Teachers would get raises averaging 4.7 percent, other state employees would get a mix of across-the-board and merit raises, and income taxes would be cut under a $22.34 billion state budget compromise announced Monday evening.
Republican leaders in the N.C. General Assembly outlined the budget to reporters at 7 p.m. and it appeared online more than two hours later. The Senate planned to hold its first vote Tuesday, while the House hoped to send the final budget to Gov. Pat McCrory by the end of the week.
Outside of taxes, spending and raises, the budget contains a few policy changes: It includes a controversial plan to lower tuition at Elizabeth City State University, UNC Pembroke and Western Carolina University to $500 per semester.
“This budget keeps our promises to support our public schools and raise teacher pay above $50,000, let families and small businesses keep more of their hard-earned money, and control the spiraling costs of college,” Senate leader Phil Berger, an Eden Republican, said in a news release.
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House Democratic Leader Larry Hall of Durham said his party had no input on the final budget, which comes during a crucial election year. “It’s truly a Republican budget without our conferees seeing it, which is damaging to the process,” he said, adding that he expects many Democrats will vote no. “We’re going to study it tonight and try to see exactly what’s in it.”
Income tax cut: The final budget features the Senate’s plan to 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 had called for making the cut more slowly, reaching the $17,500 level in 2020.
University tuition: While three historically black universities were removed from the $500-tuition plan when it initially passed the Senate, budget writers added Elizabeth City State back to the plan along with Western Carolina and UNC Pembroke.
The budget would also limit tuition increases at all UNC system schools so that students would pay the same amount each semester for four years. Tuition increases could only affect future students. The plan also freezes student fees at current levels and restricts increases to 3 percent per year.
“I think it gives families some certainty on what the cost of education will be,” said Senate budget writer Harry Brown, a Jacksonville Republican.
But Hall said the tuition change shouldn’t be in the budget because it’s a policy issue that should receive more vetting.
Teacher raises: Public-school teachers would receive raises averaging 4.7 percent, which legislative leaders say would boost the average salary for the coming school year to $50,186 including supplemental pay by counties.
The raises would be aimed at more experienced teachers because entry-level educators got a raise last year. The salary increases would range from 2 percent for teachers with 25-plus years of experience to 8.1 percent for teachers with 14 years of experience.
“We’ve focused on the entry levels over the last two years and made some tremendous strides,” said House budget writer Nelson Dollar, a Cary Republican. “This time, we’ve focused on the next level up.”
Mix of raises, bonuses for state employees: State workers who aren’t teachers would see smaller raises next year.
All state workers would receive a 1.5 percent raise and a one-time bonus equal to 0.5 percent of their annual salary. Additionally, the budget includes $80 million for targeted merit raises, which would average 1 percent of employee salaries.
One-time payment for state retirees: State retirees would receive a one-time cost-of-living adjustment of 1.6 percent. That’s a compromise between the House budget, which included a permanent 1.6 percent increase for retirees, and the Senate budget, which did not include any boost for retirees. Hall called the lack of a permanent increase – which Senate Republicans said would be too expensive – “woefully insufficient.”
Water quality regulations: Rep. Chuck McGrady, a Hendersonville Republican who is one of the key budget writers, said the Senate’s proposal to repeal stream protections was no longer in the budget.
McGrady said other provisions in the budget proposal were scaled back and now only address efforts to clean up Jordan Lake and Falls Lake. A study of whether it would be beneficial to put mussels in Jordan Lake to reduce algae has also been eliminated, he said.
“I threw elbows around on all that stuff,” McGrady said, “but you do have compromises, and I can live with this.”
Filling up the piggy bank: The budget would add $475 million to the state’s rainy-day reserve fund. Dollar says that’s “an absolute record level” and puts the state on track to soon have savings equal to 8 percent of annual spending.
Light rail restored: The budget repeals a $500,000 cap on state funding for light-rail projects that would hinder the Durham-Chapel Hill light-rail line. But it includes new restrictions from the Senate’s budget that could still place roadblocks on the project.
No commuter rail or light rail project could receive more than 10 percent of its total funding from the state. And the Durham-Chapel Hill project wouldn’t automatically get funding – it would have to wait two years and go through the Department of Transportation’s prioritization process again.
“It’s not forward thinking,” Hall said of the provision.
Staff writer Craig Jarvis contributed to this report
Starting salary: Remains at $35,000
Four years experience: 5 percent raise to $36,750
Nine years: 8.2 percent raise to $39,500
10 years: 0.6 percent raise to $40,250
15 years: 4 percent raise to $45,250
20 years: 3.2 percent raise to $48,000
25 years or more: 2 percent raise to $51,000
Does not include local supplemental pay