hopes of signing a final agreement into law. A traditional two-year budget never got enacted in 2019 after Cooper vetoed the measure and he and GOP lawmakers reached a stalemate.

Cooper, House Speaker Tim Moore and Senate leader Phil Berger have all expressed optimism in working out a deal that everyone can live with. If negotiations falter, it's possible Republicans could attract enough Democrats to override any Cooper veto. Nine House Democrats joined the Republicans in voting yes on Wednesday night.

Minority Leader Robert Reives and other House Democrats who voted no said the budget bill was better in many respects than the Senate plan.

But they said the GOP budget plan cut corporate taxes too much, left out Medicaid expansion and failed to adequately address a judge's directive to boost public education funding by hundreds of millions of dollars annually to comply with a constitutional directive. At the same time, the budget bill leaves $3.5 billion unspent.

"Even though it has things that we like that the governor has been pushing for and we've gotten, it really falls woefully short of where we need to be," Reives, from Chatham County, said at a news conference before the afternoon debate.

Democrats complained specifically about budget policy provisions on K-12 schools that they say would hamstring and intimidate teachers and administrators. School districts would be required to post teacher instructional materials online and create local panels to investigate and evaluate allegations that materials are "unfit" for children. And the state would withhold state money for superintendents' salaries if they failed to carry out state laws requiring instruction of cursive writing and multiplication tables.

The budget "mistrusts and micromanages our professional educators. We need to treat them as what they are, which is professionals," Rep. Cynthia Ball of Wake County said. "Instead of building a robust teacher pipeline, it dis-incentivizes entry into the profession."

But the House measure does give educators a bigger boost in salary and benefits than the Senate.

The House would raise teacher salaries by 5.5% on average over two years, with the biggest increases benefitting veteran teachers. The Senate proposes roughly 3%. Cooper wants roughly 10% raises. Custodians, cafeteria workers and other non-instructional staff would be paid at least $15 per hour by next year in the House plan, and public school workers would get eight weeks of parental leave for the birth of a child.

"This is unprecedented (education) spending that we have not seen before," said Rep. Jeffrey Elmore, a Wilkes County Republican.

Rank-and-file state employees would get 2.5% annual pay increases in the House plan, in line with Cooper's budget request. The Senate proposed a 1.5% annual raise. Teachers and employees also would be getting bonuses.

The House would allocate $5.8 billion in state funds alone in the next two years on building construction and repairs, compared to $4.3 billion by the Senate, according to Moore's office.

And while both chambers would reduce individual and corporate income tax rates, the Senate proposes deeper cuts, going so far as to eliminate the corporate tax by 2028. Both chambers agree on how to raise standard deductions, which would expand the number of low-income residents who pay no income taxes.