The North Carolina state House passed its $25.7 billion 2021-2023 budget bill for the second time on Wednesday, Aug. 11.
The state House is scheduled to pass the budget for the third time on Thursday. Then the state House budget is sent over to the state Senate where it will be voted down, because the Republicans in the Senate prefer the version of the state budget they passed in June.
After that comes reconciliation where Senate and House committees make compromises until they reach a budget both can support. In a perfect world the state budget would be a bipartisan effort, but since the Republicans have majorities in both the House and Senate, the Democrats don’t get to do much but vote yea or nay on the final package.
However, North Carolina Gov. Roy Cooper is a Democrat and he will almost certainly veto whatever the Republican legislature finally passes.
In 2019, after Cooper vetoed the budget, there was very little movement on either side to reach a compromise. The House overrode the veto, but the Republicans in the Senate didn’t. The fact that no budget was passed in 2019 is one of the reasons the state has a large budget surplus. The spending levels are based on the 2017 budget and, while a number of mini-budget bills were passed and signed by the governor, they didn’t come close to covering the entire budget.
At this point it appears both the Republican legislature and the Democrat governor are more inclined to reach a compromise than they were in 2019, but as they say the devil is in the details and there are a lot of details in a $25.7 million budget.
But before the budget gets to Cooper, the House and Senate will have some work to do to reach a budget both can pass.
The House budget gives teachers higher raises and has lower tax cuts than the Senate version. The compromise budget will no doubt be somewhere in the middle.
The House budget gives teachers an average of a 5.5 percent raise while the Senate version gives state employees a 3 percent raise.
The individual income tax rate in the House budget is reduced from 5.25 percent to 4.99 percent. In the Senate budget it is reduced to 3.99 percent.
The Senate plan is to phase out corporate income tax completely while the House plan calls for it to be reduced from 2.5 percent to 1.99 percent during the two-year budget cycle.