2017 Fiscal Year State Budget, Legislature, News

NC Senate leaders tout tax cuts, education spending in budget proposal

Senate leaders gave a broad outline of their proposed 2017-2018 budget Tuesday afternoon, saying it shares a lot of the same priorities as Gov. Roy Cooper’s proposal – but has different priorities.

The $22.9 billion Senate plan is an increase of about 3.75 percent over the state’s projected spending for this fiscal year, which ends in June. But it’s about $600 million less than Cooper’s spending plan.

“We have not forgotten the mess we found in 2011, the result of years of spending growth at unsustainable levels,” said Senate President Pro Tempore Phil Berger (R-Rockingham) in a Tuesday press conference. “We feel strongly that when government collects more than it needs, some of that money should be returned to the taxpayers.”

The Senate’s “Billion Dollar Middle Class Tax Cut,” passed last month, was a priority, Berger said.

Under that plan, Senate Bill 325, the state’s income tax rate would drop from 5.499 percent to 5.35 percent in the 2018 tax year. The standard deduction, or amount on which no income tax is owed – would increase from $8,750 to $10,000 for single filers and from $17,500 to $20,000 for those filing jointly.

The tax changes will result in $324 million less revenue in the coming fiscal year, around $710 million less in 2018-2019 and $775 million less by the 2019-2020 fiscal year.

Critics charge that the Republican majority in the General Assembly have slowed or reduced spending in key areas while building up a $580.5 million surplus. Reducing state revenues as dramatically as the Senate proposes is unnecessary when the state has pressing needs, Democratic lawmakers have argued.

But Berger and other Senate GOP leaders said Tuesday they believe citizens will use their money more wisely than government.

Senators also touted education spending outlined in the plan, pointing to increases in areas of bipartisan agreement.

Among them:

  • A pay raise for teachers of 3.7 percent.
  • A raise for most other state employees of $750 or 1.5 percent, whichever is larger. It was not yet clear Tuesday whether retirees will also see a cost of living increase.
  • $150 million in disaster relief funding for victims of Hurricane Matthew
  • Provisions for the “raise the age” initiative, which would send minors under 18 to juvenile courts when charged with a crime rather than trying them as adults. Berger called the change a priority and said the Senate would like to see it in place by 2020.

The full budget bill won’t be filed until late Tuesday night. On Wednesday multiple committee hearings will be held with the two required floor votes expected Thursday and Friday. The bill will then go to the House, where members say they would prefer more modest tax cuts.

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