Leaders in the state Senate on Monday unveiled a tighter budget plan than the House passed last month – outlining plans for a 2 percent spending increase that totals $21.47 billion and sets up what could be a spirited, and protracted, debate about the state’s spending.
By contrast, the $22.2 billion House budget would increase spending by about 5 percent. It also featured industry-specific tax credits and state employee raises that the Senate isn’t including in its plan, which will be the subject of discussion and expected votes this week.
Senate Majority Leader Harry Brown, a lead budget writer, said 2 percent is a more appropriate spending increase.
“With a prudent overall increase of about 2 percent, our plan keeps state government spending in line with population growth and inflation, and comes within less than a quarter-percent of the governor’s budget,” Brown said.
Gov. Pat McCrory had proposed his $21.52 billion in early March, when the state was facing an expected revenue shortfall.
But new revenue projections forecast a $400 million surplus for the current fiscal year, which allowed the House to propose higher spending levels when Republicans in that chamber developed a budget plan last month.
Brown, however, voiced confidence that a 2 percent increase can adequately cover the state’s needs.
“The Senate is proposing a balanced budget that protects the state’s long-term fiscal health, smartly invests in public education and core priorities, cuts taxes and promotes job growth and economic development statewide,” he said at a news conference Monday.
Instead of offering a 2 percent raise for all state employees, the Senate would fund targeted raises for hard-to-fill and hard-to-retain positions in state government. “We feel like before you can do an across-the-board raise, you need to get the imbalance in pay taken care of first,” Brown said.
The Senate agrees with the House and McCrory on plans to raise the starting teacher salary to $35,000. Brown estimates that teachers would, on average, see a 4 percent raise – although newer teachers would see the biggest hike.
The Senate would also spend less on textbooks and digital curriculum resources, allocating $29 million instead of the $73 million in the House plan.
Democrats say they’d already had concerns the House budget wouldn’t spend enough on education and core services.
“We ought to be a lot closer to pre-recession funding for things like textbooks,” said Sen. Terry Van Duyn, an Asheville Democrat. Van Duyn said the Senate’s lower allocations mean it’s less likely that Democrats will vote yes – as many did during the House budget process.
In addition to differences over how much to spend, the House could find fault with sweeping changes to the tax system and Medicaid that have been added to the Senate budget.
The Senate’s budget includes a variety of tax and economic development provisions featured in a bill unveiled last week. They include lower personal income tax rates, a change in corporate taxes, a new formula for distributing sales tax revenues among counties, and a retooled jobs incentives program.
The Senate also would adopt an increase in DMV fees – of 20 percent versus the 30 percent outlined in the House plan.
And the Senate wants to transfer Medicaid to an outside agency overseen by appointees from the House, Senate and McCrory.
That all sets up a lengthy coming debate, much of it held in closed-door conference committees between House and Senate leaders. If no agreement is reached by June 30, both chambers will need to pass a temporary spending plan to keep the government running.
The likelihood of a disagreement prompted sarcasm from Senate leader Phil Berger during Monday’s news conference.
He joked that when the Senate passes its proposal – expected on Thursday or Friday – it will go to the House “where we expect a grand reception and substantial support.”
Younger teachers would see bigger raises
The Senate budget proposal would raise teacher pay and hire more teachers statewide to reduce class sizes in early grades, while cutting the equivalent of 13,881 teacher assistant positions.
The proposal, unveiled Monday, would lift teacher pay an average of 4 percent, aiming the largest increases to early career teachers. Starting pay would rise from $33,000 to $35,000.
Teacher assistants are focused on early grades, but Senate leaders say reducing classes would be the best way to help teachers. Class size in grades 1 through 3 would be brought down to 15 per teacher by 2017; in kindergarten, class size would be trimmed to 17 in two years’ time.
Republican Sen. Chad Barefoot said the total new spending in public schools would be $453 million in the next two years.
“What we’re doing is we’re drastically reducing classroom sizes in grades K-3 and increasing teacher salaries, and also increasing the allotments we have for textbooks and digital resources in the classroom,” he said.
The Senate plan would add 2,000 teachers in the coming year.
Under the Senate plan, increases for teachers are as follows:
▪ Teachers with up to four years’ experience would be paid $35,000, up 6 percent.
▪ Teachers with five to nine years’ experience would be paid $38,250, up 4.8 percent.
▪ Teachers with 10 to 14 years’ experience would be paid $41,250, a 3.1 percent increase.
▪ Teachers with 15 to 19 years’ experience would be paid $44,250, a 1.7 percent increase.
▪ Teachers with 20 to 24 years’ experience would be paid $47,000, an increase of 1.1 percent.
▪ Teachers with 25 or more years of experience would be paid $50,000, which is no increase.
The Senate would fund a “step” increase, too, which means that teachers would advance a year on a system that determines pay. Under that system, the biggest raise under the Senate plan would go to a current teacher with four years experience (making $33,000 per year) who steps up to the fifth year at $38,250, an increase of 16 percent.
The Republican-led legislature has made large cuts in the number of teacher assistants in the past several years. The new proposal would reduce money for teacher assistants by $57.5 million next year and $166 million the year after. But the Senate would spend $80 million in 2015-16 on class size reduction and $193 million the following year.
The plan passed last month in the state House would not cut teacher assistants. The Senate plan will now become a negotiating point as lawmakers in the House and Senate look to resolve differences and adopt a budget for the fiscal year that begins on July 1.