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Senate gives tentative OK to 2-year state budget

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The NC Senate budget passes its first hurdle along party lines.

Conservatives in the State Senate scored a major victory on Thursday as their $22.9 billion budget passed its first votes.

The budget, which includes a nearly $1 billion tax cut, passed 34-15 along party lines.

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"More people will tell you they can spend the money a whole lot more wiser than government can spend it," Sen. Harry Brown (R-Jacksonville), the ranking member of the Appropriations Committee, told ABC11. "We're funding what we feel government needs at this point. We just try to manage that growth."

A 2-hour debate focused largely on comparing the GOP plan, which spends $22.9 billion in the coming year, and the budget recommended two months ago by Cooper, a Democrat, which sought to spend $579 million more.

The competing proposals, which benefit from a revenue surplus, both raise teacher pay and put aside more than $300 million into the state's rainy day reserve. The big difference is that Republican budget-writers inserted another round of tax cuts that would mean more than $1 billion over the next two years. Cooper's plan only offered to revive a child-care tax credit.

SEE THE FULL BUDGET PROPOSAL HERE (.pdf)

Unable to unravel the GOP plan with amendments, Democrats highlighted Cooper's budget as the preferred method to help working families and rural areas and spend more on education than Republicans would. It was a departure from their strategy in previous legislative sessions.

"It is telling that the only criticisms we've heard about this budget are it 'doesn't spend enough' and 'gives taxpayers back too much of their own money,' " said Senate Leader Phil Berger, R-Rockingham. "But rather than indulge the old tax-and-spend impulses that dragged our state into a $2.5 billion budget deficit and one of the nation's worst tax climates, we are spending prudently on core priorities, saving carefully to protect against the next recession and returning a portion of the tax surplus back to the middle-class families and job-creators who paid it."

Highlights of the Senate budget, according to Berger's office, include:

  • It increases spending by 2.5 percent over last year's budget and 3.75 percent over actual spending and focuses that increase in key areas, like providing about $600 million more for public education.

  • It continues the Senate's ongoing efforts to dramatically increase teacher pay - providing teachers an average 3.7 percent raise this year and 9.5 percent raise over two years, while also ensuring they earn far more over the course of their careers. Along with substantially increasing school principal pay, it also directs roughly $200 million in the first year alone toward compensation increases to state employees.

  • It delivers nearly $1 billion in tax relief, with 99 percent of taxpayers either paying less or paying no state personal income taxes at all.

  • It includes provisions to fund public school construction in economically struggling, rural counties, add thousands of slots to the pre-K program, and create new economic development funds to help attract major manufacturing employers to the state.

  • It provides $150 million in disaster relief assistance to victims of Hurricane Matthew and adds $363 million to the state's rainy day fund - bringing the savings reserve to its highest total ever.


"I am proud this budget delivers nearly $1 billion in tax relief, continues our multiple-year effort to dramatically increase teacher pay and improve education outcomes, and helps rebuild communities devastated by Hurricane Matthew - while bolstering our state's rainy day fund to its highest total ever," Berger said.

GOP lawmakers say lower taxes have contributed to the recovering economy and put more money in people's pockets and would continue to do both. Their latest tax proposal would decrease individual and corporate income tax rates even lower and increase standard deductions- meaning more lower-income people would pay zero income taxes.

"I believe that we've done our job here," said Sen. Tommy Tucker, a Union County Republican and co-chairman of the Senate Finance Committee. "It's all not bad and it's all not doom and gloom."

Democrats performed a question-and-answer with each other on the floor to criticize the GOP plan. They said the money going to the richest people and corporations with tax breaks should be used to invest in programs and workers' salaries still lagging since the Great Recession.

Several initiatives in Cooper's plan were either ignored by the GOP or funded at a fraction of what the new governor wanted. Cooper's plan would have raised teacher salaries on average by 5 percent, compared to 3.7 percent on average in the Senate plan.

"We note that it contains some of the ideas that Cooper (offered), but it doesn't go far enough for our working families," said Sen. Mike Woodard, a Durham County Democrat, adding that "if we fail to make sound investments in our people and our growing state, we will continue to fall behind."

Republican leaders chafed at Democrats calling it "a billionaire's budget," saying 99 percent of the individual income tax filers will pay less or pay no state personal income taxes at all. They recalled when Democrats were in charge of the legislature before 2011. They said Democrats passed budgets with higher tax rates and spending levels that contributed to deep budget holes during the Great Recession.

"What the governor's budget does is what a lot of the (Democratic) budgets did and that is spend it all," said Senate Majority Leader Harry Brown of Onslow County, also a chief budget-writer.

House Republicans have their own ideas on tax breaks and haven't committed to the Senate tax proposal. Cooper will be hard pressed to block the final Republican plan if GOP legislators unite.

The Associated Press contributed to this report.

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