Diary of a first-term legislator: Teachers, state workers to get pay raises in budget

Richmond County Daily

By Melanie Goodwin

House Speaker Jim Black and Senate pro tem Marc Basnight met Thursday until almost midnight to finalize a budget agreement, with minor details still being worked out over the weekend.

Legislators were expected to receive copies of the budget Monday, and votes are planned for Wednesday and Thursday to give members enough time to study the contents. Highlights of the agreement as of this writing include:

Pay raises: Teachers will receive an average pay raise of 2.24 percent. The budget will includes language that would give the governor the authority to increase teacher salaries higher than what is set in the budget, with legislative consultation, in an effort to raise teacher salaries to the national average.

State employees will receive a pay raise of either 2 percent or $850, whichever is greater, and will receive an additional week of vacation (40 hours).

Cigarette tax: The state’s cigarette tax will increase from its current level of 5 cents, which is the lowest in the nation, to 35 cents per pack by next July. This would occur in two phases: The tax would increase by 25 cents on Sept. 1, and by another five cents on July 1, 2006.

This increase represents a compromise between the House and Senate budget proposals on the cigarette tax and is much less than the governor’s request for a 45-cent increase. Other tobacco products would be taxed at 3 percent. The allocable share will go into effect on Jan. 1, 2006, and incentives will be given for non-participating manufacturers to assign escrow balances to the state.

Other revenue items: Continues the half-cent sales tax until July 1, 2007, and 8.25 percent income tax until Jan. 1, 2008. Candy, satellite, telephone, satellite radio, and liquor will be taxed at 7 percent. (Liquor is currently taxed at 6 percent, satellite at 5 percent, phone service at 6 percent, and candy was previously exempted.)

Cable will be taxed at 7 percent, with a credit for local franchise tax paid (5 percent). The entertainment/movie tax will remain the same and not increase. The tax on HMOs will increase to 1.9 percent. Potting soil for farmers will be exempted, effective January 2006.

Lottery: Work continues on the lottery language and how future proceeds will be allocated to various education programs. The Senate still needs to pass the lottery bill, which was passed by the House in April, to create the lottery.

The budget will only include language that changes the allocation of funds. Current discussions allocate funds as follows, though this is subject to change: 5 percent of revenues off the top would be placed in a reserve fund that could be tapped if lottery profits don’t meet expectations in a bad year. The reserve would be capped at $50 million.

Fifty percent of the remaining revenues beyond the reserve would go toward early childhood initiatives (More at Four; class-size reduction); 40 percent would be used for public school construction; and the remaining 10 percent for college scholarships.

Any overage in the expected annual lottery proceeds would be split evenly between scholarships and school construction. Advertising limits and further restrictions are still being finalized. Finally, $1 million in funding will be provided to address potential addiction and will be subtracted from the administrative budget.

Health care tax credit, minimum wage increase

The House Finance Committee passed HB 20 on Thursday, which provides a tax credit for small businesses that provide health insurance to employees and increases the state’s minimum wage to $6 per hour.

The national minimum wage of $5.15 has not increased since 1997 and inflation has eroded 14 percent of its buying power since then. The 85-cent increase is a compromise on a previous bill. The N.C. Budget and Tax Center said modest increases in the minimum wage would have minimal or no impact on employment in the state.

Smoking in restaurants

A House Judiciary Committee unanimously approved legislation on Thursday to restrict smoking in North Carolina restaurants.

Under the proposal, if a restaurant wants to provide a smoking area for its customers, that smoking area cannot exceed 25 percent of the dining room and must be separate and apart from the main dining area. The smoking restrictions would not apply to restaurants with a seating capacity of 50 people or less.

The bill, which was combined with a measure to address qualifications for substance abuse counselors, also prohibits minors from working in the smoking areas of restaurants without signed written permission of a parent or guardian.

Car registrations and tax payments

The House debated a bill Thursday that would allow automobile owners to pay their property taxes and their license tag renewal at the same time.

HB 1779 would permit cities and counties to collect $80 million a year in taxes that go unpaid. Currently there is a months-long lag between the tag renewal and the property tax bill. The measure would require the DMV and the N.C. Department of Revenue to develop an integrated computer system by 2009 so vehicle property-tax bills and registration-renewal forms could be mailed as a single bill.

New prescription drug program

The Partnership for Prescription Assistance has kicked off its North Carolina campaign to inform citizens of the hundreds of opportunities available to them to save money on prescription drugs.

PPA is an alliance of doctors, pharmaceutical companies, patient advocates and other health-care providers designed to help the uninsured and underinsured obtain medicine at a lower cost.

People seeking relief from the high cost of prescription drugs can call a toll-free 1-888-477-2669; or visit http://www.pparxnc.com and learn of any programs for which they are eligible.

Rep. Melanie Wade Goodwin (R-Richmond) is a first-term legislator. Contact her by e-mail at [email protected]; by telephone in the district at (910) 205-0464 or toll-free at (866) 488-0464; or in Raleigh at (919) 733-5823.