The $25.9 billion budget legislators plan to approve this week includes raises for teachers and state employees, tax cuts, and special provisions limiting the powers of the governor and attorney general.
The budget is more than four months overdue. The fiscal year started July 1. The last legislative vote on a budget proposal came in mid-August. Budget proposals passed with veto-proof majorities in both the state House and Senate.
Since then, House and Senate negotiators have been working among themselves, and then with Gov. Roy Cooper, on a final version.
A statement last week from Cooper’s office said he would decide whether to sign or veto the budget after he’s reviewed it.
The state has been without a comprehensive budget for more than two years. Conflicts between Cooper, a Democrat, and the Republican-led legislature resulted in an impasse and limited ‘mini-budgets’ since 2019.
The budget changes state law to require a governor obtain agreement from a majority of the Council of State if a statewide emergency declaration is to last more than 30 days. If most of the Council of State agrees, the emergency declaration can last up to 60 days. The change becomes effective in 2023. Republican legislators have tried for more than a year to limit Cooper’s emergency powers in the COVID-19 pandemic. Cooper has vetoed similar stand-alone bills, though those had shorter time limits. The last such bill, which Cooper vetoed on Nov. 1, had a seven-day limit on declared statewide emergencies that lacked approval of a Council of State majority.
The budget also includes a provision that would give legislative leaders veto power over proposed court settlements where they are named as parties or where they have intervened. Republicans were angry that Attorney General Josh Stein settled an elections lawsuit last year that extended the time mail-in ballots would be accepted if they were postmarked by Election Day.
Offering health insurance to low-income adults through Medicaid expansion, a years-long Cooper goal, is not in the budget. North Carolina is one of a dozen states that has not expanded Medicaid.
The budget does include more limited Medicaid extensions in more coverage for new mothers and for parents whose children are temporarily in foster care.
Women who use Medicaid for health insurance while they are pregnant are kicked off two months after they give birth. The extension will allow them to keep the insurance for a year after their babies are born. The provision is effective for five year starting April 1, 2022. Medicaid pays for about half of the state’s births.
Parents who are working to regain custody of their children taken into foster care would be able to keep their Medicaid coverage.
The budget also includes raises and bonuses for teachers and state employees, tax cuts, and cost-of-living adjustments for government retirees.
Teacher salaries would rise an average of 2.5% in each year of the two-year budget. The increase is a combination of a 1.3% increase in the base salary schedule and step increases.
Most teachers will receive bonuses of $2,800, according to an outline Senate leader Phil Berger’s office posted on Medium.
The budget includes a new $100 million fund to help school districts supplement teacher salaries. The allotments would be based on county wealth. Small and rural counties have trouble hiring and keeping teachers because they cannot afford to supplement state salaries to the degree that wealthier counties can.
State employees would receive 2.5% raises in each of the two budget years.
The budget institutes a minimum wage for state employees of $13 an hour this year and $15 an hour next year.
State employees who make less than $75,000 a year will receive $1,500 bonuses. State employees who make more than $75,000 will receive $1,000 bonuses. State employees who work at 24-hour residential treatment facilities, and employees at the Department of Public Safety whose jobs require frequent in-person contact will receive $1,500 bonuses, according to Berger’s outline.
Government retirees will receive cost-of-living adjustments of 2% this year and 3% next year.
The budget includes both personal and corporate income tax cuts.
The personal income tax rate drops to 4.99% next year from 5.25%, and the standard deduction for a married couple filing jointly increases from $21,500 to $25,000.
A corporate income tax rate cut from 2.5% to 2.25% would not kick in until 2025, but the corporate income tax would be phased out over four years and hit zero in 2029.