NC budget compromise calls for pay raises, gradual tax cuts

After months of delays, state lawmakers are releasing a budget that includes new personal income tax cuts and raises for state employees and teachers.

House Speaker Tim Moore confirmed Tuesday that most state employees will get a 4% raise this year and a 3% raise next year. That’s more than what the Senate proposed but less than what advocates for state workers said would be needed to address a major labor shortage.

“Our House bill had even more raises for teachers and state employees,” Moore told reporters Tuesday morning. “But this was a compromise position that we took with the other chamber. What I would like to see happen is, in the second year of the biennium, next year, is to be able to come in and even beef up their second-year raises as well.”

Teachers would get an average raise of 7% this year, a figure that includes the scheduled raises they get based on experience. Starting pay for teachers would increase from $37,000 to $39,000. The top of the pay scale for teachers with more than 25 years of experience would increase from $54,000 to $55,100.

Retired state employees would get a one-time, 4% cost-of-living bonus. An earlier House plan called for making an increase permanent.

The budget compromise also calls for gradually cutting the personal income tax rate from 4.75% this year to 3.99% by 2026. But those cuts would be tied to the state’s revenue levels and wouldn’t take effect if there are shortfalls.

Moore said the tax cuts are one issue that caused budget talks between the House and Senate to drag on for months, because the Senate didn’t like the revenue triggers.

“It allows for tax relief, but it doesn’t jeopardize the fiscal stability of the state,” Moore said.

Lawmakers are planning to vote Wednesday on the budget and on a separate bill that ties Medicaid expansion to legalizing new casinos.

Democrats have criticized that proposal, which surfaced over the weekend after the most conservative wing of the House Republicans publicly rejected a plan to include casino legalization in the budget bill.

Medicaid expansion was passed into law back in the spring and it’s been scheduled to take effect as soon as a budget becomes law. But, in what appears to be an attempt to get Democrats and Gov. Roy Cooper to vote for casinos, Medicaid expansion now won’t happen unless the casino bill becomes law. In addition to four new casinos in rural counties, it would also legalize thousands of video gambling terminals that would be in convenience stores and other locations throughout the state.

Most House Democrats signed a letter Monday that said that Republicans are “cynically using health care as a political bargaining chip to force passage of a casino bill developed in secret and written by casino lobbyists.”

Moore defended that approach to reporters on Tuesday. “At the end of the day, they have a choice whether they want to vote for the bill, or against the bill,” he said. “And get this: if you look at a lot of the folks who voted for the sports betting bill, and if you compare the list of folks who voted for the Medicaid expansion, with a few minor exceptions, they’re about the same, so I don’t see it as being something that doesn’t make sense. There’s a nexus.”

Moore said he was unsure as of Tuesday if the casino-Medicaid bill would have enough votes to pass.

Neither the budget bill nor the Medicaid-gambling bills had been publicly released on the legislature’s website as of midday Tuesday, but draft versions of both leaked to media outlets on Monday night.

Moore said Tuesday that the leaked budget bill was a draft that could still change, but he confirmed that key provisions in that draft will be in the final budget, including:

• A new nonprofit called NC Innovation will get $250 million in each of the next two years. The group wants to help research and development projects from the state’s universities become successful start-up companies. The amount is less than the $1.4 billion that the Senate wanted to give the group, but it’s more than the initial proposals from the House and the governor.

  “We all realize that this is an opportunity for a great project with great business leaders to try to recruit and keep the intellectual property that is developed in North Carolina,” Moore said.

• A major expansion of private school vouchers, known as “Opportunity Scholarships.” The vouchers would no longer be limited to low-income families.
• A provision that would allow appellate court judges to carry concealed weapons in the courtroom, a change that prompted a comment from Rep. Marcia Morey, D-Durham and a former judge:
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  Big budget provision ‼️. Page 427 proposes to allow our Supreme Court Justices and Court of Appeal Judges to carry concealed guns in court. Goodbye bailiffs and good luck to lawyers as justices twirl guns around their fingers during oral arguments. #ncpol #ncga

  — Rep. Marcia Morey (@marciahmorey) September 19, 2023