UPDATE: Links to the Senate budget here and the “money report” here (PDF files).

Senate leaders on Tuesday began unveiling their $22.2 billion General Fund budget, including a nearly 20 percent pay boost for teachers over two years, a middle-class tax cut, and a tuition freeze for UNC system students.

The Senate budget lowers in-state tuition at five UNC schools — Elizabeth City State University, Fayetteville State University, UNC Pembroke, Winston-Salem State University, and Western Carolina University — to $500 per semester or $1,000 per academic year, beginning in the fall of 2018. Out-of-state tuition for those five campuses would be $2,500 per semester or $5,000 per academic year.

Freshmen entering the UNC system would see no in-state tuition increases through their senior years (generally for four years) under the Senate budget. The tuition guarantee also would apply to active members of the military based in North Carolina. Student fees would be reduced by 5 percent and future increases would be limited to 3 percent per academic year.

Senate leader Phil Berger, R-Rockingham, said the budget “embraces the priorities we share with Gov. (Pat] McCrory and the House of cutting taxes on the middle class, controlling the growth of government spending, bolstering the state’s savings and dramatically increasing teacher pay while at the same time providing over $180 million for state employees in performance-based pay increases.”

The Senate General Fund budget represents a 2.3 percent increase over the current fiscal year’s budget. That increase falls below the 2.9 percent Taxpayer Bill of Rights index. The TABOR index represents the percentage of population growth in the state plus the inflation rate.

The teacher compensation increases, which Berger announced last week, would increase average teacher pay from $47,783 to $54,224 over the next two years.

“If the proposal becomes law, average teacher pay will be up almost $10,000, more than 20 percent, since the 2013-2014 school year,” Berger said.

Sen. Harry Brown, R-Onslow, the Senate’s chief budget writer, said the increases would propel the state to the top of the regional rankings in teacher pay. He also said the budget includes one-time $2,000 bonuses for school principals, and one-time $500 bonuses for assistant principals.

Performance-based bonuses for third-grade reading teachers also are included, Brown said.

State employees would not get an across-the-board pay raise in the Senate budget. Instead, the budget provides $180 million for performance-based pay increases or bonuses.

Brown said the state employee raises and bonuses amount to roughly a 2 percent average increase, 1 percent in raises and 1 percent in bonuses.

“They’re allocated to each department in state government,” Brown said. “There’s a provision that says they cannot be across-the-board. And it’s really based on performance, hard-to-fill positions, market adjustments.”

The Senate budget provides no cost of living adjustment for state retirees. Brown said a COLA would create a long-term liability for the state pension plan. “We just didn’t think that was good budgeting,” he said.

The Senate’s three compensation packages, for teachers, state employees, and retirees, contrast with the packages passed in the House budget earlier in May, and are likely to be items of contention once members try to hash out a compromise agreement in a conference committee.

The House budget provided for an average 4.1 percent pay increase for teachers, a 2 percent pay increase plus a one-time $500 bonus for state employees, and a 1.6 percent COLA for retirees.

Other differences between the two chambers include:

  • Tax cuts. The Senate proposal increases the standard deduction, or “zero tax bracket,” from $15,500 to $17,500 for married couples filing jointly over two tax years, the current calendar year and next year. The House plan phases the tax break in over four years. Proportional increases for taxpayers with other filing statuses are included.
  • Ferry tolls. The Senate leaves tolls charged on some North Carolina ferry routes in place. The House budget eliminates them.
  • The rainy day fund. The Senate budget socks away $583 million into the state’s reserve account for emergencies or economic downturns. The House budget earmarks $300 million for the account.

 

The Senate budget provides $34.8 million to award more need-based scholarships in the Opportunity Scholarship Program, which provides scholarships of up to $4,200 per year for children of lower-income families to attend private schools.

Other provisions in the Senate budget include:

  • Tuition reimbursements for teacher assistants in five counties: Anson, Franklin, Moore, Richmond, and Scotland. The program would provide tuition reimbursements of up to $4,500 annually for 25 teaching assistants to work toward a college degree leading to a teacher’s license.
  • A $50 million reserve from lottery proceeds to pay for future local school building needs.
  • $14 million from the sale of the Dorothea Dix Hospital property for mentally ill services. The budget calls for $12 million to be used to expand in-patient care in rural areas, and $2 million for child crisis centers.
  • Programs for Alzheimer’s patients. The budget would fund 200 additional slots for patients and their families through the Community Alternative Program for Disabled Adults.

Brown said the budget would go through various Senate committees on Wednesday and receive floor debate and votes on Thursday and Friday. Leaders are hoping that a final budget agreement can be worked out between the Senate and the House before the new fiscal year begins on July 1.