North Carolina House budget plan spends $1B more next year
RALEIGH -- The North Carolina House wants to spend $1.1 billion more on state government next year under a draft budget proposal released Monday, which seeks to raise teacher and state employee salaries while setting aside more money for emergency reserves and economic incentives.
The two-year plan written by House Republicans would spend almost $22.2 billion in the fiscal year starting July 1, which compares to the $21.1 billion in the current year's plan finalized last summer by the General Assembly.
The proposal must go through three committees, with the first meeting later Monday, before heading to the House floor for required votes later in the week. The Senate will likely pass its own plan in June, setting up negotiations to get a final compromise to McCrory's desk.
The 5 percent year-over-year increase originates in large part from a much-improved revenue forecast. State economists are projecting a $400 million surplus this fiscal year and another $835 million more revenues than anticipated through mid-2017. The extra cash allows lawmakers to do more than GOP Gov. Pat McCrory's budget proposal released in March, when a shortfall was still anticipated.
While $200 million each would go into state reserves for emergencies and for repairing government buildings, House GOP leaders are going on a bit of a post-Great Recession spending spree.
The plan proposes $420 million more on salaries and benefits, buoyed by 2 percent raises for nearly all state employees and government retirees, with likely higher expected salary changes for prison officers, state crime lab scientists and others. A special fund also would give McCrory's administration leeway to raise salaries in hard-to-retain fields.
Teacher pay based on years of experience also would go up 2 percent in most cases, although salaries for the least experienced would go up more than 6 percent, in keeping with the promise of legislative leaders and McCrory to raise minimum salaries from $33,000 to $35,000. There's also a previously announced pilot program designed to give large supplements to teachers in local school leadership positions.
House leaders are able to locate more money than McCrory sought on two key economic development investments.
The House wants to give $60 million annually for the next two years to a grant program for film production companies. McCrory offered $10 million. The film grant program replaced a tax credit program that Republicans allowed to expire last year after complaints it was too costly.
A new venture capital program proposed by McCrory to help launch new inventions would get $40 million next year in the House program. McCrory wanted $30 million over two years. And both the governor and House agree on bringing back a tax credit for those who repair historic buildings.
There are no broad income or sales tax increases in the plan, although the budget would restore an income tax deduction for medical expenses that was repealed in the 2013 tax overhaul law. The restored deduction, which would apply to tax filers 65 and over, would cost about $24 million annually.
The budget does raise Division of Motor Vehicles fees by 50 percent, however, generating $132 million next year and $290 million in 2016-17 to help pay for transportation projects. The state ports in Morehead City and Wilmington would get $75 million of the money for improvements. The state gasoline tax, which already fell 1.5 cents per gallon in April to 36 cents would fall further to 33 cents. But diesel fuel would remain at 36 cents.
And while the governor wanted to eliminate a tax credit for solar projects next January, the House budget would expand it for two additional years, through 2017.
As usual, the House plans must spend a great deal of new money - $748 million over two years - to pay for increased enrollment and medical expenses for Medicaid
