General Assembly will focus on smaller budget measures, tax refunds

GOP Tax rebate plan would fully refund over 350,000 tax bills

FILE PHOTO Senate President Pro Tempore Phil Berger, from left, North Carolina Gov. Roy Cooper and House Speaker Tim Moore pause prior to a news conference. (AP Photo/Gerry Broome)

RALEIGH — North Carolina Republicans on Wednesday pitched broad refunds to everyone who pays state income tax, a proposal that would transfer most of last year’s large revenue surplus and signals a new GOP tack in the summer budget stalemate with Democratic Gov. Roy Cooper.

House Speaker Tim Moore and Senate leader Phil Berger said their chambers will advance a bill that would mail refunds to 5.1 million people who paid income tax for 2018, with nearly all of them sent by just before Christmas. Refunds would be up to $250 of the income taxes that a married couple filing jointly paid this year, while all other taxpayers would get up to $125 of what they paid.

The state collected $897 million more than anticipated in the year ending June 30, according to the legislature’s chief economist, marking the largest surplus since before the Great Recession. The amount includes an unexpected bump: State officials had predicted a $643 million surplus in May.

About $660 million would be returned to the public if the measure, which will get a committee hearing Thursday in the Senate, were to become law. More than 350,000 taxpayers would see their entire tax bill repaid, the leaders said in a release.

“Tax revenues belong to the people who earned the money to begin with, the people we collected it from in the first place,” Berger said at a news conference. “We’re returning their money to them to spend or save as they see fit.”

Through the announcement, the GOP leaders also confirmed a strategy in which they’ll advance spending and tax bills separate from the two-year budget that the Republican-controlled legislature passed but Cooper vetoed in late June.

House Republicans have failed to find enough Democratic support to override the veto. Cooper blocked the budget because it contains corporate tax cuts and lacks substantial teacher pay raises, and because it fails to expand Medicaid to more working adults.

Negotiations between Berger, Moore and Cooper have gone nowhere beyond a Cooper offer in early July. Republicans say the governor won’t work on a deal unless they first agree to Medicaid expansion. Although Cooper and his staff have said there’s no such ultimatum, they won’t take expansion off the table and criticize GOP leaders for failing to provide a budget counteroffer.

As the impasse enters an eighth week, Moore and Berger said their chambers will start to push through portions of the budget in stand-alone bills to address critical areas. A Senate committee on Wednesday considered a measure that would enact salary increases in the vetoed budget for correctional officers.

And Moore — who made clear Wednesday he’d keep trying to cobble together the votes for an override — said the House would roll out a compensation package for state employees and other workers next week.

The strategy essentially dares Cooper to veto what are sure to be popular salary and tax refund measures.

“I made it clear all along that we’re going to be looking for alternative plans, and you’re getting a sense of that today,” Moore said.

Cooper didn’t immediately respond Wednesday to the refund proposal, although his Twitter account this week highlighted a newspaper editorial that criticized the idea because the state needs to spend more for education, the judicial system and local water projects.

In a letter to Berger on Wednesday, Cooper said Republicans shouldn’t use “piecemeal budget bills” to get what they want without negotiations.

“Let’s stop this,” Cooper wrote. “There is a way forward that forges true compromises without any of us compromising our principles.”

Berger said enough tax revenue is available so the refunds, if approved, wouldn’t affect GOP budget provisions to expand school construction and increase the state’s rainy day reserves by another $700 million over two years.