NC House budget plan reveals tax cut and pay rise for state employees

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RALEIGH, North Carolina (WNCN) – Republican leaders in the state House of Representatives on Monday unveiled plans to cut taxes and raise civil servants’ salaries as they try to reach agreement on a budget plan two-year final with the Republican-controlled Senate and Democratic Governor Roy Cooper.

The House proposal keeps overall spending in line with the version of the budget passed by the Senate in June, but makes a variety of changes, including the amount of tax cuts and the amount of workers’ wages.

“It controls spending while meeting many critical needs that we have in our state,” said Speaker of the House Tim Moore (R). “He takes care of North Carolina.”

The House plan would reduce the personal income tax rate from 5.25% to 4.99%. The senatorial version of the budget committed the state to lower it further in the coming years to 3.99%. With increases in the standard deduction as well, Rep. John Szoka (R-Cumberland) said the median household would save about $ 330 on their tax bill.

The House also proposed to reduce the corporate tax rate from 2.5% to 2.25% in the first year, and then to 1.99% in the second year. The Senate budget would phase out the tax by 2028.

Both houses agreed earlier this year that spending will not exceed $ 25.7 billion, a 3.45% increase in spending, in the current fiscal year and will not exceed $ 26.7 billion. dollars the following year.

Democrats are worried about attempts to get the state to cut taxes further in the years to come.

“We don’t want to get locked into tax cuts that are really going to hamper our ability to fund our government in the future,” said Representative Wesley Harris (D-Mecklenburg).

The House budget also includes a variety of policy changes, such as requiring schools to post learning materials online for the public to review, eliminating the requirement that educators pay $ 50. $ to help pay for the hiring of a substitute teacher when they use a personal day and reinstating master’s pay for new teachers.

The Senate budget also included policy changes, including limits on the governor’s power.

Harris described some of these changes as “things that just don’t belong in the state budget.”

He added: “And we just want to make sure that we don’t link that to corporate tax giveaways and a partisan political wishlist that includes the difficulty of voting, the removal of our governor’s powers.”

House Republicans are demanding one-time bonuses for state employees and salary increases that are said to be higher than what the Senate included.

Most state employees would receive an average pay rise of 5% over two years.

For kindergarten to grade 12 teachers, it would be 5.5% on average. The Senate asked for 3 percent for them, while Governor Cooper asked for 10 percent.

Premiums would be higher for government employees earning less than $ 75,000 and those in certain frontline positions during the pandemic.

Retirees would receive a 2% bonus each year, but not a permanent cost-of-living adjustment.

The House budget also includes tax exemptions for businesses that received loans under the Paycheck Protection Program and for people who received unemployment benefits last year. The House passed a separate bill earlier this year calling for the measures, but the Senate did not act on it.

In June, state leaders learned that North Carolina would receive about $ 6.5 billion more than expected over the next two years.

This prompted Democrats to call for increased spending in areas like education. Republicans did not want to increase spending beyond what they had already agreed to.

Responding to the budget announcement on Monday, Representative for Democratic House Leader Robert Reives (Chatham County) said, “We should use this unique financial opportunity to build a better functioning North Carolina for everyone. world. This budget proposal falls short of that, but this is only the beginning of the process and I look forward to working with all stakeholders, including Governor Cooper, to develop a budget that truly reflects the needs of our State.


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