The Pulse

Raises and tax cuts in the proposed NC House budget

By: - August 9, 2021 7:43 pm
Image: Adobe Stock

State employees would get raises of 5% over the next two years and teachers would get average raises of 4% this year in a proposed House budget that layers bonuses on top of regular pay.

House Speaker Tim Moore and budget writers presented highlights of their budget at a news conference Monday afternoon.

The House Appropriations Committee is set to vote on the proposal Tuesday, with approval by the full House expected by the end of this week.

Veteran teachers would see the biggest salary gains under the House plan. The budget offers teachers eight weeks of paid parental leave to care for a newborn, and reinstatement of salary bumps for master’s degrees.

State government retirees would receive 2% bonuses in each year of the House budget.

The Senate’s proposed budget included 3% raises over two years for state employees and teachers, along with bonuses. The Senate had no cost of living increases or bonuses for retirees.

The tax cuts the House has proposed are not as deep as the Senate’s proposed cuts. Rather than phase out the corporate income tax over five years, starting in 2024, the House proposes to reduce the 2.5% tax rate to 2.25% starting in 2024 and to 1.99% the following year.

At 2.5%, North Carolina has the lowest corporate income tax rate of any state that collects such a tax.

The personal income tax would drop from the 5.25% rate to 4.99% next year under the House plan. The Senate wants phased-in reductions to reach 3.99% after 2025.

Rep. Jason Saine, a Lincoln County Republican and the House budget committee senior chairman, said the tax cut differences do not represent a fundamental disagreement with Senate Republicans. Some House members were reluctant to enact tax cuts that would kick in years in the future.

“We’re all trying to get to the same place,” he said. “It’s just a matter of timing.”

The House and Senate pass different versions of a state budget before negotiating a compromise.

Rep. Wesley Harris, a Mecklenburg County Democrat, questioned the GOP tax-cut strategy in a Finance Committee meeting before the news conference. Harris used comparisons of North Carolina’s per capita real gross domestic product, or GDP, with U.S. figures and those from neighboring states.

Per capita GDP is a rough measure of standard of living.

North Carolina shows smaller increases between 2012 and 2018 than South Carolina, Tennessee, Georgia, and the county.

“We haven’t seen the economic benefits of these tax cuts,” he said. “What it has prevented us from doing is really making the investments that we need for the long-term growth.”

North Carolina was in strong financial shape to start the year and the federal economic rescue plan has poured billions more dollars into state coffers.

The House budget is stuffed with special provisions, policy changes that don’t have money attached.

One provision would require local school boards to set up advisory committees to hear complaints about classroom materials. These local committees would hold hearings on the complaints and pass their recommendations to local school boards. If the local board decides the material is appropriate, challengers could appeal to a state advisory committee.

School districts would be required to list all instructional materials on a website and keep copies available for review.

The provision comes as Republicans aim to limit what public school students learn about racism in America.

In a statement, House Democratic Leader Robert Reives said North Carolinians deserve better from a budget.

“We should be empowering educators – not censoring their curricula,” the statement said. “We should be investing in our communities – not cutting taxes for big business. And we should be using this once-in-a-lifetime financial opportunity to build a North Carolina that works better for everyone.”

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Lynn Bonner
Lynn Bonner

Investigative Reporter Lynn Bonner covers the state legislature and politics, as well as elections, the state budget, public and mental health, safety net programs and issues of racial equality.