The North Carolina Senate rejected the House version of the state’s two-year spending plan, paving the way for budget negotiations.
The Senate unanimously voted, 46-0, not to agree to the House proposal Tuesday that calls for spending more than $52 billion over the next two years and cuts taxes by $2 billion.
“[The House] really did try, but I think we need to probably not concur so we can get together, and sort of straighten it out for them and help them get it in the right place,” Senate Committee on Appropriations/Base Budget Co-Chair Brent Jackson, R–Sampson, said.
House budget writers touted the historic amounts of spending on disaster relief and capital projects in their proposal. The House also cut more taxes than the Senate. The Senate version reflects a $1 billion tax cut for North Carolinians.
The House version includes more tax provisions than the Senate proposal. It makes expenses paid with federal Paycheck Protection Program loans tax-deductible and exempts military pensions, which both are absent from the Senate proposal. The Senate version, however, eliminates the corporate tax, while the House reduces the tax rate to 1.99%. The Senate also cuts the personal income tax rate lower than the House; 3.99% versus 4.99%.
Most state employees, including educators, would see a 3% pay increase under the Senate plan. State correctional officers could see an average pay increase of 7% under both plans. The House plan provides 2.5% raises for most state employees, and teachers would see step raises around 5.5%.
Under the House plan, other school personnel would receive $13 an hour pay during the first fiscal year and $15 an hour pay during the second fiscal year, while the Senate plan only secures $13 an hour over the two years. The House also provided eight weeks of paid parental leave for public school employees and restored advanced degree supplements for the first time.
Democrats in both chambers criticized the plans for inadequate education funding and teacher raises. Senate Democrats said the Senate plan prioritizes corporate taxes and does not set aside enough funding for state workers and needy North Carolinians.
The budget bill now heads back to the House, where lawmakers must make a formal request for a conference committee hearing. Once both chambers vote on and pass a final plan, it must be sent to the governor. The state is now 48 days into the current fiscal year.