NC House Releases Proposed State Budget

By Staff

Monday evening the North Carolina General Assembly released their budget for 2016. Since it is an election year, state employees and teachers would receive a small raise, and a small increase in the standard deduction that most taxpayers use would result in an estimated $117 a year in the hands of the average family.

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eitc

Republicans who authored the plan claim that by making Medicaid more “efficient” they have freed money for salary increases. This does not, however, take into account the money that the State of North Carolina have access to if they had expanded Medicaid rather than having Governor McCrory block that expansion in order to score political points when Republicans were running hard against the Affordable Healthcare Act and doing their political best to attach the name of President Obama to every issue from education to fighting crime.

The House budget does acknowledge that Republicans’ so-called tax “reform” has failed middle class families. Therefore, searching for a solution to a problem they created, Republican leaders wrote the budget to include expanding the standard deduction to compensate for tax hikes on working families. A more aggressive plan to address North Carolina’s growing income disparity would have included restoration of the Earned Income Tax Credit for low- and lower-middle-income workers. This could have been paid for for by reinstituting a 7.75 percent tax rate on income over $1 million. The Republican Supermajority rejected the idea of this tax or an increase in estate taxes for estates totaling over $54,000,000. They claimed that such an increase would somehow destroy family farms.

More than half of North Carolina taxpayers who make more than $95,000 a year would get a tax cut if the EITC was returned as an option. An EITC wouldn’t cut taxes for people making over $95,000 a year, and it would help those who work and earn under $35,000.

The NCGA’s proposed 2016 budget also calls for a small increase in the standard deduction for the state income tax, beginning in tax year 2017. Married couples filing jointly would be able to deduct $16,000. That deduction is now capped at $15,000. The deduction for a single people would go from $7,750 to $8,000.

State and state-funded local employees would receive an election year raise of 2%, and most would also receive a $500 bonus. Those who are due for a step increase would get the step increase, but not the bonus. Assistant district attorneys and assistant public defenders would receive a 3% raise. Retirees from state jobs would receive a 1.6% cost-of-living increase.

With Republicans taking a hit on their cuts to education spending, this budget would give teachers a raise of around 3%, depending on their position on the salary schedule and classification. A tier system has been added which would effectively provide raises based on time served and other metrics rather than provide raises across the board. Those at the bottom and top of the pay scale would receive $1,000 bonuses, to be paid out monthly over the course of the year. This will allow allow Republican legislators the wiggle room to dubiously claim that they had met Governor McCrory’s ask for a 5% overall raise. None of these raises would bring North Carolina’s teachers to pre-recession pay levels.

The tier system would work as follows:

  • Tier 1 teachers (starting careers), who got the majority of teacher raises in 2015, would not get a raise in 2016. They would receive and election year bonus of $1,000.
  • Tier 2 teachers would see a 4.1% increase.
  • Tier 3 teachers would get 5% increase.
  • Tier 4 teachers would get 3.4% increase.
  • Tier 5 teachers would get 3.2% increase.
  • Tier 6(senior level)teachers would get a 2% raise plus a $1,000 election year bonus.
  • Central office staff and non-certified school personnel would receive a 2% raise.

This still will not meet Governor McCrory’s $50,000 promise nor would it bring salary up to pre-recession levels.

average teacher pay adjusted rfor inflation
average teacher pay adjusted for inflation

“In pursuing more tax cuts over investment, the House is undercutting the foundations of a strong economy,” stated Alexandra F. Sirota, Director of the Budget & Tax Center at the NC Justice Center. “The House budget will not meet the needs of North Carolina, such as improving classroom experiences for every child, revitalizing the main streets of every community and promoting the health and well-being of families and seniors. It is time for policymakers to get serious about the unmet needs in North Carolina and pursue public investment over tax cuts that benefit the rich at the expense of everyone else.”

The negotiations and budgeting process will continue in Raleigh into the summer. You can read the full proposal HERE.