Senate leaders rolled out their $22.2 billion budget Tuesday afternoon, offering a faster tax cut, bigger teacher raises and smaller state-employee raises than the House’s budget.
Senate leader Phil Berger held a news conference to announce highlights of the spending plan for the fiscal year that begins in July. The Senate expects to vote on the plan this week, launching budget negotiations with the House.
Senate budget writers have included a tax cut aimed at the middle class that was already approved in a separate bill. It would raise the standard deduction – the amount on which taxpayers owe no taxes if they don’t itemize returns – from $15,500 to $17,500 over two years for a married couple. The House budget includes a similar plan that makes the cut more slowly, reaching the $17,500 level in 2020.
The $145 million cost that cut will be partially offset by tweaks to the expanded sales tax on services that would add $35 million to the state’s coffers.
The budget also features a controversial plan to lower tuition to $500 per semester at four historically minority schools, as well as Western Carolina University. The budget includes $70 million to pay for the plan.
“Helping our public schools and teachers, letting families keep more of their hard-earned money, and controlling the spiraling cost of college are the issues we hear about the most from people all across North Carolina,” Berger said.
While the House budget included a 2 percent raise for state employees, the Senate budget includes $95 million for merit pay raises averaging 1 percent, as well as $85 million for a one-time, merit-based bonus averaging 1 percent.
State agencies would decide how much of a raise each employee receives, but they wouldn’t be allowed to provide across-the-board raises for all their workers.
State retirees wouldn’t get a cost-of-living increase under the Senate plan, while the House wants to give them a 1.6 percent increase.
Senate budget writer Harry Brown said the House plan for retirees would cost the state $700 million over 12 years. “We just didn’t think that’s good budgeting,” he said.
Teachers would get the biggest pay boost in the Senate plan in an effort to raise average teacher salaries from $47,783 to $54,224 over two years. The plan includes a dramatic shift in the pay scale so that teachers would receive annual raises during the first 15 years of their careers and more modest raises every five years after that.
“What we’ve been trying to do is treat teachers like professionals,” Berger said. “In most professions, someone gets to the top of the pay in their profession in 10 to 15 years.”
School principals would get $2,000 one-time bonuses, and assistant principals would get $200 one-time bonuses. The budget would also start a pilot program to offer merit bonuses of up to $6,800 for third-grade reading teachers.
The budget would reduce elementary class sizes by hiring an additional 1,000 first- and second-grade teachers, without cutting the number of teacher assistants.
Other budget highlights announced Tuesday include:
Durham school would be shuttered: The Senate wants to close the Wright School, which serves students with disabilities. A similar Senate proposal last year didn’t get agreement from the House.
Light rail funding restored: The Senate budget eliminates a $500,000 cap on state funding for light-rail projects – a provision that’s also in the House budget approved in May. The cap was established last year and threatened a planned light-rail line between Durham and Chapel Hill.
Senate keeps ferry tolls: While the House budget would make all state-run ferries free to drivers, the Senate budget makes no changes to existing ferry tolls.
Lab schools: A public university that offers teacher training programs would be required to set up a “lab school” in a district where a quarter of schools are classified as low performing. Lab schools would be staffed in part by students in the university programs and would test new educational techniques.
Zika virus: The Senate would allocate $500,000 for Zika virus prevention efforts – the same funding included in the House budget and Gov. Pat McCrory’s proposal.
State funding reserves: The Senate wants to add $583 million to the state’s rainy day fund, which would make the fund equal 8 percent of the state’s budget. By contrast, the House budget would add $300 million to the rainy day fund.
How the teacher pay plans compare
Starting salary: Remains at $35,000 in both the House and Senate plans
Five years of experience: 4.1 percent raise in House plan; 4.8 percent raise in Senate plan
10 years of experience: 5 percent raise in House plan; 6.25 percent raise in Senate plan
15 years of experience: 3.4 percent raise in House plan; 7.5 percent raise in Senate plan
20 years of experience: 3.2 percent raise in House plan; 3.8 percent raise in Senate plan
25 years of experience: 2 percent raise in House plan; no raise in Senate plan