Gov. Roy Cooper says he’ll sign compromise state budget

Gov. Roy Cooper speaks from the N.C. Department of Administration building in Raleigh.

RALEIGH — Gov. Roy Cooper announced Tuesday he would sign the compromise state budget plan into law when it passes the General Assembly this week.

“I will sign this budget because, on balance, the good outweighs the bad. It moves North Carolina forward in important ways, many that are critical to our state’s progress as we are emerging from this pandemic,” Cooper said in prepared remarks.

The support from Cooper made the bill’s passage in the N.C. Senate a certainty, as the budget passed by a bipartisan vote of 40-8.

The Democratic governor said that the budget got many things right, including expanding high-speed internet, funding for universities and community colleges, helping businesses recover from pandemic losses, and raises and bonuses for teachers and other state employees.

“This budget continues the Republican-led legislature’s decade-long commitment to low taxes and responsible spending. The multibillion-dollar surpluses these policies helped create are evidence that they’re working, and it means we can cut taxes even more,” Senate Leader Phil Berger (R-Eden) said in a statement following the Senate session.

The budget proposal comes in at $52.9 billion over the biennium.

The 2021-22 budget comes in at $25.9 billion, which is a 4% increase over the 2020-21 budget. In 2022-23, the budget calls for $27 billion or 4.1% increase.

Education spending, around $1.5 billion above the base budget in recurring funds, is a top priority with salary and hourly wage increases in K-12 and at the secondary levels.

The average raise for teachers over the biennium is 6.7%. Teachers will also be eligible for up to $2,800 in bonuses and the usual teacher pay step increases are also included.

State retirees will see a 5% boost over the biennium in a 2%range for 2021-22 and 3% in 2022-23.

The budget also allots $100 million to supplement salaries in low-wealth school districts.

Minimum wage rates for non-certified local school employees and community colleges will increase to $13 an hour in 2021-22 and then in 2022-23 to $15 an hour.

Over the biennium, community college faculty will receive a 6% increase.

Funding for the NC Promise Tuition Plan will receive $15 million for 2021-22 and $20 million in 2023.

The NC Promise Tuition Plan allows in-state students to pay only $500 and out-of-state students to pay $2,500 per semester at certain state schools. Schools currently part of the plan include Elizabeth City State University, the University of North Carolina at Pembroke and Western Carolina University.

Fayetteville State University has joined the plan, and around $11.5 million in additional funds will be added in 2022-23 to include the school.

State employees will see a 5% raise split evenly in half over the two-year budget period. Those employees will also get a $1,000 bonus.

Another topline item in the budget is healthcare-related spending, including extensions to post-partum benefits beginning in April 2022 and $150 million allocated for child advocacy centers. Another $150 million drawn from the State Fiscal Recovery Fund will go to address lead and asbestos in school and childcare centers.

Medicaid expansion is not in the budget. Cooper has vetoed all previous budgets presented to him that did not include Medicaid expansion. The budget, however, does include the creation of a joint legislative committee to study access to healthcare in the states.

That decision irked Cooper, who said real action to address extending health insurance coverage to hundreds of thousands via the federal program is still needed.

Roughly $5.9 billion in state funds is in the budget for infrastructure projects and capital projects, including $878 million to state agencies, $1 billion to the UNC System, and $400 million to community colleges.

A modified version of the various tax-cut plans that worked their way through the General Assembly this session also has a spot in the budget, which includes increasing the zero-tax bracket to $25,500.

Beginning in 2023, the state’s personal income tax rate will be incrementally decreased from the current 5.25% down to 3.99 % over the following six years. Additionally, child tax credits are increased by $500 per child.

Corporate taxes will see a similar declining sliding scale. That tax will be phased out over a six-year period beginning in 2025.

Military pensions will no longer be taxed. The estimate provided by the legislature for the impact on state revenues is around $30 million a year.

PPP loan forgiveness is also included in the tax-related items in the budget.

The state’s Savings Reserves, often called the Rainy Day Fund, will top $4.25 billion once the budget proposal is signed.

Other notable spending items include $338 million is set aside for economic development projects, $800 million in state funds for disaster relief, $215 million in federal COVID-19 funds to reimburse the State Health Plan for COVID-related expenses, and $750 million in federal funds to the North Carolina Parks and Recreation Trust Fund (PARTF) and the Land and Water Fund.

Policy items included in the budget include revisiting collusive settlement agreements and statewide emergency declarations. The legislature passed bills on both topics earlier this year only to have Cooper veto them.

Senate Bill 105 contains language limiting an ongoing state of emergency declaration beyond 30 days unless concurrence is received from the Council of State. If concurrence is received, at the 60-day mark the state of emergency would expire unless action is taken by the General Assembly. The change would be effective Jan. 1, 2023.

A section is also included prohibiting collusive settlements by the N.C. Attorney General by including a new section in state statute stating in cases where lawmakers are a party or have intervened in a case, that a “consent judgment shall be jointly approved by the Speaker of the House of Representatives and the President Pro Tempore of the Senate, or by and through counsel of their choice, before the judgment may be entered.”

Gov. Cooper said that signing the budget did not mean he consented to them being included, and hinted at future litigation, calling both items unconstitutional.

“However imperfect this budget is, our schools, our communities, our small businesses, our families need our help right now, especially as we recover from this pandemic,” Cooper said Tuesday.