Editor’s note: The Senate took a final 32-17 vote Friday morning to approve its budget plan. Senate Bill 105 now heads to the House.
The N.C. Senate voted Thursday to pass the body’s state budget plan by a vote of 32-18, with four Democrats joining all Republicans in supporting the plan. Sens. Ben Clark, D-Cumberland, Kirk DeViere, D-Cumberland, Paul Lowe, D-Forsyth, and Don Davis, D-Greene, supported the Senate budget.
Senate Bill 105 will require a second vote Friday morning. Once the measure clears the Senate, the state budget debate will shift to the state House.
The budget includes, among other toplines, $3 billion in cash for infrastructure projects over the next two years, part of a 10-year, $12 billion cash plan for infrastructure and capital projects over 10 years. Senate leaders also emphasized tax cuts that include lowering the personal income tax rate, increasing the per-child tax deduction by $500, and raising the zero tax bracket, or standard deduction, to $25,500 for married couples.
Senate Republicans estimate that the tax reform measures would reduce median household income tax payments by 37%
“Because of the state’s strong financial position after a decade of responsible governance, Senate budget writers could pair historic tax cuts with a massive infrastructure package,” said Senate Leader Phil Berger, R-Rockingham, in a press release sent after the vote. “Responsible spending, tax cuts whenever possible, and saving for a rainy day have defined Republican budgets for 10 years, and the formula works.”
Some Senate Democrats, however, said the budget proposal does not take advantage of one-time federal pandemic relief money or surplus revenue. They offered eight amendments to try to drive up spending. Party-line votes of 28-22 helped Republicans table every Democrat amendment.
Senator Natalie Murdock, D-Durham, offered an amendment to raise noncertified school employees’ pay to $15 an hour, rather than the budget proposal’s $13 an hour. Sen. Michael Garrett, D-Guilford, tried to amend the budget to raise teacher pay by 10%, rather than the proposed 3%.
At one point, Minority Leader Dan Blue, D-Wake, tried to block the tabling of a colleague’s amendment by moving to adjourn the meeting. That maneuver also failed on a 28-22 vote.
“The amount of money that is being spent in this budget is already unprecedented,” Berger said on the Senate floor after failed votes on amendments. “This budget, if you add everything together … you are at about $33 billion. That’s an increase of about $8 billion through spending. Some people would think, ‘Goodness, that’s a lot,’ but apparently, it’s not enough. These amendments add up to another $3.5 billion over that. The problem with that $3.5 billion is that it’s recurring spending. Not only will we have to take care of it in this biennium, but we will also have to take care of it for years to come.”
For education, the budget proposal would spend $10.4 billion in 2021-22 and $10.5 billion in 2022-23 on K-12 public education. That amount includes a 3% raise for teachers over two years in addition to one-time bonuses of $300 and between $1,000 and $1,500 added bonuses from federal funds. Additionally, noncertified school employees would see their wages rise to a minimum wage of $13 per hour.
The budget also allocates $40.9 million each year to ensure that every school district has at least one school psychologist. And it allocates $6 million to fund the Excellent Public Schools Act implementation meant to ensure students are reading proficiently by the third grade.
Blue urged senators to use this year’s budget surplus and tax overcollection for capital projects and other spending, saying that it would boost North Carolina’s competitiveness in the world economy. He compared the spending suggestions to investments China has made in its economic infrastructure.
“I hate for our state to miss this opportunity to catapult our state to compete with other states and other countries in the world,” said Blue.
“When we have the opportunity to strengthen our courts, our judiciary branch … we ought to seize on that opportunity, and yet we still talk about $14 billion over the next five years in tax breaks,” he continued.
Also included in the health care portion of the budget is nearly $34 million for distributing 1,000 additional waivers to fund customized health care services for people with intellectual and developmental disabilities in lieu of institutionalized care plans. It would also provide for women with incomes up to 196% of the federal poverty rate to remain eligible for Medicaid postpartum coverage for a full 12 months. The Medicaid Transformation Fund slated to roll out on July 1 also gets hundreds of millions in one-time money to transition Medicaid to a managed care model.
Blue pushed back on Republicans’ point that the state’s economic growth since Republicans took control of the legislature can be at least partially attributed to conservative fiscal policy. He pointed to the strong growth of the 2000s, when Democrats controlled North Carolina’s budgeting process.
“Yes, that decade was one of growth, but it was uneven growth, but we have to remember where we were at the end of the decade,” replied Berger. “The state was $2.5 billion in the hole because of exactly your philosophy that we see here — just write the check — and we know how that turned out. Teacher pay was frozen. People got laid off. We’ve seen this philosophy before, and it just doesn’t work.”