(The Center Square) – Gov. Roy Cooper signed North Carolina's more than $50 billion biennium budget Thursday, making history in the process.
It is the first budget the governor has approved since taking office in 2017. It includes record education and infrastructure spending and puts more money than ever in the state's reserves.
"This budget moves North Carolina forward in important ways," Cooper said in a news release. "Funding for high-speed internet, our universities and community colleges, clean air and drinking water and desperately needed pay increases for teachers and state employees are all critical for our state to emerge from this pandemic stronger than ever. I will continue to fight for progress where this budget falls short but believe that, on balance, it is an important step in the right direction."
The House gave the budget its final approval Thursday after it cleared the Senate earlier in the week.
North Carolina spending will be more than 4% over each of the next two fiscal years. The state will spend $25.9 billion in the current fiscal year, which started July 1, representing a 4.3% increase over the previous fiscal year, and $27 billion in fiscal year 2023, representing a 4.1% increase over the fiscal 2022 budget. The budget also cuts $3.2 billion in taxes over the biennium and $13 billion over the next five years.
The plan increases the state's zero-tax bracket from $21,500 to $25,500. It cuts the personal income tax rate from 5.25% to 3.99% by 2027, starting with 4.99% in 2022. It increases child tax deduction by $500 per child and eliminates state income tax on military pensions. The bill also reduces the franchise tax base for corporations and phases out the corporate income tax over six years, beginning in 2025. It makes expenses paid with Paycheck Protection Program loans tax-deductible.
"This budget continues the Republican-led legislature's decade-long commitment to low taxes and responsible spending," Senate Leader Phil Berger, R-Rockingham, said in a news release. "The multibillion-dollar surpluses these policies helped create are evidence that they're working, and it means we can cut taxes even more."
North Carolina will make a total of $16.1 billion in annual cash contributions to capital and infrastructure projects and debt service over 10 years under the plan. It directs $4.25 billion to North Carolina's rainy day fund and another $800 million for disaster relief. It also increases base K-12 education spending by $1.5 billion, pushing the budget line close to $11 billion. The state also invests in broadband expansion, domestic violence shelters and other social services.
Teachers and current and retired employees will receive 5% bonuses. Teachers will receive an average 6.7% pay increase over the biennium and up to $2,800 in bonuses. Noncertified school and community college personnel will get a pay boost up to $15 an hour.
The budget also includes nonmonetary provisions, which Cooper previously vetoed as stand-alone legislation. The governor now will be required to seek a panel of state leaders' approval before extending an emergency declaration. Cooper, a Democrat, has faced pressure from Republican lawmakers to end the state's COVID-19 emergency declaration. He also has faced legal challenges over the restrictions within the emergency orders. He vetoed two previous bills with the requirements.
The bill also requires legislative leaders to sign off on lawsuit settlements involving the General Assembly. Republicans proposed the change after Attorney General Josh Stein and the state election board settled with voting advocates in a case that modified the state's voting laws. Republicans claim the settlement was done in secret and with Democrat allies.
Some Democrats opposed the provisions in the budget. Critics also said the state could have done more for health care, including expanding Medicaid.