GOP leaders say a budget deal is close after yearlong stalemate
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After a year of negotiations, North Carolina Republicans are close to finalizing a state budget, legislative leaders said Tuesday.
Why it matters: North Carolina is the only state that did not pass a full budget last year, and the stalemate has delayed potential raises for state employees and teachers.
Driving the news: Senate leader Phil Berger and House Speaker Destin Hall appeared before the news media Tuesday afternoon to announce they had reached an agreement on many of the major sticking points.
- Both cautioned that negotiations were ongoing and that the final bill had yet to be written.
- "This is a starting point," said Berger, who is presiding over his final budget negotiations as Senate leader. "There is a lot that needs to be decided between the two chambers, but this agreement sets out a good framework."
Zoom in: The budget is moving forward after the two chambers of the General Assembly compromised on the pace of personal income tax cuts.
- The Senate had previously favored a faster schedule of tax reductions, while the House wanted to keep the current tax rate because of uncertain economic forecasts for the state.
By the numbers: Previously scheduled tax cuts are being repealed to free up money for immediate and substantial raises.
- Income taxes — currently 3.99% — would drop to 3.49% in 2027 and hold there for three years before dropping further to eventually reach 2.49%.
- As part of that agreement, Berger said both chambers would agree to put to voters this fall a constitutional amendment permanently capping taxes at 3.5%.
The tax compromise would allow the state to move forward with new raises for teachers and state employees.
- Under the deal, teachers would receive 8% raises on average, and a bonus of either $1,000 or $500, depending on their years of service. Hall called the raises for teachers the largest on average since 2006.
- State employees would get a raise of around 3% on average and a bonus of either $1,750 or $1,000, depending on whether they make more or less than $65,000 per year.
- Several law enforcement agencies would get larger raises — including the State Bureau of Investigation, prison officers and Alcohol Law Enforcement — to improve recruitment.
Between the lines: Funding for the future of N.C. Children's Hospital also appears closer to being resolved.
- Berger said lawmakers have agreed to release $208 million from previous budgets for the hospital that had been held up by the current negotiations.
- But any future money for the hospital is still being negotiated.
The other side: In reaction to the deal, Democratic leadership said it was disappointed by the scale of raises for state employees.
- "Any pay raise that falls below inflation and the increased cost of the State Health Plan will effectively be a pay cut for employees who serve our state, particularly if those raises are not retroactive," House Democratic leader Rep. Robert Reives said in a statement.
- The raises in the deal are effective upon the signing of the budget and not retroactively, Hall said during the press conference.
What's next: Hall said the two chambers still have much to work out but that they have resolved the budget's major structural issues.
- Negotiations will likely continue over the next few weeks, he said.