(The Center Square) – North Carolina lawmakers are drawing closer to finding a consensus on how the state should spend billions of dollars for the next two years.
Legislative leaders are hashing out the final differences in the Senate and House proposals for the 2022 and 2023 fiscal years. The process has been delayed well into the 2022 fiscal year, which started July 1.
After state agencies submitted their budget requests, Gov. Roy Cooper released his recommendations for how the state should spend more than $50 billion over the next two years. The Senate approved its version of the budget June 25 before the fiscal year started. The House approved its proposal Aug. 12.
Since both chambers could not agree on a final version, they've met to find common ground.
Officials said appropriations subcommittee leaders reached an agreement before they passed it to the full committee for consensus. Appropriations leaders have agreed, and it is now up to Senate Leader Phil Berger, R-Rockingham, and House Speaker Tim Moore, R-Cleveland, to reach an agreement.
The legislative leaders also are consulting with Cooper to finalize the plan, Berger spokesperson Pat Ryan said.
"We all agree that it would be cleaner and simpler if the House and Senate would work out their differences first and then bring in the governor to have more bilateral negotiations with the Legislature," Ryan said.
Both spending plans put forth by both chambers cut taxes and increase spending. North Carolina plans to spend 3.45% more in fiscal year 2022 – $25.7 billion – and 3.65% more in the fiscal year 2023 – $26.6 billion.
Under the General Assembly's plans, the state would spend $3.7 billion less than what Cooper proposed spending over the biennium. The governor recommended a $27.4 billion budget in fiscal year 2022 and a $28.5 billion budget in fiscal year 2023.
The House budget plan included historic amounts of spending on disaster relief and capital projects. The proposal cut more taxes than the Senate proposal. The Senate version reflects a $1 billion tax cut for North Carolinians, while House plan reflects a $2 billion cut.
The House version made expenses paid with federal Paycheck Protection Program loans tax deductible and exempted military pensions, which both are absent from the Senate proposal. The Senate version, however, eliminated the corporate tax, while the House reduced the corporate tax rate to 1.99%. The Senate also cut the personal income tax rate lower than the House; 3.99% versus 4.99%.
Most state employees, including educators, would see a 3% pay increase under the Senate plan. State correctional officers could see an average pay increase of 7% under both plans. The House plan provides 2.5% raises for most state employees, and teachers would see step raises around 5.5%.
Under the House plan, other school personnel would receive $13 an hour in pay during the first fiscal year and $15 an hour pay during the second fiscal year. The Senate plan provided $13 an hour over the two years. The House also provided eight weeks of paid parental leave for public school employees and restored advanced degree supplements for the first time.
Democrats in both chambers criticized the plans for inadequate education funding and teacher raises. Senate Democrats said the Senate plan prioritized corporate taxes and did not set aside enough funding for state workers and needy North Carolinians. Cooper recommended prioritizing teacher and state employee pay and capital improvement bonds. The governor also pushed for Medicaid expansion.
Despite the nearly three-month delay into the fiscal year, Ryan said most North Carolinians probably wouldn't take notice that the budget has not been enacted. He couldn't provide a timeline for when a final agreement would come, but North Carolina will operate under existing funding levels for recurring funds because of state law.