Taxes, education and Medicaid expansion: What could be key points in NC budget debate.
It is the first inning of a nine-inning baseball game, also known as the state budget negotiation between North Carolina’s Democratic governor and Republican-led General Assembly.
State Budget Director Charles Perusse, who is part of Gov. Roy Cooper’s administration, used the baseball metaphor Thursday to describe the state of play.
Cooper announced his budget proposal on Wednesday. Now is when the work begins. Key issues over the next few months of discussions are likely to focus on education funding, taxes, state employee raises and perhaps Medicaid expansion.
The Joint Appropriations Committee — the lawmakers who write the state budget — questioned Perusse about the proposal Thursday.
The state budget will come first from the Senate, followed by the House version. Both chambers will vote on a compromise budget before sending it to Cooper’s desk.
Cooper and House Speaker Tim Moore and Senate leader Phil Berger, both Republicans, were at the center of the 2019 budget battle stalemate.
Cooper vetoed the 2019 biennial budget over teacher raises, Medicaid expansion and corporate tax cuts. After a drawn out, months-long, contentious budget fight, the result was no new comprehensive budget at all.
Now, Republicans control both chambers but don’t have the supermajority needed to easily override the governor’s veto.
But leaders have started budget discussions with talk of compromise and not wanting to repeat the same situation. They say they’re hopeful this year’s process will be different.
North Carolina is in a good place financially overall, with more money coming soon from federal coronavirus relief. But the two parties have different priorities about how much money they want to spend and on what.
Here are three issues that could be sticking points this time, and where things stand:
Taxes
In 2019, Republican lawmakers suggested using the state budget surplus to give the taxpayers’ money back to them. But the Taxpayer Refund Act never passed.
This time, Senate Republican priorities include lowering the individual tax rate.
In Cooper’s proposed budget, he called for restoring the Earned Income Tax Credit. He said his plan would help people “on the margins.”
The Earned Income Tax Credit would help about 880,000 low- and-moderate income families, according to his proposal, most with income less than $50,000 a year. He also is proposing a Child and Dependent Care Tax Credit equal to the federal amount that would help about 200,000 families pay for child-care expenses.
Cooper told reporters that he has concerns about “an across the board” income tax cut because it mostly benefits the wealthy, he said.
Republican senators filed Senate Bill 337, Tax Relief and Recovery Act, this week that would reduce the state individual income tax from 5.25% to 4.99%. It would also increase standard deductions and child deduction amounts.
Moore, from Kings Mountain, said leaders are discussing what is “the most fair when it comes to tax relief, what’s going to do the most to help working families and keep the economy moving along.”
During Appropriations on Thursday, Rep. Pat Hurley, an Asheboro Republican, noted the increased spending compared to the last budget.
“Was there any discussion of returning taxpayer money to the taxpayers?” Hurley asked.
Perusse said Cooper’s proposal targeted tax breaks to those who need it the most.
“We understand that will be a topic of conversation,” he said.
Medicaid expansion
Cooper already has indicated that Medicaid expansion won’t be something that must be tied to passing the budget. He told reporters Wednesday that it could be discussed anytime during the legislative session.
“I know we’ve talked about a number of other health-care issues. It could be in that, it could be as part of the budget, it can be discussed anywhere, so we’re certainly not confining the discussion of Medicaid expansion in the budget,” Cooper told reporters Wednesday.
Rep. Gale Adcock, a Cary Democrat, told reporters during a House Democrats press conference Thursday that Medicaid expansion is such an important issue, she believes Cooper will “do whatever it takes to come up with a reasonable plan.” She said Democrats would love to see a bill just about Medicaid expansion.
“There’s always room for compromise, this is politics,” Adcock said.
Moore told The News & Observer that he doesn’t see any more appetite in this session to pass Medicaid expansion than he did last time.
“As long as no single issue gets in the way of a budget, I don’t see why we can’t get there,” he said. “There’s plenty of money. There’s all this federal money that’s come down. I don’t know of any time this much federal money has come down. There’s opportunity to take care of a lot of priorities.”
Teacher raises
Teachers didn’t get across the board raises in the last budget, as it was one of the 2019 sticking points. That’s why Cooper is proposing a 10% raise over two years for them this time.
He also wants $2,000 bonuses for teachers, principals, noncertified public school employees, university employees and community college employees this fiscal year, and another $1,000 bonus next year. He has proposed restoring master’s degree pay and 7.5% raises for school districts’ central office staff and noncertified public school employees over two years.
The amount of the raises — as well as overall education spending — will likely be a key point during budget negotiations, though not necessarily a dealbreaker.
Cooper told reporters on Thursday that everything is on the table this budget session.
“If the budget is not right for North Carolina, I won’t sign it and may veto it,” he said, but added that it “won’t be dependent on any one issue.”
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This story was originally published March 26, 2021 at 6:15 AM with the headline "Taxes, education and Medicaid expansion: What could be key points in NC budget debate.."