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Double-digit raises for teachers, some other state workers: See what's in the first draft of new NC budget

Clean water, better roads and raises for teachers are among the priorities Republicans in the NC House want to address in the new state budget.

Posted Updated

By
Will Doran
, WRAL state government reporter

All state employees would get a minimum 7.5% raise over the next two years under a budget proposed Wednesday by Republican leaders in the state House.

Their budget plan would also fund school safety improvements and economic development projects, while keeping previously approved tax cuts on track.

North Carolina has a large budget surplus this year, as well as massive shortages of teachers and other state workers. Some government agencies have reported as many as one in every four or five jobs vacant. As of February there were 5,000 unfilled teaching jobs statewide. So a big focus in the budget it using that surplus to try to address those workforce issues.

"North Carolina is in an amazing position," House Speaker Tim Moore said, referring to the state's strong financial position.

Teachers would receive an average 10.2% raise over both years of the proposed budget, which covers the 2023-24 and 2024-25 school years.

Retired state workers also get attention in the budget, with a permanent 1% increase to their pensions, not just the one-time bonuses that previous budgets have given them.

It also contains several policy changes that are unrelated to state finances but have broad support among Republicans — such as forbidding COVID-19 vaccine mandates, and banning multiple types of policies that some environmentalists view as a key tool in fighting climate change, like cap-and-trade rules.

"It prevents this state from going down a failed energy policy that raises rates and reduces reliability," said Republican Rep. Dean Arp, who wrote some of the budget language banning various pro-environmental policies.

The budget also focuses heavily in community colleges in particular, with a number of various new policies and grants. GOP leaders said North Carolina needs to produce more skilled workers, like nurses and welders, to help companies that are already here as well as to keep attracting new businesses to the state.

"There's just so many jobs coming in, and not enough people to work those jobs," Moore said.

This isn’t the final budget — GOP leaders in the state Senate may have different plans, which could lead to negotiations later this spring or summer. That means some of the numbers on raises and other parts of the budget could still change in either direction.

It is, however, a starting point that shows what at least one of the legislature’s two chambers plans to support.

On Thursday the House plans to let lawmakers propose budget amendments, many of which will likely be aimed at specific programs or grants. It’s shaping up to be a much quicker process than in recent years, when budgets have sometimes not passed until well into the fall. The House plans to vote on its budget plan next week, perhaps as early as April 5.

If the Senate makes changes to what the House passes, the chambers’ leaders will then hash out a final deal to send to Democratic Gov. Roy Cooper, who released his own budget proposal this month.

More details on raises

The House’s proposed 10.2% average teacher pay raise is significantly less than the 18% average raise for teachers that Cooper suggested in his own budget proposal.

But it’s also more than Republican leaders have typically proposed for teacher raises in the last decade, as North Carolina has fallen to among the worst-paying states in the country for teachers.

"That is huge," Moore said of the proposed 10.2% raise. "That's just — I don't know that we've ever given this large of a raise before."

Some of the other government jobs that would see higher salary increases include hard-to-fill roles in state prisons and law enforcement, including 11% raises for members of the Highway Patrol.

The State Employees Association of North Carolina, or SEANC, criticized the fact that the budget would single out specific types of jobs for bigger raises than others, and that recent raises in general haven't kept pace with inflation.

"The General Assembly calls state employees 'heroes' when we care for North Carolinians during the pandemic, clean up and restore communities after hurricanes, floods and snowstorms and die at the hands of inmates in an understaffed prison," Ardis Watkins, SEANC's executive director, said in a written statement. "But when legislators write a budget that doesn’t keep up with inflation and assigns state employees a lower level of importance than other public servants, they are calling us expendable."

In addition to the 7.5% across-the-board raises, state agencies would also get additional pots of money to dole out in extra raises as they see fit. That’s intended to help agency heads address hard-to-fill jobs, such as those facing competition from similar but higher-paying private sector jobs. Also on Wednesday, the House voted nearly unanimously to pass a bill aimed at addressing the state worker shortage by removing college degree requirements for some jobs.

Other parts of the budget plan focus on helping community colleges train more workers for skilled trades. And public universities and community colleges would also get money to spend on faculty retention, at the discretion of campus leadership.

For retirees, the recent use of bonuses rather than raises for their pensions has frustrated many, who say their retirement pay hasn’t kept up with the cost of living. Conservative leaders, however, have typically viewed permanent pension raises as fiscally irresponsible. So it remains unclear if the proposed raises in this budget plan will survive future negotiations.

This year the state has a multibillion-dollar budget surplus. Plus the government will receive $1.8 billion over the next two years from the federal government in exchange for expanding Medicaid — a bill Cooper signed into law this week.

The House budget suggests holding onto much of that $1.8 billion for the future, in case of a pending recession or other financial pressures on the state. But the budget does propose using several hundred million from the Medicaid expansion money on a number of projects — mostly one-time grants related to public health and safety measures.

School safety, infrastructure and more

The budget proposes spending $1 billion per year on infrastructure to improve the state’s water and sewer access, among other projects.

There’s also an extra $1 billion for transportation projects, plus $400 million for other economic work — most of it aimed at creating new “megasite” properties around the state, which are turn-key tracts designed to be ready for companies that want to relocate or expand in the state.

"It's exciting when you're in a state that continues to grow," said Republican Rep. Jason Saine.

North Carolina has no more megasites because they’ve all recently been claimed for massive new factories, like a VinFast electric car plant coming to Chatham County and a Toyota electric car battery plant southeast of Greensboro. Both are planned to come online in 2025.

The budget also proposed an additional $40 million for school safety. That could be used for active shooter training programs or for physical improvements like locks, fences and cameras.

On the clean water front there’s also money for the Department of Environmental Quality to address PFAS and other chemicals in the state’s waterways that have recently received increased attention to their health risks.

But environmentalists won’t like other parts of the budget, like plans to undo two of Cooper’s executive orders. One of those orders was aimed at cutting down on pollution from trucking; the other sought stronger regulations on greenhouse gas emissions.

Tax policy changes

Cooper and legislative Democrats have strongly criticized Republicans’ plans to eliminate corporate income taxes by 2030. The House budget proposal keeps that in place but also doesn’t speed up the cuts even more, as some conservatives had called for. It also eliminates the corporate franchise tax.

The state’s personal income tax was already set to gradually drop from its current 4.99% rate to 3.99% in 2027. The budget proposal would largely keep that on track but would speed up one step along the way.

Additionally, the House wants to increase the child tax deductions that parents receive by 20%, and reinstate the adoption tax credit that Republicans got rid of to help pay for broader tax cuts in years past. The budget would also make the tax credits permanent that developers can now sometimes receive for rehabilitating historic buildings.

In all the proposed tax changes would shrink the state budget by about $650 million over the next two years, on top of the already-approved tax cuts.

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