State House budget proposes more for infrastructure, raises

North Carolina House Republicans unveiled a two-year state government spending proposal Wednesday that would offer sizeable raises for teachers compared to recent years while earmarking billions of dollars for infrastructure and health care.

The unveiling of the House budget plan comes two weeks after Democratic Gov. Roy Cooper offered his own proposal, which GOP leaders have already dismissed as spending too much. Cooper's plan seeks much higher pay raises for teachers.

The House plan would spend almost $29.8 billion in the fiscal year starting July 1, largely in keeping with the spending limit agreed to recently by House Speaker Tim Moore and Senate leader Phil Berger. That is over $3 billion less than what Cooper wanted to spend next year. The House would spend $30.9 billion for the year starting July 2024.

Moore and other House budget leaders highlighted at a news conference both new or expanded spending toward salaries, services, tax reductions, and capital expenditures. Moore said the threat of a recession, which he blamed on poor policy choices from Washington, warrants a conservative approach that he believes has helped make North Carolina a fiscal model nationally.

“We recognize that we are facing some uncertain headwinds,” Moore told reporters. “We would be irresponsible to spend every bit of money and not prepare for the future given these uncertain times.”

House Republicans say their plan proposes average raises of just over 10% for public school teachers over the next two years, compared to 18% average raises by Cooper.

For rank-and-file state employees, the House proposal offers raises of more than 7.5% through mid-2025, while Cooper's requested raises of over 8%. The House plan doesn't include $1,000 or $1,500 bonuses for teacher and state employees that Cooper also proposed.

The House plan would provide more funds for pay in hard-to-fill staffing positions. Another $26 million would help recruit and retain community college faculty.

House Republicans want to accelerate slightly individual income tax rate cuts that became law in 2021 and incrementally will bring the rate to 3.99% in 2027. They also want higher standard deductions for tax filers and deductions for those with children. The business franchise tax rate also would fall incrementally in the measure, reaching a one-third reduction by 2029.

Rep. Dean Arp, a Union County Republican and one of the chief budget writers, said the House plan includes $3.6 billion on infrastructure investments over the next two years, along with $2 billion for local and regional water and sewer system projects.

For public education, the House GOP plan would limit fourth-grade class sizes to 24 students to help with a program to improve student's math proficiency. The budget would include additional funds to hire teaching assistants to help with the program.

The House budget committees will debate the measure and consider amendments Thursday. House floor votes are expected next week. Senate Republicans will then advance their own spending plan in the coming weeks.

Leaders from both chambers will then negotiate a final budget bill to vote on and present to Cooper, probably in June.

Cooper was already behind the eight ball on persuading lawmakers to embrace his spending plan. Republicans earned enough electoral gains in the fall so that the GOP is only one House seat away from holding veto-proof control in both chambers.

And the Medicaid expansion legislation that Cooper signed into law earlier this week requires passage of a state budget law for next year before coverage to hundreds of thousands of low-income adults can be carried out. That means Cooper's leverage on the budget is likely to wane as Republicans can fill it up with favored provisions.

The budget proposal does place in reserve over $1.6 billion in extra cash that North Carolina will receive from Washington once expansion is enacted.

Much of that money would be used for mental health services, the details of which be proposed in separate legislation soon, said Rep. Donny Lambeth, a Forsyth County Republican, and another chief budget writer.

A policy provision contained in the House's budget draft would turn the State Bureau of Investigation into a standalone department that would no longer be housed in the Department of Public Safety — a Cabinet agency of the governor.

The proposal comes a day after current the bureau's director, Bob Schurmeier, spoke to House members publicly, alleging interference by Cooper's office in hiring decisions and urging laws to make the bureau more independent than is already provided in state law.

A Cooper spokesperson said the governor's office has had concerns about Schurmeier's leadership and practices within the agency. Schurmeier's current term as director expires at the end of June.