State retirees to get 'paltry' bonus checks

State retirees haven’t had a substantial cost-of-living adjustment, or COLA, since before the recession, and House Bill 231 wouldn't change that. Instead, it’s a one-time bonus of 0.5 percent this fall and again in 2020.

About 216,000 retired workers are in the state's defined retirement system. Their average pension is only about $21,000, so the bonus works out to about $105 each year. The cost of the bonus is about $25.5 million per year.

"Is that the best we can do for retirees, and making it a one-time bonus and not a recurring cost-of-living adjustment?" asked Sen. Erica Smith, D-Northampton. "It seems a little bit paltry to me.”

Sen. Harry Brown, R-Onslow, responded that it was the bonus included in the vetoed budget, "and that's what we're moving forward with today."

Brown said lawmakers were advised that a 1 percent recurring increase for state retirees amounted to an additional $500 million liability for the state pension fund, so a recurring increase "wouldn't be prudent."

Smith noted that the consumer price index has risen 18 percent since the recession.

"What is patently clear from this discussion and the responses is that retirees are treated like a liability, and not like a priority, which they should be," she said. "Year after year after year, we have budget surpluses. We are not doing enough for our retirees. We can do better than this. We owe them better than this."

"Many of them are relying on surplus food lines," agreed Sen. Joyce Waddell, D-Mecklenburg, a retired educator. "Many are forced to decide, 'Should I buy medicine or food?' And it shouldn’t be that way."

"Conversations can continue, and we’ll take a look at some things, maybe the issues you just brought up," Brown responded. "But it’s obvious to me and several others in here that the governor is not going to support any budget unless it has Medicaid in it, and that’s unfortunate."

Sen. Rick Horner, R-Nash, said he’d like to do more for retirees, but he said the budget standoff with Gov. Roy Cooper makes that unlikely.

"I’m not going to vote against this as opposed to nothing, and lack of any discussion, that amounts to anything," Horner said.

The bill passed the Senate on party lines, 27 Republicans in favor and 21 Democrats against. It now goes to the House.

Just moments before that vote, the Senate voted 47-3 for a measure that would raise the standard deduction slightly, lowering tax bills for individual payers.

Another bill that cleared the Senate 32-18 would reduce the franchise tax on businesses and boost the film grant program.

"The franchise tax is a job-killer," Sen. Paul Newton, R-Catawba, said during Tuesday's floor debate on the bill, noting that only 16 states collect it. "It punishes companies for investing capital in the state."

"Is that our message to business – come here so we can tax you?" said Sen. Ralph Hise, R-Mitchell.

Sen. Floyd McKissick, D-Durham, said there's no evidence that cutting the tax would boost investment in the state. He said the state can't afford to keep cutting its business taxes.

According to legislative staff, the two bills combined will cost the state $152 million in revenue in 2020-21, increasing the next year.

Sen. Jeff Jackson, D-Mecklenburg, said that money would most likely be cut from education funding, based on the way the state budget is constructed. If the GOP wants to do away with the franchise tax, he said, they need to discuss other ways to make up that revenue so schools don't lose out."

Sen. Wiley Nickel, D-Wake, said Wednesday that it was "premature" to cut taxes before a final spending plan is ironed out.

"These tax cuts will likely take away money from public education or COLAs for retirees," Nickel said. "I don't see how we can put the cart before the horse here."