Now that the North Carolina General Assembly has finally passed a state budget for the 2023-25 biennium — and Gov. Roy Cooper has decided not to veto it, allowing it to become law without his signature — conservatives have a great deal to celebrate. The bill achieves major victories for fiscal restraint, tax and regulatory relief, and education reform, among other important causes.
To celebrate these wins, however, requires that we reverse the now-familiar aphorism: it has to be about the destination, not the journey.
What does that destination look like? Here are some key elements of the new state budget:
• Tax relief. North Carolina’s flat rate on personal income will drop to 3.99% by 2026, down from the current 4.75%. There may be additional rate reductions after 2026, depending on how fast General Fund revenues are growing. The state’s tax rate on corporate income remains on a steady course to zero by the end of the decade. The bill also reduces the state franchise tax and repeals most privilege taxes, both welcome reforms.
• Infrastructure. The budget provides nearly $2 billion in water and sewer grants to local governments and puts $4.6 billion into the State Capital and Infrastructure Fund, which finances the construction, renovation, and repair of government buildings and other assets.
• Regulatory reform. The bill clarifies that local governments have no legal authority to impose minimum wages on private firms and that state agencies have no legal authority to impose cap-and-trade programs or new rules on auto emissions. It also strengthens the Joint Legislative Commission on Governmental Operations, which provides crucial oversight on both fiscal and regulatory matters.
• Educational freedom. As you’ve probably heard by now, the budget contains a dramatic expansion of North Carolina’s Opportunity Scholarship program. All parents in the state will now be eligible for vouchers they can use to purchase private education, though the amounts will vary by income — ranging from 100% of the state per-pupil allotment (roughly $7,200 last year) for low-income families to 45% of the allotment for upper-income families (such as families of four earning $250,000 or more).
• Education reform. The General Assembly also made progress on how North Carolina trains, deploys, and compensates public-school teachers. All instructors will get pay raises, but lawmakers wisely focused on the front end of the pay schedule. Salaries for starting teachers will rise 11% over two years, to $41,000. The bill also supplements the pay of teachers who take on additional responsibilities.
These are just some of the praiseworthy provisions in the new budget. It also contains a number of objectionable provisions, in my view, such as Medicaid expansion, corporate-welfare schemes, and a measure that will limit access to public records created by the legislators themselves as they conduct the public’s business.
Still, on balance, the 2023 budget bill represents a good outcome. Alas, the process that yielded it was confusing, frustrating, and on several occasions infuriating.
Whatever you think of the idea of (selectively) legalizing casinos, for example, lawmakers should never have tried to stuff it into the final budget. No casino bill was ever aired and passed by a committee, then debated and enacted on the floor. When budget conferees meet to negotiate a compromise, they should be considering only the issues actually in dispute — provisions already contained in the House or Senate budgets, or at the very least other bills already passed by one chamber.
Why care about process? Because when you don’t follow it, you often end up with embarrassing messes like the one that nearly derailed this year’s budget negotiations.
More generally, the final outcome took far too long to accomplish. The General Assembly clearly needs real guardrails and deadlines, including caps on the length of legislative sessions. If the legislatures of Florida, Texas, Georgia, Virginia, Tennessee, and — God help us — South Carolina can get all their important work done in a fixed amount of time, why should we think North Carolina lawmakers are incapable of doing the same?
John Hood is a John Locke Foundation board member. His latest books, Mountain Folk and Forest Folk, combine epic fantasy with early American history.