In a sign that the state budget impasse may soon end, Republican Gov. Pat McCrory announced Tuesday that he and legislative leaders had reached an agreement on a $21.735 billion bottom line for the 2015-16 fiscal year General Fund budget.
“This agreement is the result of ongoing dialogue during the last several weeks,” McCrory said in a statement. “We remain committed to working with the House and Senate to find common sense solutions that create jobs, strengthen education and fund critical infrastructure in North Carolina.”
McCrory had proposed a $21.5 billion budget in March. The House passed a $22.2 billion budget, with the Senate budget coming in at just below the governor’s total. The parties have until Aug. 31 to agree on spending totals for individual budget categories; at 11:59 p.m. that night, the second continuing resolution of the fiscal year that began July 1 expires.
“It’s a little bit less than the House had wanted to spend; it’s a little bit more than the Senate had wanted; it’s more than the governor had proposed as well,” said Lee Roberts, McCrory’s budget director. “That’s what happens when you get a compromise.”
The General Fund budget pays for general state government programs, such as education, public safety, and health and human services. It does not include money provided by the federal government or transportation funding. That boosts overall state spending to roughly $50 billion.
The 2015-16 number represents a 3.1 percent increase over the 2014-15 budget. The General Assembly Fiscal Research Division had estimated the inflation plus population growth rate for 2015-16 to be 3.5 percent. The governor’s budget office projected the inflation/population increase would be at a lower rate — 2.7 percent.
“We’re OK with that [3.1 percent] number,” said Sen. Bob Rucho, R-Mecklenburg, who co-chairs the Senate Finance Committee.
Rucho said the legislature’s chief budget writers will set target spending numbers for appropriations subcommittee chairmen to align with the overall number. He said he will continue pushing for lower income taxes.
Rucho wants to raise the standard deduction for married couples to $17,500 and reduce the personal income tax rate to 5.5 percent.
The current individual income tax rate is 5.75 percent. The current standard deduction for married couples filing jointly is $15,000.
“It’s good that both the Senate and the House have compromised where they needed to so that we can finally answer these looming questions for citizens of North Carolina and once and for all end the budget discussions for this year,” said Sarah Curry, director of fiscal policy studies at the John Locke Foundation.
“It’s good to know that they didn’t just pick an arbitrary number out of the air for their final budget number,” Curry said. They’re using a set policy to determine what their spending amount is. That’s comforting to know, moving forward, for responsible budget practices and fiscal management.”
Barry Smith (@Barry_Smith) is an associate editor at Carolina Journal.