@NCCapitol

@NCCapitol

NC to have working budget for first time in 2-plus years; Cooper to sign lawmakers' proposal

Posted November 16, 2021 12:05 p.m. EST
Updated November 16, 2021 6:54 p.m. EST

— Gov. Roy Cooper said Tuesday that he'll sign the state budget working its way through the North Carolina General Assembly this week, breaking a logjam that kept the state from having a full budget plan to work from since 2019.

Cooper called the $25.9 billion spending plan Republican legislative leaders rolled out Monday "imperfect," but he said he feared GOP leaders would walk away from negotiations if this budget fight doesn't come to an end, stranding a raft of priorities included in the plan.

"I will sign this budget because, on balance, the good outweighs the bad," Cooper said at a news conference that began shortly before the state Senate took the first of several votes needed to finalize the budget by Thursday. "Our schools, our communities, our small businesses [and] our families need our help right now."

The Senate debated the spending plan for less than an hour before giving it preliminary approval by a 40-8 vote.

Lawmakers and the Cooper administration have negotiated on the budget for weeks behind closed doors. The talks produced more spending on education than either the House or the Senate included in their earlier proposals, as well as $800 million in school construction funding, but the education funding still fell short of Cooper's goal.

"It is the barest of the bare minimum," Tamika Walker Kelly, president of the North Carolina Association of Educators, said of the increased funding for schools. "This was a missed opportunity to invest in our public schools."

Teachers and state employees would receive 2.5 percent average annual salary increases under the budget, as well as multi-tiered bonuses that give most state workers another $1,500 and teachers up to another $2,800. Hourly salaries for non-certified school employees would go up to $13 an hour this year, then to $15 in the 2022-23 fiscal year.

"This budget does not respect our educators in a way that makes them feel appreciated at all," Walker Kelly said.

But the budget won't expand Medicaid health coverage to thousands of low-income working adults, which has been a priority for Cooper for years.

Cooper also criticized tax cuts in the plan, including a complete phase out for the corporate tax cut, which wouldn't begin until 2025.

The governor said he has the votes to sustain a veto in the state Senate, which would have blocked the budget proposal. But North Carolina law has a provision that simply continues funding state government at the previous year's levels if a budget doesn't pass by July 1 of each year, allowing Republicans to step away from negotiations or pass a series of "mini-budgets" on non-controversial issues without shutting down state government.

Cooper said there's too many things in the budget "that we must seize now” and they would “evaporate” without his signature. Cooper ticked off some of the things he likes:

  • $1 billion to expand broadband around the state
  • A new $500 million fund to help businesses still recovering from the pandemic
  • Large investments in water and sewer infrastructure
  • Funding boosts for colleges, including HBCUs

Senate Minority Leader Dan Blue echoed the governor's sentiments in remarks on Senate floor.

"I had higher hopes for this budget, both in the process and in the end result, but I know what the reality of compromise is," said Blue, D-Wake. "We could do better than this, but a lot has been accomplished in the budget at the end of the day."

Republican leaders agreed in the budget to discuss Medicaid expansion next year, assigning a study committee to the issue in the interim. Cooper called that "some progress" but said "real action remains painfully overdue." A coalition of hospitals and other health care groups called for him to veto the budget over Medicaid expansion, which seemed to have enough support this year to clear the state Senate, but not the House.

Blue, the only Senate Democrat to debate the budget on Tuesday, said Medicaid expansion has been studied enough and that all stakeholders are aware of the impact it could have in North Carolina. He also criticized the tax cuts in the plan, saying they create a "structural deficit" that could hamstring lawmakers in future years as they try to fund needed services.

Sen. Paul Newton, R-Cabarrus, said lowering the individual income tax rate and increasing the standard deduction means 99 percent of North Carolinians will pay less in taxes – or no income taxes at all – starting next year.

"With inflation on the rise, which disproportionately hurts those who can barely make ends meet, there could not be a better time to ease the financial burdens on North Carolinians, especially low-income North Carolinians," Newton said.

Cooper predicted some parts of the budget will fall apart in court. Republican lawmakers pasted in a pair of policy items, with some tweaks, that the governor has already vetoed. One would prevent the attorney general from settling lawsuits involving House and Senate leadership without their consent. Another limits a governor's ability to shut down large swaths of the economy, or order other statewide emergency measures, via executive order.

Cooper also said he believes state courts will force the state to spend more on K-12 education through the ongoing Leandro lawsuit.

“Courts got this right, legislature did not," he said. "They made some progress, but I do believe that the court will order more funding.”

The budget includes a new $100 million program to boost teacher salaries in nearly all North Carolina counties. The idea is help counties that can't afford large teacher salary supplements, with a formula taking into account the local tax base and median household income.

Because the program will operate in all but five of the state's counties – Wake, Mecklenburg, Guilford, Durham and Buncombe – some Democrats, including Blue, complained that it leaves out urban areas where Democrats live.

Blue noted that Wake County has more than 170,000 people living below the poverty line who can't easily afford the property tax increases needed for the school district to make up for being left out of the program. He asked from the Senate floor why several other counties with high per capita income levels weren't left out as well, suggesting it's because Republican lawmakers represent those areas in the legislature.

"[You] came up with another formula simply to get these five counties, and that's unfair," Blue said. "Each time, you figure out a different way to basically do 'in your face' to these urban counties."

Senate President Pro Tem Phil Berger rejected the claim that the GOP majority was targeting Democratic districts.

"This budget funds education in ways and amounts that are unprecedented," said Berger, R-Rockingham.

His office said the goal of the program was "to help the lower-wealth counties compete, not to take tax dollars from poorer counties and send it to richer counties."

"This is the best budget rural North Carolina has ever seen," agreed Sen. Danny Britt, R-Robeson.

Cooper told reporters he wouldn't have written the supplement program the way it was, but he acknowledged a key issue in the Leandro case is helping poorer, more rural, counties compete on teacher salaries.

"We've tried to cover as much as we could [in this budget] and touch every life in this state and make it better," said Sen. Brent Jackson, R-Sampson.

WRAL anchor/reporter Chris Lovingood contributed to this report.

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