The proposed $22.9 billion North Carolina budget released by the state Senate this week takes advantage of the increased revenue – which is the result of tax cuts that have spurred the state’s economy – to increase spending and further reduce taxes.
Both the personal income tax rate and the corporate income tax rate are being cut. Before the Republicans took over the legislature, the Democrats had raised the corporate tax rate so high that it was difficult to recruit businesses to the state. Since the tax rates have been lowered by the Republicans, the state is considered much more business friendly and has had more success recruiting businesses and jobs to North Carolina.
The Republicans continue to reduce the personal income tax rate and increase the amount of income that is exempt from state income tax. The tax cuts in this budget total over $1 billion, which means $1 billion more money will be in the pockets of people and companies to spend as they see fit.
The state recently announced a budget surplus of over $580 million – the result of these tax cut policies that are bringing both people and business into the state. Taxing more people and businesses at a lower rate is resulting in more, not less, revenue.
The mainstream media constantly state that tax cuts have to be paid for by reducing expenditures, but that isn’t the case. In North Carolina tax cuts are resulting in the state having more revenue. With the proposed Senate budget, 99 percent of the taxpayers in North Carolina will pay less or no personal income tax.
The proposed Senate budget increases spending by 2.5 percent.
It puts an additional $600 million into public education with salary increases for teachers and principals. Teachers will receive an average increase of 3.7 percent in the upcoming year and a 9.5 percent raise over the next two years.
It increases the spending on roads and bridges by $320 million.
The rainy day fund is being increased to $1.8 billion, or about 8 percent of last year’s budget. This is money set aside for emergencies and it is the most money the state has ever had in a rainy day fund.
The furniture market in High Point gets $3 million in the current draft of the budget and Gibsonville gets $60,000 for its downtown.
The budget proposed by the Senate still has a long way to go to become law. It has to be passed by the Senate and the House and then signed by the governor. If it is vetoed by the governor, then it has to pass the Senate and the House by super-majorities to override the veto. So far the Republicans in the House and Senate have had no problems overriding Gov. Roy Cooper’s vetoes and there is no reason to think that won’t happen with the budget.
Although the budget this year was developed by the Senate, there was significant input from the House, so the belief is there will be fewer changes made by the House to the Senate budget than in years’ past.