NC House Draft Budget Released; Debate Begins

May 19, 2015

The debate begins over the House's proposed budget.

The North Carolina House of Representatives has released its proposed $22 billion budget for the state and the debate has begun.

The draft proposal would increase state spending by $1.3 billion. That’s more than a 6 percent increase over last year’s budget and nearly three times what Governor Pat McCrory called for in his budget released earlier this year.

In education, the house proposes:

  • $43 million in additional funds for textbooks and digital resources for students.
  • $26 million to restore drivers education training in high schools. Those funds were cut last year.
  • Increase the pay of first year teachers from $33,000 per year to $35,000 per year, just as some lawmakers had promised. This is in addition to any salary supplements offered by local school districts.
  •   A raise of at least 2 percent for all other teachers
  • Funds the same number of teaching assistants in the classroom.

And the proposed budget calls for a 2 percent raise for most rank and file state employees. And a 2 percent cost of living increase for state pensioners. Add in a pay boost for the governor and the house is proposing $361 million in salary increases for the next fiscal year. 

That, of course, is just the tip of the budget iceberg. The 320+ page bill deals with every aspect of state government, from port repairs to community mental health grants.

One notable item absent from the draft budget, the House makes no mention of lowering the income taxes paid by individuals or companies.

Tax credits and fee hikes are in the bill.

Monday night, the House Finance Committee ran overtime as they approved or amended a number of proposals. Take what you pay for services at the DMV. Denise Canada is an analyst with North Carolina’s non-partisan Fiscal Research Division. She told committee members, "you’ll see in your packet there are two to three pages listed of all the individual fees that are changing." Then she added, "There’s a 50 percent increase in almost all of the DMV fees that you see listed here."

That was approved. So to the partial restoration of the historic development tax credit, which is a tax rebate paid to developers or individuals who redevelop or rehab certain older structures. That’s something Governor McCrory has been fighting for, and the North Carolina Senate doesn’t like.

One amendment which was passed restores individual tax deductions for medical expenses. Originally it would only apply to those 65 or older. Republican Julia Howard wanted to change that. "There’s a lot of parents that have disabled children that need this desperately," she told her fellow lawmakers.

The original provision would cost the state an estimated $24 million per year. Eliminating the age restriction would more than double the cost to $54 million.

Republican Nelson Dollar applauded the motive, but questioned the spending. "You’re moving major pieces of money around that you don’t have." Republican Paul Stam agreed. "We just can’t start unraveling tax reform at this stage." Still, the amendment passed.

Tuesday, the full House Appropriations Committee will debate the bill. And it’s likely going to be an all day affair. But the proposal is still on track to make it to the House floor Wednesday or Thursday this week.

Then, it’s off to the Senate. They’ll have their own views of how best to spend taxpayer money. Senator Bob Rucho represents Mecklenburg County. He says the Senate is "worried about spending." And with an increase of more than 6 percent in the House budget, Rucho thinks the house goes to far. "I think the Senate is more in line with Governor McCrory’s budget which was just over 2 percent growth." The Senate will also likely look to cut income tax rates as they have in the past.