Gov. Roy Cooper said Tuesday he will sign the state budget into law even though it includes tax cuts for corporations that he does not want and provisions he believes are unconstitutional.
After Cooper’s announcement that he would sign the budget, the Senate gave swift preliminary approval to the $25.9 billion plan in a 40-8 vote. The final Senate vote comes tomorrow. The budget them moves to House votes and then on to Cooper’s desk for his signature.
“On balance, the good outweighs the bad,” Cooper said at a news conference. “While I believe it is a budget of some missed opportunities and some misguided policy, it’s also a budget that we desperately need at this unique time in the history of our state.”
When it is signed, the state will have its first comprehensive budget in almost three years. An impasse between Cooper, a Democrat, and the Republican-led legislature resulted in “mini budgets” over the last two years rather than an overall spending plan.
The budget includes raises and bonuses for teachers and state employees, nearly $1 billion for broadband expansion, infrastructure spending, tax relief for “everyday North Carolinians,” and more that Cooper said he supports.
“However imperfect this budget is, our schools, our communities, our small businesses, our families need help right now,” he said. “I will sign this budget because of its critical and necessary investments, and I will fight to fix its mistakes.”
The budget does not include Medicaid expansion to help provide low-income adults with health insurance. North Carolina is one of a dozen states that has not expanded Medicaid. Cooper has fought for years for Medicaid expansion.
The budget phases out the corporate income tax. The 2.5% rate will be cut to 2.25% in 2025. By the end of the decade, the corporate income tax will be eliminated.
The personal income tax rate drops next year from 5.25% to 4.99% and will decline in steps to reach 3.99% after 2026. The standard deduction and the child deduction are increasing.
Cooper said he opposes tax cuts for corporations and for the state’s wealthiest people.
The budget also fails to fully fund public education as required in the Leandro case. It gives legislative leaders veto power over proposed court settlements when they intervene or are named in lawsuits. Republicans are angry at Attorney General Josh Stein for settling a lawsuit last year that allowed extended time for ballots to be accepted for the November election if they were post marked by election day.
Cooper called these “unnecessary and politically motivated missteps that I believe should and will be overturned in courts. By signing this budget, I want to make it clear that I do not consent to the constitutionality of these provisions.”
In addition to teacher raises that will average 5% over two years, the budget includes a $100 million fund for salary supplements. But teachers in five counties, Mecklenburg, Wake, Durham, Guilford, and Buncombe, won’t get any of that salary supplement money.
Senate Democratic leader Dan Blue of Wake County said that’s why he voted against the budget. Blue said these five counties, all represented by Senate Democrats, were “almost surgically targeted.”
“The only reason you did it was to aim at the Democrats who represent those districts,” he said. Blue was the only Democrat to debate the budget.
Senate leader Phil Berger, an Eden Republican, said provision isn’t punishing counties, but is enhancing the ability of rural counties to attract and keep teachers.
Asked about the salary supplement provision, Cooper said he would have written it differently.
“All counties should have been part of that process,” he said.