Tuesday afternoon the lead budget writers for North Carolina's Senate gave us the budgetary equivalent of a movie trailer. Here's Senate Pro-Tem Phil Berger:
"Anyone who has seen our Senate budgets over the past six years will not be surprised that this budget continues our philosophy of improving outcomes in public education, providing generous tax cuts for the middle class and job creators, controlling spending growth and saving for the future."
This preview of the Senate's proposed state budget came with few details at the time.
The full details of the $22.9 billion spending plan weren't released until around midnight last night. Morning Edition Host Marshall Terry talks with WFAE's Tom Bullock who has been digesting the numbers.
MT: Let's start with what has become an annual issue. Here's what Senator Berger had to say yesterday about a proposed increase in teacher pay.
"It continues implementing a plan announced last year to dramatically increase teacher pay, providing an average 3.7 percent raise this year and 9.5 percent raise over the two years of the biennium."
MT: So which teachers would get a salary bump?
TB: New teachers and the most experienced teachers would see no change in pay. They did get increases in prior years. But mid-career teachers would. In particular, those with nine to 14 years in the classroom would see a nearly 5 percent increase. Teachers with one to three years under their belts and those with 20 to 24 years experience would see raises of less than two percent on average.
Principals would see a potential pay increase as well. The Senate is calling for $28.5 million for in essence performance bonuses for principals using a couple of different measures. But it also cuts longevity bonuses for principals.
Overall the Senate budget calls for $600 million in additional funding for public schools both traditional and charter. And it does fully fund projected school enrollment. But there are some oddities in the education section worth noting. One is that it would limit spending flexibility for school districts by limiting or eliminating their ability to move money allotted for specific teacher slots, or textbooks, to other areas deemed necessary by school districts. This is something that has angered the Senate in the past.
Also, the budget includes a provision barring school districts from suing counties for more education funding, something that happened in Union County.
And the Senate plan includes no additional funding for programs like art, music, and PE. Combined with the calls for limited spending flexibility, it's not clear if the Senate plan would provide a fix for the rules on smaller k-3 class sizes that some in General Assembly have been calling for.
MT: Are there any big funding cuts in the Senate's proposed budget?
TB: Obviously those affected by the cuts will think so. But overall the budget cuts seem relatively small. This is largely due to the state's budget surplus, now projected to be $580.5 million.
But here's one strange cut worth noting – the Senate lopped $4 million from the UNC law school's budget without giving any reason why. But it also increases funding for UNC Medical schools, so I guess the lawyer heavy North Carolina Senate prefers doctors to lawyers.
MT: Let's move on to taxes. Earlier this year the Senate passed a bill title "A Billion Dollar Middle-Class tax cut." Is that in this budget?
TB: Absolutely. Here are the details.
First, it cuts the personal income tax rate from 5.499 percent to 5.35 percent. And it would cut the corporate income tax rate from 3 percent to 2.5 percent by 2019.
Plus, it would increase the amount of mortgage interest which could be deducted to $22,000. It also increases the standard deduction families can take to $20,000, allows unlimited deductions for charitable contributions and medical costs and creates a child care tax credit ranging from $500 to $2,500, depending on household income.
The Senate loves to tout that this plan would mean 99 percent of all individual income tax payers in North Carolina will either receive a tax cut or pay zero income tax. But it is also a big cut for the wealthy and for corporations.
Add all those tax cuts up and you get to roughly a billion dollars.
MT: But some Republicans North Carolina House have been critical of this plan.
TB: Specifically by saying it may go too far in cutting taxes. Their plan leaves the tax rates unchanged but would raise the standard deduction and change some business taxes to reduce the amount companies pay for machinery and franchise taxes.
This year the Senate's budget comes out first. But it's safe to say this will be a fight once the House has their turn at writing a budget.
MT: The Senate has a reputation of adding policy bills to their budget. Any of that this year?
TB: A lot actually.
There's a proposed two year moratorium on commercial wind farms in North Carolina. The Senate says this is due to concerns the turbines could interfere with military aircraft. It's worth noting the U.S. Department of Defense has said as recently as last month that is not the case.
The budget also would begin the process of trying 16 and 17 year olds charged with misdemeanor crimes in juvenile court. Currently they are treated as adults.
In a press release Senator Phil Berger also touts a provision that would "Strengthen laws against human trafficking" in the state. This is something being called for by House Republicans including Bill Brawley of Mecklenburg County.
But whereas Brawley's bill calls for around $50 million for treatment and awareness campaigns the Senate budget calls for just shy of $70,000 for a state commission to print awareness posters.
Finally, the Senate budget would also create a new cabinet department by splitting the Department of Public Safety in two. The DPS would continue to oversee state law enforcement functions like the Highway Patrol and State Bureau of Investigation. But a newly created Department of Adult Corrections and Juvenile Justice would run the state's prisons. Senator Berger said this would mean officials could "more effectively manage inmate custody and supervision statewide."
MT: So, Tom, these are some of the details in the Senate's proposed budget. What happens next?
TB: Well, roughly nine hours after the full details of this $22.9 billion plan were made public, the debate on the measure begins. The first committee meetings are being held this morning. The first floor vote should come Thursday. Final approval is expected likely Friday morning.
