NC House gives initial OK to budget plan

Budget writers came into the process with an unprecedented state surplus of more than $6.5 billion, plus billions more in federal COVID relief funds.

Republican leaders touted the historic level of spending in the budget, including more than $1.6 billion in water and sewer infrastructure funding, as well as personal and corporate tax cuts totaling some $8.6 billion dollars over the next five years.

"This historic budget is transformative and fully funds the vision of a good North Carolina for all citizens," said Rep. Dean Arp, R-Union.

"Amazing work here," seconded Rep. Pat McElraft, R-Carteret. "And it wasn't all with federal funds, either."

Democrats, however, said the bill has the wrong priorities.

Earlier Wednesday, House Minority Leader Robert Reives said it contains some good provisions, but "falls woefully short of where we need to be" in spending on education, clean energy and economic development.

"This isn’t a time to be figuring out ways to help out-of-state corporations save money," Reives, D-Chatham, said. "That money needs to go into investment in different communities here."

Rep. Gale Adcock, D-Wake, blasted House Republicans for not only failing to expand Medicaid, but even cutting Medicaid funding to find millions for pet projects "by increasing Medicaid office co-pays by 33 percent, and at the same time lowering reimbursements to the providers who care for Medicaid patients."

"We had to make some difficult choices," conceded Health budget-writer Rep. Larry Potts, R-Davidson.

Rep Julie von Haefen, D-Wake, said the education budget covers only about 48 percent of that court's order.

The Leandro ruling, von Haefen said, "represents the bare minimum of what our state should be doing for our students across the North Carolina to provide a sound basic education to our students. Not a world-class education, just a basic one."

"We are failing our public schools, not the other way around," agreed Rep. Cynthia Ball, D-Wake. "And this budget exemplifies our chronic underfunding of every aspect of education."

Republicans said education funding and teacher pay are substantially increased under their plan, but said it's also important to build up the state's savings account.

N.C. House proposal includes average 5.5% raises for teachers, 5% for other state employees

"Fiscal discipline and responsibility ensures our future," said chief budget writer Rep. Donnie Lambeth, R-Forsyth.

House Speaker Tim Moore left the dais to come to the floor and defend the budget, saying the vote should be “120 to zero" and chastising Democrats for complaining that education funding is insufficient.

"I don't know when's enough, then,” Moore, R-Cleveland, said. “This is the most money we've ever spent."

Rep. Amber Baker, D-Forsyth, countered that Democrats first saw the massive budget bill two days ago, and said it’s offensive to be told “take this budget, be glad about it.”

“So if we choose not to vote on it today, maybe the next time, you include us in this process,” Baker said. “But to shove it down our throats simply because you wrote it and you’re telling me it’s good, that’s not the way to do things.”​

"When is good enough not good enough?" asked Rep. Brandon Lofton, D-Mecklenburg. "Of course it's when the stakes are too high."

As the debate stretched on for hours, many Republicans simply left the chamber, while Democrats lamented the empty seats.

State workers would receive a 5 percent raise over two years. Nearly all workers would get some bonus from federal ARP funds and unused funds earmarked for school performance bonuses.

The House's proposed salary increases are more generous than the Senate's, where leaders proposed just 3 percent over two years across the board.

However, the proposal does not include a permanent cost of living increase to retirement pensions, which Rep. Raymond Smith called "a slap in the face to all of our state employees and our retirees." Retirees would instead get a one-time bonus of 2 percent for this year and next year.

Republican budget-writers said they're waiting for more guidance on the affordability of permanent increases from the board that oversees the state's pension fund.

The House's tax cut package is more modest than the Senate. It would lower the individual tax rate by one-quarter of one percent, increase the standard deduction to match the federal increase in that amount, and cut corporate taxes by half a percent over the next few years.

Reives and other Democrats warned that cutting $8.6 billion from state revenues over the next five years could lead to problems meeting the state's future needs.

"We’re so flush with money right now, we kind of feel like, "Oh, we’re in great shape." That’s not true," Reives said. "We’ve got money left over from the fact that we didn’t come to a budget agreement [for the past three years]. We’ve got American Rescue Plan money coming in. But what happens when we get back to our normal cycle on money?"

Republican leaders said the state's tax revenue is stable enough to cover the tax cuts without endangering the state's ability to meet its responsibilities.

Reives said this is "one step in the process." Once the House finalizes its budget Thursday, their plan will go back to the Senate, and the two chambers will have to work together with Governor Roy Cooper to negotiate a compromise deal, something they haven't managed to make happen since 2017, the last time Republicans held veto-proof majorities in both chambers.

"Do we want to go two more years without a budget? an emotional Rep. Pat Hurley, R- Randolph."It's time we wake up. Life is too short. I have lost six friends in the last month."

"There's no red line," Reives said of the upcoming talks. "I do believe everyone we're talking to understands the meaning of the word 'compromise.'"