RALEIGH, N.C. (WGHP) – Saying he was “pretty sure the House will not concur with this budget,” North Carolina Senate Leader Phil Berger revealed a 2-year spending plan that includes smaller raises for state employees and teachers than either the House or Gov.  Roy Cooper suggested when they took their passes earlier this spring.

The Senate’s bill is long on saving money, investing in health care, cutting personal and corporate income taxes and implementing a wider availability for private school vouchers that has been debated in recent weeks. Committees will begin debating its details on Tuesday.

“We have intended to pass our version of the budget this week and set up a conference committee,” Berger (R-Rockingham) said during a news conference. “Even if the conference is three weeks, we should get it done by the middle of June.”

The spending plan he and three other senators described is for $29.8 billion next year and $30.9 billion in 2024-25, which he said, “proceeds with caution” by holding billions “in key reserves,” such as the rainy day fund – up to $5 billion by itself – and the fund to save for an expected recession.

As the Senate had announced even while the House was passing its bill in April, this budget would cut personal income tax to 4.5% in 2024 and to 2.49% by 2030, which Berger said would save $6.6 billion in the next five years.

One of the issues certain to get the most discussion is planned pay raises to help address labor shortages in state agencies and the always controversial salaries for public school educators.

The Senate proposed a 5% across-the-board raise for all state employees and 4.5% for teachers over the next two years. They increased starting pay for teachers by 11% on top of that and advanced that salary from $37,000 to $41,000, Berger said.

He also said this does not include the local supplement that can add $5,000 and that it pushes the average pay to $59,121 by the end of the budget period.

There also is an expansion of merit-based increases for key state employees, and the budget doubled the recruitment pool for hard-to-fill and retain positions. The NC Highway Patrol, State Bureau of Investigation, and Alcohol Law Enforcement will get a 12% pay increase across the biennium, a follow-up release specified.

In the House’s plan teachers would receive 10.2% raises (5.5% in the first year), but they also would receive 8 weeks of parental leave (up from 4), stipends for having a master’s degrees and some assurances about class size for fourth and fifth grades.

State employees would receive 7.5% raises (4.25% in the first year), and there would be an additional 2% for positions that are harder to fill, such as school bus drivers. North Carolina Highway Patrol employees would get 11% over 2 years.

“We also have included labor market adjustment reserve, that will enable agencies and community colleges to look at areas where there are shortages and provide additional pay raises there … $96 million (double last year),” Berger said.

He said community colleges would offer significant raises for instructors in certain health fields.

In defending teacher salaries, Berger pointed out that pay for a beginning teacher could be as much as $46,000 in the second year and that there were bonuses of

$10,000 for lead teachers and $3,000 for participating teachers.

“There’s a labor shortage across the economy, not just state government,” Berger said. “One of the levers we can deal with is alary. … We plan to utilize that lever, hopefully to great effect. … One of the last things we want to do is that state government raises pay so much that it exacerbates larger economy.”

Health care issues

One of the centerpieces of this budget, of course, is that its passage would fulfill the expansion of Medicaid that lawmakers agreed to do – and Cooper signed into law – earlier this year.

It also spends the one-time $1.6 billion Medicaid signing bonus from the federal government with investments in developing medical education programs at the UNC System, including $60 million at UNC-Pembroke, and community colleges to shore up the needs in staffing for rural hospitals.

It also establishes what it called “significant reform” for the controversial certificate of need for rural medical facilities, expanding on the recommendations of the House to address access to health care in counties with a population of 125,000 or fewer.

“It takes a sledgehammer to the certificate-of-need laws,” Sen. Ralph Hise (R-Alleghany) said.

He also described a very powerful swing at reducing costs for state employees and their dependents by providing more return to employees who are insured outside the state policy. And more controversially the budget requires hospital systems in urban areas – of 225,000 population or more – to save $125 million in state insurance costs over the length of their state licensing – or to lose their licenses.

“They have to meet that savings to the state … in order to keep their licenses,” Hise repeated when asked for clarity.

Other educational investments

Sen. Mike Lee (R-New Hanover) described the investment in education that included significant dollars to add more school nurses, counselors and social workers that senators are hoping will add another 120 employees in those fields.

And there is $35 million each year for school safety grants, which is “not just to hire SROs [school resource officers] but to help children in crisis.”

He also described the expansion of what lawmakers like to call “opportunity scholarships,” which provide public school money to be spent on private school education but on an expanded, tiered bases for students in all income brackets, not just low-income. That’s the concept in Senate Bill 408, which has not cleared both chambers.

He also described $70 million investments in education for high-demand fields, such as nursing dropout subsidies that target programs at historically Black colleges and universities.

Other topics

Berger said there was no gaming money in the budget – the House budget included a significant piece of revenue from expanded sports gambling – and it did not address controversies involving oversight of SBI.

But there were several other items mentioned by the senators and in their follow-up email:

• Allocates $1.4 billion for NCInnovation to improve applied research outputs at UNC System schools and to help commercialize those results.
• Expands the study of development sites to include those with fewer than 1,000 acres and $10 million in reserves to support local governments’ development of new megasites.
• Expands the post-election audit report to include a summary and detailed description of the results, and information on any items that could have affected the outcome of the election.
• Provides almost $19 million for the development of food processing facilities across the state.
• Sets aside $20 million nonrecurring “to provide housing for homeless veterans, victims of domestic violence, sexual assault and human trafficking.”

Highlights of the House’s plan

The 2-year plan as presented includes:

• Teachers would receive 10.2% raises (5.5% in the first year), but they also would receive 8 weeks of parental leave (up from 4), stipends for having a master’s degree and some assurances about class size for fourth and fifth grades.
• State employees would receive 7.5% raises (4.25% in the first year), and there would be an additional 2% for positions that are harder to fill, such as school bus drivers. North Carolina Highway Patrol employees would get 11% over 2 years.
• There are 2% cost-of-living increases for retirees (1% each year), a subject that committee members reinforced at length.
• UNC system employees would get 7.5% raises over two years.
• There is $40 million in school safety.
• There’s $1 billion in infrastructure to help with repairs to the water and sewage systems.
• The budget also allows for the State Bureau of Investigation to become an independent department, not under the Department of Public Safety, and gives legislators the right to remove its director for cause. The governor appoints the director to a 6-year term and currently is the only person who can remove that director.
• There is a significant expansion of opportunity scholarships for school choice, which is tied to Senate Bill 406.