Senate GOP Unveils State Budget Proposal, Spends Less Than Cooper Plan

Senate Republicans offered up a state budget plan Tuesday in contrast with Roy Cooper's recommendation, proposing to spend hundreds of millions less than the Democratic governor wanted while taking different routes on taxes and teacher pay.

Highlighting portions of their budget bill hours before its full public release and votes, Senate GOP leaders said they want to increase spending next year by about half the rate that Cooper offered in his plan released two months ago.

Much of that difference is consumed by Republicans in another round of proposed individual and corporate income tax rate cuts, already announced earlier this year. And while both Cooper and Senate Republicans would increase teacher pay, the Senate Republican budget offers an average 3.7 percent increase compared to the 5 percent average increase proposed by the governor.

"What you'll find in this budget and in Gov. Cooper's budget proposal are many of the same funding priorities. The difference is simply different spending levels," Senate leader Phil Berger of Eden said at a Legislative Building news conference. "We feel strongly that when government collects more than it needs, some of that money should be returned to the taxpayers."

Berger said the first year of the two-year proposal expected to pass the Senate by the end of the week would agree to spend $22.9 billion, which is 2.5 percent over the current-year budget approved by legislators and then-GOP Gov. Pat McCrory last summer. Cooper sought to spend almost $23.5 billion, or a 5.1 percent increase.

In announcing his plan in March, Cooper said the spending surge was necessary because North Carolina needed to "catch up" after years of neglect in education spending. But Berger said that Republicans were keeping to their principles of controlled spending and saving. He blamed Democrats in charge of state government before 2011 for out-of-control spending growth that left the state ill-prepared to cover shortfalls during recessions.

"Memories can be short and we have not forgotten the mess that we found in 2011," Berger told reporters.

The Senate tax proposal would reduce the individual income tax rate from 5.499 percent to 5.35 percent in 2018 and raise standard deductions. The corporate tax rate — already the lowest in the nation for states with such a tax — would fall from 3 percent to 2.75 percent next year and 2.5 percent in 2019.

Although Republicans say nearly all individual taxpayers would pay less in taxes or nothing under their tax plan, Cooper's office portrayed the proposal incorporated in the budget as another reckless round of tax cuts benefiting corporations and the wealthiest wage earners. They cited a report by the General Assembly's nonpartisan staff stating the tax proposal could lead to shortfalls toward the end of the decade.

Otherwise, Cooper spokesman Ford Porter said in a release, "it's good that some of the governor's proposals on teacher pay and other issues are reflected in the Senate budget, but we will reserve judgment until we see the details."

Republicans have downplayed the tax report, saying that in part it doesn't include the economic growth the tax cuts would generate, leading to more revenues overall. Cooper's budget offered little in tax breaks beyond a reinstatement of a child-care tax credit.

A copy of the teacher pay proposal inserted in the Senate budget would raise base salaries for instructors from one to 24 years of experience, but keep the most veteran teachers at $51,000 annually. Cooper's teacher pay schedule, however, aimed to raise salaries for all teachers, including those with at least 25 years' experience. Senators also are proposing a way for "highly qualified" new teachers to make more coming out of college.

Otherwise, tough decisions this fiscal year have been eased partly by a projected $580 million surplus that allowed state economists to project budget-writers would have another $1.4 billion than previously calculated through mid-2019.

The Senate's budget was expected to move through several committees Wednesday and onto the chamber floor Thursday for the first of two recorded votes. House Republicans are expected to pass their own budget plan in a few weeks. The two chambers would then negotiate a final compromise plan, which could withstand any Cooper veto if GOP legislators remain unified given their majorities.