Flawed NC House Budget Passes
The most important bill passed each year is the State Budget. It invests around $24 billion of our money we pay in taxes in public education, health, public safety, and for other public purposes. The budget is a two year spending plan and covers fiscal years 2019-2020 and 2020-2021. Typically, legislators will amend the two year budget at its halfway point in next year’s session.
Before the State Budget becomes law it must pass the State House, then the State Senate, and then both legislative chambers need to agree on the same version. At this point the State Budget goes to the Governor who can sign it into law or veto it. If he vetoes, legislators can try to override the Governor’s veto or work out a new budget agreeable to him.
This week the State House passed its version of the State Budget on a 61 to 55 vote. I voted No.
All budgets have good and bad and this one is no different, but the bad outweighs the good in these key areas.
A Tale of Two Teacher Raises
HB 966 increases teacher pay and that is a good thing. Budget writers say it is an average 4.6% increase, but there’s a catch. In a highly unusual move, the pay raises do not go into effect until January 1, 2020 – rather than July 1, 2019. This means teachers have to wait six months for the raise. If you started raises at the start of the fiscal year (July 1) then the teacher raise would only be 3% because you would be using the same amount of money for
raises over 12 months instead of 6 months.
Why do we need to increase teacher pay? Because we need to attract and keep the best teachers. Pay raise gimmicks like the ones in this budget do not help us attain our goal of attracting and keeping the best teachers.
Governor Cooper proposed a different way and we should adopt his approach. No more corporate tax cuts. Invest $579 million in teacher pay raises (compared with $341 million in the House budget) so you can give a real raise that starts July 1 that raises teacher pay 9.1% over the course of the two year budget.
Missed Opportunity to Invest in Community Colleges and Workforce Development
A good way to help people earn more money and help local economies is to invest in community colleges to provide scholarships. I supported amendments to invest in Finish Line Grants to help community college students finish school and $30 in NC GROW community college scholarships for students pursuing in-demand degrees. Both amendments were defeated and are not funded in HB 966.
Tax Cuts for the Working Poor Instead of Wealthy Corporations
HB 966 cuts the franchise tax that corporations pay. I supported an amendment to keep the tax the same for businesses worth more than $250,000 and to use those funds to reinstate the state Earned Income Tax Credit that benefits low-income working families. The amendment would have meant more money in people’s pockets that they in turn spend locally, but the amendment failed.
State Budget Overview
Passing a State Budget is not an easy process. Earlier in the month of May, the NC House passed its version of the State Budget. In late May, the NC Senate did its version. Over the next few weeks the House and Senate will work out their differences and send a State Budget bill to Governor Cooper who can either sign the bill into law or veto it. Right now, a veto looks likely given both the House and Senate budgets refuse to expand Medicaid and continue to divert money from schools to corporate tax cuts.
Medicaid Expansion Left Out Again
The biggest disappointment with the Senate budget is that it fails to expand Medicaid to close the coverage gap for 500,000 North Carolinians. Every year we send billions of tax dollars to Washington DC that never comes back to us. If it came back through Medicaid expansion, we would have more jobs and more health care for our citizens.
37 other states have expanded Medicaid to close the coverage gap. Most recently, our neighboring state of Virginia expanded Medicaid as part of a State Budget compromise agreed to by a Democratic Governor and a Republican General Assembly. If Virginia can expand health care coverage, lower costs for all of us, and grow health care jobs – why can’t North Carolina?
Health Care Funding Cut
Failing to expand Medicaid is bad, but the Senate budget also underfunds the existing Medicaid budget by at least $100 million. Because many of the dollars we invest in Medicaid are matched by the federal government, the state cut will lead to an even larger total shortfall of $220 million.
Teacher Pay Plan Lower than the House Budget and Governor Cooper’s Proposal
With the Senate budget, average teacher salaries would increase 3.4% over the next two years (compared with 9.1% for Governor Cooper’s proposal). Teachers with 15 to 24 years’ experience would receive a $500 one-time bonus and those with 25 years or more experience would receive a $1,000 one-time bonus.
We need to raise teacher pay to the top in the Southeast and to the national average. To put the Senate’s 3.4% pay raise over two years in context, Governor Cooper had proposed a 9.1% increase. One of the reasons his proposal contains a bigger pay raise is he does not prioritize cutting corporate taxes which is a key feature of the Senate budget.