RALEIGH (WTVD) --North Carolina Senate and House Leaders reached an agreement on a budget Monday evening.
The $22.34 billion state budget prioritizes teacher pay and cutting taxes on the middle class, said Senate leader Phil Berger.
"This was a great budget that we arrived at through compromise," said House Speaker Tim Moore.
Berger, Moore and other GOP legislators announced details on the agreement Monday night. The two chambers will vote on the compromise measure in the coming days.
The compromise budget includes a 2.8 percent spending increase and achieves both chambers' shared goals with Gov. Pat McCrory of prioritizing teacher pay raises, cutting taxes on the middle class, controlling the growth of government spending and bolstering the state's savings.
The Republican state leaders said the budget continues to show their commitment to dramatically raising teacher pay with a plan to boost average teacher salaries to $50,186 next school year and to nearly $55,000 within three years.
SEE MORE: TEACHER SALARY SCALE (.PDF)
The plan would set average teacher pay above $50,000 for the first time in state history and, when fully implemented, would mean average teacher salaries are up almost $10,000 - more than 20 percent - under Republican leadership since the 2013-14 school year.
"I am grateful to members of the Senate and House for reaching a compromise that continues the discipline and conservative principles of spending responsibly, taxing sparingly and saving wisely that have turned North Carolina's fiscal outlook around from multi-billion dollar deficits to significant budget surpluses," Berger said. "This budget keeps our promises to support our public schools and raise teacher pay above $50,000, let families and small businesses keep more of their hard-earned money, and control the spiraling costs of college."
Budget-writer Rep. Nelson Dollar says average pay raises for teachers will be 4.7 percent, with the increases weighted toward mid-career and veteran instructors. Rank-and-file workers would get at least 1.5 percent raises and small bonuses. There's also money for merit-based raises.
The House sought 4.1 percent average raises with some bonuses in its budget proposal, while the Senate's offer envisioned average 6.5 percent raises.
Arguments by Senate Republicans won out with several provisions contained in the final product. A $10 million pilot program would distribute bonuses to third-grade reading teachers whose students see the most growth in test scores. The very best teachers could receive $6,800 bonuses.
"Saying that we're going to get people into the 50s is not nearly far enough," said Rep. Chris Sgro, D-Guilford.
Sgro was also concerned that House Bill 2 was not mentioned in the budget.
"I don't feel comfortable voting for the budget, and I won't when it does nothing to address House Bill 2 and the deep economic harm that we've suffered," Sgro said. "Nobody's addressed that in this budget, which depends on revenue we're going to lose to tourism to concerts, to business relocation, so it's not realistic."
The budget agreement also provides more than $550 million in salary and benefit changes for state workers, including a permanent pay increase and bonus for state employees and a cost of living bonus for state retirees. It invests hundreds of millions of additional dollars in public education and other core priorities and shores up the state's rainy day fund by close to $475 million. And it includes provisions to help make college more affordable and accessible to students across the state, strengthen and stabilize public universities with lower enrollment and stimulate regional economies.
Finally, the budget provides tax relief to the middle class and small businesses by making the first $17,500 a family earns exempt from income tax over the next two years, with a family making the N.C. median household income of $44,000 annually seeing an additional tax cut of $110 next year alone. This will bring the total amount of tax relief since 2011 to approximately $3 billion per year.
"This budget is the embodiment of what can be accomplished when common sense, conservative ideas are put to work - we are cutting taxes, reinvesting in the state's infrastructure and saving money," Moore said. "I am particularly happy that, in addition to teachers, we were able to deliver pay raises to our state employees and provide a one-time payment to our much deserving state retirees."
In an apparent resolution on the future of tolling coastal ferries. The bill directs the Board of Transportation to establish passenger tolls for the ferry linking Hatteras and Ocracoke in addition to the three routes already tolled. But the other three routes would remain free.
Gov. Pat McCrory will have to sign the final budget, which takes effect July 1, into law.
The Associated Press contributed to this report.
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