The North Carolina state Senate released its proposed budget for 2021-2022 and 20222-2023 on Monday, June 21.
The state legislature passes a two-year budget in odd years, and in even years traditionally makes adjustments for the second year of the budget cycle.
However, the last state budget passed in North Carolina was in 2017, which was passed over Gov. Roy Cooper’s veto.
In 2019, Cooper again vetoed the budget and his veto was overridden in the state House, but in the state Senate the Democrats supported the veto and Republicans didn’t have enough votes to override the veto.
A number of mini-budget bills were passed giving some state employees raises, but Cooper and the legislature could not reach agreement on a raise for teachers, so they did not receive one.
Much of the current budget is still based on spending at the 2017 levels; revenue is coming in at higher than anticipated levels and the state received $5.7 billion in American Rescue Plan money, so the state is currently rolling in money.
Once the budget bill passes the state Senate it will be sent to the House where there will no doubt be revisions. The state House and Senate have agreed on the total spending for the budget at $25.7 billion in 2021-2022 and $26.6 billion in 2022-2023. However, they have not agreed on how that money will be spent.
After the state House and Senate resolve their differences and settle on a budget, it goes to Cooper who so far has vetoed every budget presented to him by the Republican-led legislature.
The budget process is supposed to be completed by the beginning of the next fiscal year on July 1, but that seems highly unlikely.
President Pro Tem of the Senate Sen. Phil Berger in a press release said, “A decade of responsible budgets and growth-oriented tax policy has North Carolina in the best fiscal shape in a generation. This surplus came largely out of the pockets of North Carolina citizens and they deserve to see some of it returned to them.”
The proposed Senate budget includes lowering the personal income tax rate from the current 5.25 percent to 4.99 percent in 2022 and to 3.99 percent by 2026. It also increases the zero-tax bracket to $25,500. According to the press release, a family of four earning the median household income would see a 37 percent reduction in state income taxes.
The proposed budget also includes a 3 percent raise for most state employees, including teachers, and bonuses for all state employees from federal funds. State employees who make less that $75,000 a year would receive a $1,500 bonus and those who make more than $75,000 would receive a $1,000 bonus. Teachers would receive an additional $300 bonus and principals an additional $1,800 bonus.
The minimum wage for non-certified public school and community college employees would be raised to $13 an hour.