News: CJ Exclusives

Pay Raises, Tax Cuts, Savings Boost In House Budget

$22.2 billion General Fund budget wins initial vote, 103-12; Senate expected to receive measure Thursday

North Carolina legislative building
North Carolina legislative building

The N.C. House on Wednesday gave its initial approval to the state’s $22.2 billion General Fund budget that includes a middle-class tax break along with a modest boost in salaries for state employees and teachers.

The bill passed with a bipartisan vote of 103-12, with every Republican and 30 Democrats backing the budget. Final approval is expected Thursday.

The budget represents a 2.3 percent increase over the current fiscal year’s $21.7 billion budget and is below the Taxpayer Bill of Rights index of 2.9 percent, which adds population growth and inflation.

Even so, the budget provides an average 4.1 percent pay increase for teachers. It provides a 2 percent pay increase, plus a one-time $500 bonus for full-time, permanent state employees. Retirees get a 1.6 percent cost of living adjustment. Additional salary adjustments are included for some court officials, including assistant district attorneys and assistant public defenders. It also provides pay increases for state troopers, correctional officers, and SBI and ALE officers.

The teacher raises vary depending on classroom experience, peaking at 15.1 percent for teachers entering their 10th year of service.

The vote came after lawmakers debated the bill and related amendments for about four hours.

One amendment reversed a move made Tuesday by the House Appropriations Committee that sliced $8.7 million from transportation maintenance funds to pay for a new plane for the State Bureau of Investigation.

On Tuesday, the committee approved the funding source for the plane purchase. However, a number of representatives were hesitant, expressing concern that lawmakers were setting a bad precedent by funding a law enforcement purchase from the transportation budget after the General Assembly during last year’s session had agreed to stop making General Fund transfers from dedicated highway revenues.

On Wednesday, Rep. Paul Tine, an unaffiliated representative from Dare County, who sponsored the proposal in committee, said he understood that reservation. He then offered a floor amendment restoring the $8.7 million to the transportation maintenance accounts.

Tine’s amendment, which passed 103-0, said it was the “intent of the General Assembly” to come up with money somewhere in the budget to purchase the new SBI plane. That could occur on Thursday, when the House takes its final vote on the budget, or after the budget bill goes to the Senate.

Moments before the initial budget vote was taken, Rep. Nelson Dollar, R-Wake, the chamber’s senior budget writer, told his colleagues, “I sense a great bipartisan agreement on this budget.”

Dollar told the House that the budget socked away $300 million in the state’s rainy day fund. That brings the total in the savings reserve to $1.4 billion, or about 6.5 percent of the prior year’s general fund budget. The target is 8 percent.

“Whenever the next recession comes, we do want to make sure we have sufficient funds so that we are not faced with choices of greater tax increases cuts to critical services in this state,” Dollar said.

Rep. Larry Hall, D-Durham, the House minority leader, voted against the bill. Hall called pay increases for state employees “insufficient” and said lawmakers aren’t doing enough to move teacher salaries toward the national average.

“Our roof has a hole in it, the plumbing is leaking, and we’re putting all of our money in the bank,” Hall said. “I just feel like we’re not doing our best.”

The finance package included in the budget bill phases in over the next four years a $2,000 increase in the standard deduction, or 0 percent tax bracket, for married couples filing jointly. Proportional standard deduction increases are included for other taxpayers. The Senate also wants to increase the zero tax bracket by $2,000. However, its plan would be phased in over two years — this year and 2017 — twice as fast as the House budget.

The bill also would eliminate the 1 percent tax businesses pay on mill machinery.

During Wednesday’s deliberations, the House approved an amendment that would place a moratorium on restructuring the Department of Transportation until Feb. 1, 2017. Raleigh-area legislators supported the measure, saying they wanted to protect jobs in the area until they could find out if taxpayers would actually save money with the proposed restructuring.

One potential controversial debate was averted when GOP House Speaker Tim Moore, R-Cleveland, ruled a proposed amendment by Rep. Julia Howard, R-Davie, out of order. Davie’s amendment would have terminated the state Department of Transportation’s contract establishing tolling on high occupancy and toll lanes on Interstate 77 in Mecklenburg and Iredell counties.

The HOT lanes project has stirred extensive local opposition, but NCDOT officials and Gov. Pat McCrory have defended the proposal and said it could cost the state $100 million to terminate the contract.