Winston-Salem Journal: Ap

Jun 28, 9:11 PM EDT

Legislature begins giving formal OK to budget adjustments

RALEIGH, N.C. (AP) -- The Republican-led General Assembly began offering its formal endorsement Tuesday to a state government budget deal that raises pay for teachers and state employees and offers an income tax break to those who don't itemize on their returns.

The Senate gave preliminary approval to the compromise measure with the House on a 33-16 party-line vote in favor of the GOP, whose members praised the $22.3 billion plan that spends less than 3 percent more than the current fiscal year. The bill adjusts the second year of the current two-year budget that begins Friday.

One more Senate vote Wednesday and two House votes - the first coming Thursday - are needed before it goes to the desk of Gov. Pat McCrory, who hasn't spoken publicly about the agreement. But the measure does meet his goal of raising average teacher pay - from state and other sources - above $50,000 this fall, according to legislators.

The measure also sets aside $474 million in the state's rainy day reserve fund, bring its total to nearly $1.6 billion, a record.

Senate Appropriations Committee co-chairman Harry Brown, R-Onslow, said the budget adjustments follow the GOP mantra of "spending responsibly, taxing sparingly and saving wisely." The measure also includes several initiatives to keep the cost of attending University of North Carolina system schools in check, including the offer of $500 in-state tuition at three campuses beginning in fall 2018 and fixed tuition for incoming in-state freshmen this fall.

The agreement provides the "pathway for the opportunity of a college education for everyone in North Carolina at a reasonable cost," Senate leader Phil Berger, R-Rockingham, said during floor debate. "On balance, this is the best budget that I've seen in the 16 years that I've been here."

Democrats said there were some good items in the budget, like teacher pay raises of 4.7 percent on average, but they concentrated on what they saw as negatives.

In particular, they criticized nearly $35 million inside the plan to expand taxpayer funded-scholarships to K-12 students in low-income families. The measure projects $10 million increases annually for the next decade.

"There's some good things to be found in this budget," said Sen. Floyd McKissick, D-Durham, "but there are others ... which I detest, which I find deeply troubling."

A small revenue surplus, money unspent by government agencies and more than $318 million in Medicaid savings gave Republicans the ability to offer the pay raises, including an across-the-board 1.5 percent raise for rank-and-file state workers, along with money for bonuses. Standard deductions also will rise by $1,000 to $2,000 through next year, meaning more money earned by income tax filers will be subject to no taxes. Republicans say those cuts will be weighted toward low- and middle-income filers.

The extra funds also allowed Republicans to have more funds than usual to distribute to nonprofits organizations and local initiatives. These have traditionally been called "special projects." Critics have called it pork.

"You can drag it home and be happy about it but it does not go to addressing the priorities of the children of this state," said Senate Minority Leader Dan Blue, D-Wake.

Other items in the final budget:

- create a pilot program to reward the best third-grade reading teachers with bonuses of up to $6,800.

- repeal a $500,000 cap approved in 2015 on state funding for light-rail projects, although other restrictions in place, including a 10 percent limit on funding a project from state funds, could be problematic for some regional governments.

- scale back a Senate proposal that would have repealed and replaced nutrient management rules for several bodies of water used for drinking water. Now the rules for Jordan and Falls lakes in the Triangle area again will be delayed.

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