Raleigh, N.C. — State lawmakers have negotiated a $23 billion spending plan for 2017-18 that includes raises for teachers and state employees, a cost-of-living adjustment for retirees and tax cuts for individuals and businesses.
Details of the proposed budget won't be available until late Monday or Tuesday morning, but House and Senate leaders said they expect to approve it by the end of the week. The new fiscal year starts July 1.
The compromise, which has been negotiated behind closed doors over the past two weeks, spends slightly more than the $22.9 billion plans passed by the House and the Senate over the past month.
Following are some of the highlights:
- A 3.3 percent average raise for teachers, and a 9.6 percent average raise over the next two years. Meanwhile, principals and assistant principals would see their salaries go up by 8.6 and 13.4 percent, respectively, over two years.
- A $1,000 raise for all other state employees
- Three bonus days of leave for all teachers and state employees
- A permanent 1 percent cost-of-living adjustment for state retirees
- Adds $363 million to the state's "rainy day" reserve fund, bringing the total to nearly $1.84 billion, which tops the statutory requirement of having 8 percent of annual spending in reserve
- Personal income tax rates would drop from 5.499 percent to 5.25 percent in 2019
- Corporate income tax rates would go from 3 percent to 2.5 percent in 2019
- The standard deduction, the amount on which people pay no income tax, would go from $16,500 to $20,000 for married couples filing jointly and from $8,250 to $10,000 for individuals in 2019.
- Another $100 million for Hurricane Matthew relief
- $27 million to add 3,525 slots to North Carolina Pre-K, which legislative leaders said would wipe out 75 percent of the current waiting list for the pre-kindergarten program
- $100 million in state lottery funds to help rural school districts with their construction needs. The state would match local funds on a 3-1 ratio.
- $10 million for treatment programs statewide to address the growing opioid addiction problem
- A provision to no longer try all 16- and 17-year-olds as adults by the end of 2019, including money for planning for the move and to construct more juvenile detention facilities
- An additional $320 million for the Strategic Transportation Initiative highway-building program over two years
Senate President Pro Tem Phil Berger said the budget includes many of the same funding priorities Gov. Roy Cooper included in his $23.5 billion budget proposal – higher teacher salaries, more spending on health care, an investment in economic development and increased public safety, all without raising taxes.
"We call on Gov. Cooper to support this plan that achieves what he has said are important priorities for our state," Berger said.
Cooper doesn't appear to be budging from his earlier stance that lawmakers are underfunding education and other priorities by giving businesses another tax cut.
"While we wait for details, the budget outlined by legislative leaders continues to shortchange education, economic development and middle-class families in favor of more tax giveaways that help the wealthy and large corporations. Those are the wrong priorities," Cooper spokesman Ford Porter said in a statement.
Rep. Nelson Dollar, R-Wake, the chief budget writer in the House, said certain funds, such as those put in reserve, cannot be used for salaries. Also, large jumps in annual spending aren't sustainable, he said, so lawmakers wanted to limit that.
"When you came to the Great Recession, the state was in just a horrendous situation, and we never really want to be there again," Dollar said. "You do have to be responsible with that and look to the long term."
Berger added that lawmakers don't want to have to make budget cuts in the next economic downturn. "The promise we make to the teachers is a promise we can keep," he said.