Senate budget includes tax cuts, more spending on education, infrastructure

May 9, 2017 GMT

Senate leaders on Tuesday outlined their 2017-18 spending plan, saying it accomplishes many of the same priorities as those in Gov. Roy Cooper’s budget proposal with less spending.

The $22.9 billion proposed budget would spend about $600 million less than Cooper called for but would still be about 3.75 percent more than the state is projected to spend in the 2016-17 fiscal year, which ends in June, Senate President Pro Tem Phil Berger said at an afternoon news conference.

The state is expected to end the fiscal year with a $580 million surplus from its $22.5 billion budget for 2016-17.

The actual budget bill is expected to be filed late Tuesday before committee hearings are held on the proposal Wednesday. The two required votes on the bill would then be held Thursday and Friday before the Senate sends the budget to the House.

“We understand that some want to spend more than this budget spends, but memories can be short. We have not forgotten the mess we found in 2011, the result of years of spending growth at unsustainable levels,” said Berger, R-Rockingham. “We feel strongly that, when government collects more than it needs, some of that money should be returned to the taxpayers.”


Toward that end, the Senate rolled its so-called “Billion Dollar Middle-Class Tax Cut” plan into the budget. The Senate approved the legislation last month, calling for lowering the personal income tax rate from 5.499 percent to 5.35 percent in 2018 and the corporate tax rate from 3 percent to 2.5 percent by 2019. The plan also would expand the standard deduction and make changes to mortgage interest deductions and child tax credits.

Spending on K-12 public education accounts for $9 billion of the proposed budget, including $131 million for teacher raises. Berger said senators want to raise salaries by an average of 9.5 percent over the next two years. Cooper’s plan called for 5 percent raises for teachers in each of the next two years.

Other education increases in the Senate plan include $28.5 million for raises for school principals, $75 million in state lottery funds to help rural school districts with school construction costs, an extra $10 million for textbooks and digital resources and $18 million over two years to add 2,350 slots to the state’s pre-kindergarten program. Cooper’s budget likewise included raises for principals and money for textbooks, but he called for twice as many new slots for North Carolina Pre-K.

Outside of education, the Senate budget includes a 1.5 percent or $750 raise, whichever is greater, for state workers, but it doesn’t include any cost-of-living adjustment for retirees. Cooper’s budget included slightly larger raises for state employees and a 1.5 percent COLA for retirees.


“We’re extremely disappointed, and we think this is very difficult to explain to state employees and retirees who protect the lives and property of their fellow citizens,” said Ardis Watkins, a spokeswoman for the State Employees Association of North Carolina. “There’s a huge surplus, and once again the legislature’s not giving state employees and retirees enough to keep up with the cost of living.”

Where Cooper includes plans to expand the state’s Medicaid program in his budget, the Senate called for a $150 million reserve fund to help carry out the plan lawmakers have already approved to convert Medicaid from a fee-for-service system to more of a managed care model.

Both the governor and the Senate set aside recovery money for Hurricane Matthew victims – the Senate included $150 million while Cooper had $115 million – and for the state’s “rainy day” reserve fund – $363 million in the Senate plan compared with $313 million in Cooper’s.

Both proposals also spend more on infrastructure statewide, with the Senate including another $320 million for the Strategic Transportation Investments program, $246 million to upgrade structurally deficient bridges and $130 to improve the safety of existing roads. Cooper set aside more than $400 million over two years for road construction and maintenance.

The Senate also used the budget to begin taking steps toward trying most 16- and 17-year-olds charged with crimes as juveniles, although no funding was included for that change, and to start a pilot project in Wilmington to fight the state’s opioid addiction crisis.

Cooper spokesman Ford Porter and Sen. Terry Van Duyn, D-Buncombe, said they were glad some of the Senate’s budget priorities matched Cooper’s, but they both criticized the proposed tax cuts.

“Unfortunately, Senate Republicans have prioritized yet another massive tax giveaway for corporations and the wealthiest that would give millionaires a tax cut 60 times larger than middle-class families,” Porter said in a statement.

“It again prioritizes tax cuts for corporations and the wealthy over investments,” Van Duyn said. “We are a growing state population wise, and we are still at pre-recession levels in a lot of our funding priorities. We could do better if we invested in things like education, particularly pre-K and community colleges, so that the citizens of North Carolina could make more money.”

Berger countered, “We think people have better ideas how to spend their money than bureaucrats and politicians.”