Senate Budget Emphasizes Employee Raises, Reserves, Tax Cuts

Republicans in the North Carolina Senate proposed a state budget Tuesday that emphasized raises for state employees and putting more money into reserves compared to a competing spending bill in the House.

The two-year budget plan by Senate GOP leaders also would extend pay raises to all teachers — not just to the most experienced public school instructors, as House Republicans proposed in a budget they approved in early May.

Republican senators proposed a 5% pay raise over two years for rank-and-file state workers, with supplements for correctional officers that could reach $7,500 annually and others for some state law enforcement agents. The House plan offered raises of 1% or $500, whichever is greater, with extras for certain fields.

The Senate plan would also set aside another $1.1 billion over two years for the state’s rainy-day reserve fund, which would reach a record $2.3 billion.

The Senate benefited by learning after the House passed its budget that the state’s projected revenue surplus this year has mushroomed to over $640 million — the highest since before the Great Recession. Much of the surplus would be parked in the rainy day fund, which was depleted by Hurricane Florence recovery needs.

The full Senate is expected to vote on its budget plan later this week. Senate leader Phil Berger said the proposal advances a GOP agenda, including tax cuts, that began when Republicans took over the legislature in 2011.

“This budget continues those policies,” Berger, a Rockingham County Republican, said at a news conference. “Those are policies that have brought about North Carolina’s success story.”

House and Senate Republicans will have to negotiate a final budget proposal that is unlikely to win over Democratic Gov. Roy Cooper, who will be asked to sign it into law. Cooper has proposed spending hundreds of millions of dollars more than the $23.9 billion that House and Senate Republicans agreed to spend in the fiscal year starting July 1.

The House and Senate plans contain nearly identical tax breaks that would reduce the corporate franchise tax and increase the standard deduction for individual income tax filers. Neither budget plan would expand Medicaid to cover hundreds of thousands of additional able-bodied adults through the 2010 federal health care overhaul law.

Cooper has made Medicaid expansion a primary policy goal this year.

“This budget leaves out Medicaid expansion that would close the health care coverage gap and it shortchanges public schools in exchange for more corporate tax cuts,” Cooper spokesman Ford Porter said in a news release. “The governor hopes to continue working with the House and Senate on a budget that does more to help hard-working North Carolinians.”

A Cooper veto could lead to a summer showdown. Following the November elections, Democrats now hold enough legislative seats to stop Republicans from overriding a veto, increasing the governor’s negotiating leverage.

“I expect that we are likely to continue to have a disagreement with the governor,” Berger said. “I don’t know that it’s something that would prevent us from getting a budget. We’ll have to wait and see.”

Neither chamber has proposed teacher raises that would match an average pay increase of 9.1% over two years that teachers would receive under Cooper’s proposal. The Senate plan gives average raises of 3.5% over two years. All teachers would get some kind of permanent raise and the most experienced teachers would also get one-time bonuses of up to $1,000 each year.

Last summer, state employees got 2% raises and all low-wage workers saw their pay reach the equivalent of $15 per hour. But tens of thousands of state employees remain left behind financially, said Robert Broome, executive director of the State Employees Association of North Carolina.

“Common-sense compensation is more than about establishing minimum salaries,” Broome said, praising the Senate GOP’s salary proposal.