State budget cuts income taxes, raises teacher and state worker salaries

Posted June 27, 2016
Updated July 7, 2016

— House and Senate budget negotiators say they have crafted a $22.34 billion state budget that cuts personal income taxes and raises salaries for both teachers and state employees.

"It continues the commitment made by Republican state leaders to dramatically raise teacher pay," Senate President Pro Tem Phil Berger said Monday night.

Although documents laying out the budget deal aren't expected to be available until close to midnight, Berger, House Speaker Tim Moore and other legislative leaders provided an overview during a 7 p.m. news conference. Overall, the budget represents a 2.8 percent increase in spending over the current fiscal year.

The final budget, they said, adopts a Senate plan to expand the personal exemption, income on which North Carolinians pay no taxes. For a couple who are married filing jointly, that personal exemption expands from $15,500 to $16,500 for the current tax year and then to $17,500 for the next tax year.

Meanwhile, the final budget looks more like the House proposal, granting salary increases to both teachers and state workers.

Average teacher salaries will rise about 4.7 percent, lawmakers said. Counting local supplements, the average teacher salary in North Carolina will rise to more than $50,000 this year and top $54,000 over the next three years. According to a salary schedule provided by budget writers, every teacher in the state would get a raise under the bill.

All state workers would get a 1.5 percent pay increase under the plan, plus a 0.5 percent bonus. The budget also sets aside a merit pay fund equivalent to 1 percent of state worker salaries that will be distributed based on performance.

"Some individuals will receive more than 1 percent; some will receive less than 1 percent," House Budget Chairman Nelson Dollar, R-Wake, said. "Those rules will be finalized and revised by the state Human Resources Commission."

State retirees will not get a cost of living increase, but instead will see a 1.6 percent one-time bonus. This is a compromise between House members, who wanted a cost of living increase, and Senators who said a permanent rise in pension benefits would be too costly.

Berger said he expected senators would take the first of two votes on the budget Tuesday. Moore said the House tentatively planned to vote on Thursday and Friday, but that schedule could move up to Wednesday and Thursday votes if Democrats agree to the change.

Presuming both chambers approve the budget, it would next go to Gov. Pat McCrory for his signature or veto. The new budget year starts Friday.

Here are other items included or otherwise settled by the state budget:

YEAR ROUND SCHOOLS: A provision that would have forced dozens of single-track year-round schools throughout the state, including several in Durham and Wake counties, to change their calendars has been deleted from the final version of the budget. "It's out," Berger confirmed Monday.

EDUCATION: The budget does include a bonus program for third-grade teachers whose students excel on state-mandated reading tests. A third-grade teacher who has students with the top marks for the state and their district can earn up to a $6,800 bonus under the plan, according to Senate Budget Chairman Harry Brown.

UNIVERSITIES: The budget keeps language that freezes tuition for undergraduates during their four years in the University of North Carolina system. It also moves forward with a plan to create a $500 per semester in-state tuition plan at three schools: UNC-Pembroke, Western Carolina University and Elizabeth City State University. Tuition for out-of-state students would be $5,000 per year.

While the initial plan for a lower tuition rate had proved controversial, lawmakers said that several schools came to them asking to be part of the plan. The lower tuition, proponents say, will help shore up enrollment at less attended schools.

"I think the decision was that Elizabeth City State was the one that could benefit the most," Berger said.

FERRIES: A provision in the state budget will specify that ferries that are currently tolled will remain tolled, but routes that are not tolled will remain free, according to Rep. John Torbett, R-Gaston. The House version of the budget would have eliminated ferry tolls, while senators have pushed to expand tolling.

Torbett said the budget includes money to repair ferries and to buy a new passenger ferry that will operate between Hatteras Island and Ocracoke Island.

WRIGHT SCHOOL: The budget does not include a cut to the funding for the Wright School in Durham, which works with students who have emotional and behavioral disorders.

"It's fine," Dollar said of the school's funding.

ZIKA: The budget puts $500,000 into a Zika virus prevention program.

JORDAN LAKE: Berger and Moore said that a compromise had been reached on the cleanup of Jordan Lake. Senators had wanted to roll back rules that would curb pollution washing into the lake from communities in the Triad.

Rep. Chuck McGrady, R-Henderson, one of the House budget chairmen, said plans that would have relied on freshwater mussels or delayed cleanup dates have been taken out of the bill.

MENTAL HEALTH: The budget provides funding for an additional 250 "innovation waiver" slots for people with developmental disabilities. That funding helps those individuals live outside of institutional settings.

Dollar and Brown said the budget provides $20 million of the $30 million boost McCrory sought for mental health and substance abuse funding.

According to a news release, the budget also will use proceeds from the sale of the Dorothea Dix property in downtown Raleigh to pay for "services for the mentally ill, including $2 million to establish child facility-based crisis centers and $18 million to expand inpatient behavioral health beds targeting rural areas."

SAVINGS: The budget creates a $10 million disaster relief fund and boosts the state's rainy day fund by nearly $475 million, which will give the state a savings reserve equal to about 7.5 percent of its annual budget.

NOT IN: Budget writers said they did not include provisions regarding hot-button topics such as House Bill 2, certificate of need programs or other major policy items that weren't in either version of the budget.


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  • Elizabeth Hawkins Jun 28, 2016
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    I'm a bit concerned that the General Assembly did not think us Retirees deserved a cost of living increase like the teachers and active state employees did. It is no different for me to go to grocery store, buy a loaf of bread, and still pay the same price for the same loaf that the person in front of me paid and the one behind will pay for theirs. Makes me sad cause we are all equal in living expenses for the most part.

  • Gerald Pettiford Jun 28, 2016
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    View quoted thread

    Yes it is. The tax foundation is a known conservative think tank just like heritage foundation.

  • Teddy Fowler Jun 28, 2016
    user avatar

    Some of you naysayers are a sad bunch.... sometimes you just have to give credit when it's due no matter what your politics are.....

  • Abby Winter Jun 28, 2016
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    I hope that was sarcasm. Doesn't anyone remember when they cut teacher pay and benefits a couple of years ago. This is all just a stunt by the NC legislature so that they can pad their re-election campaigns with sound bites about how they stand behind the teachers and state employees by finally giving them a raise. clap clap pats on back

  • Shandy Scott Jun 28, 2016
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    So an organization that gathers tax data from each state and than ranks each state based on the data obtained from each state is bias. A true LOL!!!

  • Mary Meadows Jun 28, 2016
    user avatar

    Is it really a tax cut if taxes were horribly increases so that virtually everyone owes state taxes at tax time and then they decide to give a tax cut? I bet the tax cut still doesn't return taxes to where they were prior to the massive increase that took place. It was hidden under the guise of "making it so much simpler to do your taxes". Sure was. They took away virtually all deductions.

  • Charlie Watkins Jun 28, 2016
    user avatar

    God Bless Governor McCrory and the GOP for working tirelessly to help all North Carolinians. Lowering taxes and raising the pay of teachers and state employees is a blessing indeed.

    Thank you! And Bless You All.

  • Chester Flippo Jun 28, 2016
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    We[u] are[/u] arguing about shifting tax burdens, specifically that the burden has shifted to people that educate our children and the middle class while the rich have shed their public responsibility. Overall means nothing if the benefits go to the few.

  • William James Jun 28, 2016
    user avatar

    The 3 Campus Tuition Cap has 0% chance of bettering or strengthening the academic or fiscal success of these campuses. Rather, it will encourage weak students better suited for community colleges to enroll, while the stronger students will undoubtedly transfer to name brand colleges that gives them a better chance of getting a solid paying job. Weaker students and those unable to afford to attend elsewhere will remain behind, who inherently more likely to drop out = negative outcome to be counted against the college later. This is simply a long game strategy to build up negative outcome data to later justify closing programs, lay offs, etc opening up this money to programs favored more by state government.

  • Gerald Pettiford Jun 28, 2016
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    The Tax Foundation is heavily bankrolled by the Koch Brothers, who donated $545,000 through the Claude R. Lambe Foundation,[9] a Koch owned "charity"[10] which also funded similar unthink tanks such as the Heritage Foundation, Cato Institute, and Americans for Prosperity before it was dismantled in 2013. I don't think anyone can really trust tax foundation, they are bought and paid for.