Raleigh, N.C. — The proposed $22.34 billion state budget is one vote away from heading to Gov. Pat McCrory after the House voted 92-23 Thursday for preliminary approval of the spending plan.
The compromise budget, which was negotiated over the past three weeks, cleared the Senate on Wednesday.
The measure increases teacher salaries by about 4.7 percent on average, which backers said would push the average salary over $50,000. Other state workers would get a 1.5 percent pay increase under the plan, plus a 0.5 percent bonus, while state retirees would get a one-time 1.6 percent increase to their pensions.
"We have a strong tradition of investing in human capital ... and the people of this state," said Rep. Nelson Dollar, R-Wake, the chief budget writer in the House.
The budget also increases the personal exemption, income on which North Carolinians pay no taxes, by $2,000 for joint filers and $1,000 for single filers by the end of 2017. It also increases funding in the state reserve, or "rainy day," fund to a record 7.5 percent of the state budget.
Dollar said the income tax cut "gives solid tax relief to working families and the middle class," while the deposit in the reserve fund is a "prudent investment."
A number of Democrats praised some of the provisions in the compromise, but they said the budget doesn't go far enough.
"We can do better. I know we can," said Rep. Verla Insko, D-Orange, who criticized cuts to state support of child care programs and the impact that would have on working parents.
"We're taking for granted who we represent," said Rep. Larry Hall, D-Durham, who compared the $74 million earmarked for projects in the districts of powerful GOP lawmakers to a popular talk show.
"It's almost like the Oprah (Winfrey) show. You got an earmark, and you got an earmark, and everybody's got an earmark – if you're in the right position in the hierarchy," Hall said.
Reps. Gayle Adcock, D-Wake, and Pricey Harrison, D-Guilford, expressed disappointment that the budget includes a provision that continues to delay regulations designed to limit nutrient-laden runoff into Falls Lake and Jordan Lake.
Rep. Chuck McGrady, R-Henderson, agreed with them that rolling back the regulations "is probably not the right thing to do," but he said the Senate wanted to push it even further, and the provision in the budget was the best compromise the House could get.
Even as they said teacher raises were long overdue, Reps. Rosa Gill, D-Wake, and Marvin Lucas, D-Cumberland, said more educators should be eligible for the bonuses now reserved for third-grade reading teachers because more people are involved in getting students reading at grade level by the time they finish third grade.
"If you have a good reading program in a school or a good anything, it's going to be because you have some good people in the central office making it happen," Lucas said.
Rep. Mickey Michaux, D-Durham, said accelerating the increase in the personal exemption from the four years in the House version of the budget to two years in the final compromise would lower state revenue by $300 million over the next two years, while Rep. Paul Luebke, D-Durham, questioned the premise of shifting the tax burden from income taxes to sales taxes.
Luebke noted that millionaires have seen their income taxes cut by an average of $36,300 because of tax cuts in recent years, while working families have seen practically no benefit because they're paying more in sales tax than they have gotten back in income tax refunds.
"This isn't right. This is tax unfairness," he said.
Rep. John Szoka, R-Cumberland, said Democrats were "playing games with numbers," noting the expanded personal exemption will help middle-class families. Rep. Paul Stam, R-Wake, added that Democrats repeatedly increased sales taxes when they controlled the legislature.