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Senate gives OK to NC budget with billions in federal aid

June 24, 2021 GMT

RALEIGH, N.C. (AP) — A North Carolina government budget proposal heavy on capital projects, saving reserves and tax cuts and distributes over $5 billion in federal COVID-19 aid received preliminary approval on Thursday from the state Senate.

The GOP-controlled chamber voted 32-18 for the two-year plan, which would spend $25.7 billion in state tax dollars next year, or a 3.5% increase compared to the current fiscal year. But budget-writers still had to account for historic amounts of federal relief, as well as a massive $6.5 billion windfall in additional state dollars through mid-2023 announced just last week.

“I jokingly said earlier today, ‘I’m embarrassed that we’re spending so much of good taxpayer money in this budget,’” said Sen. Brent Jackson, a Sampson County Republican and an appropriations committee chairman. “But it is a good budget.”

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But Democrats said the Republican proposal misses a once-in-a-generation opportunity to address program and salary needs in K-12 schools and in health care. Teachers and state employees would receive 1.5% annual pay increases, along with bonuses ranging from $1,000 to $1,800. Democratic Gov. Roy Cooper’s budget proposed average 5% annual raises for teachers and 2.5% annual raises for rank-and-file workers, along with bonuses.

“We have the resources to dig deeper,” said Democratic Sen. Natalie Murdock of Durham County as she unsuccessfully sought an amendment to raise the minimum wage for school custodians, cafeteria workers and other staff to $15 per hour. The Senate budget raises the minimum to $13. Republicans used parliamentary maneuvers to deny votes on other Democratic amendments during a 2 1/2 hour debate.

Still, four Democrats joined all Republicans in voting for the measure, which gets a second required floor vote Friday. The bill then goes to the House, where Republicans will pass their own plan. The two chambers then will negotiate a final proposal to present to Cooper, who has vetoed all three omnibus budget bills presented to him since taking office in 2017. Cooper wants more involvement in fashioning a final plan.

“The Senate budget mortgages the future health and education of our people to the corporations and wealthiest among us ... Just awful,” Cooper tweeted late Wednesday. “Thank goodness the budget process has a long way to go.”

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Republicans said the tax cuts return surpluses to taxpayers, benefitting low- and middle-income tax filers disproportionately. Individual income tax rates would fall from 5.25% to 3.99% by 2026 and the 2.5% corporate rate would reach zero in 2028. Standard and per-child deductions for individual filers also would go up. In all, the individual and corporate tax changes would result in $13.5 billion less cumulative revenue for the state over the next five years.

The budget would put an additional $3.8 billion in the state’s rainy-day reserve and $3 billion toward a slew of state construction projects. The federal American Rescue Plan money distributed includes $1.5 billion for grants to help business and nonprofits who struggled during the pandemic, over $1.1 billion for local water and sewer projects and several hundred million dollars on expanding broadband.

“The amount of money that is being spent in this budget is unprecedented,” Senate leader Phil Berger said. Still, he said, the Democratic amendments set aside would have committed the state to billions of dollars more in annual spending in perpetuity. House and Senate GOP leaders have agreed to spending caps in the two-year budget.

Democrats complained that GOP legislators should have still complied with a judge’s order for the state to carry out a “comprehensive remedial plan” to address school funding litigation.

That plan, offered by Cooper and the State Board of Education, envisions spending at least $5.6 billion through 2028. Cooper’s budget included almost $1.6 billion toward meeting those education goals addressed by the “Leandro” case.

The Senate’s budget would spend about $321 million in state funds over two years on items explicitly mentioned in the remedial plan, according to an analysis by legislative staff. The figure doesn’t include other federal funds.

“It’s an atrocity that we sit here with the funds and we refused to spend” but a fraction of what is needed, said Sen. Gladys Robinson, a Guilford County Democrat.

Senate Republicans have said a judge can’t force the legislature to spend money, and point out that education funding has grown significantly under GOP legislative rule. Watauga County GOP Sen. Deanna Ballard, an education budget-writer, emphasized Thursday that the state budget proposal and other federal COVID-19 relief dollars for all of education since 2020 would add up to $24 billion.

“The aim of this budget is to serve our students with a ‘sound and basic education,’” Ballard said, citing a phrase from “Leandro” court rulings from 1997 and 2004.