By Gary D. Robertson

Associated Press

RALEIGH — Senate Republicans gave initial approval to their budget proposal Thursday and prevailed over Democrats who favored new Gov. Roy Cooper’s plan, voting to extend the GOP’s recent broad tax cuts that keep benefiting corporations and the highest wage earners.
In a 34-15 party-line vote, the Senate backed the GOP’s state government spending blueprint through mid-2019. A second and final Senate vote was scheduled shortly after midnight. The legislation will next move to the House, where Republicans also are in charge. The two chambers want to pass a final budget before the fiscal year begins July 1.
A 2½-hour debate focused largely on comparing the GOP plan, which spends $22.9 billion in the coming year, and the budget recommended two months ago by Cooper, a Democrat, which sought to spend $579 million more.
The competing proposals, which benefit from a revenue surplus, both raise teacher pay and put aside more than $300 million into the state’s rainy day reserve. The big difference is that Republican budget-writers inserted another round of tax cuts that would mean more than $1 billion over the next two years. Cooper’s plan only offered to revive a child-care tax credit.
GOP lawmakers say lower taxes have contributed to the recovering economy and put more money in people’s pockets and would continue to do both. Their latest tax proposal would decrease individual and corporate income tax rates even lower and increase standard deductions— meaning more lower-income people would pay zero income taxes.
“I believe that we’ve done our job here,” said Sen. Tommy Tucker, a Union County Republican and co-chairman of the Senate Finance Committee. “It’s all not bad and it’s all not doom and gloom.”
Unable to unravel the GOP plan with amendments, Democrats highlighted Cooper’s budget as the preferred method to help working families and rural areas and spend more on education than Republicans would. It was a departure from their strategy in previous legislative sessions.
Democrats performed a question-and-answer with each other on the floor to criticize the GOP plan. They said the money going to the richest people and corporations with tax breaks should be used to invest in programs and workers’ salaries still lagging since the Great Recession.
Several initiatives in Cooper’s plan were either ignored by the GOP or funded at a fraction of what the new governor wanted. Cooper’s plan would have raised teacher salaries on average by 5 percent, compared to 3.7 percent on average in the Senate plan.
“We note that it contains some of the ideas that Cooper (offered), but it doesn’t go far enough for our working families,” said Sen. Mike Woodard, a Durham County Democrat, adding that “if we fail to make sound investments in our people and our growing state, we will continue to fall behind.”
Republican leaders chafed at Democrats calling it “a billionaire’s budget,” saying 99 percent of the individual income tax filers will pay less or pay no state personal income taxes at all. They recalled when Democrats were in charge of the legislature before 2011. They said Democrats passed budgets with higher tax rates and spending levels that contributed to deep budget holes during the Great Recession.
“What the governor’s budget does is what a lot of the (Democratic) budgets did and that is spend it all,” said Senate Majority Leader Harry Brown of Onslow County, also a chief budget-writer.
House Republicans have their own ideas on tax breaks and haven’t committed to the Senate tax proposal. Cooper will be hard pressed to block the final Republican plan if GOP legislators unite.

Highlights of North Carolina state Senate’s budget bill

Highlights of the $22.9 billion budget for North Carolina state government for the 2017-18 fiscal year tentatively approved Thursday by the state Senate. Unless otherwise noted, monetary figures reflect increases or reductions to base budget expenses or the amount of revenue generated or lost. The two-year budget bill also covers the 2018-19 fiscal year, but those provisions can be altered by the General Assembly when it meets next year.
PUBLIC EDUCATION
— teach an additional 9,120 students anticipated in the public schools this fall: $31.9 million.
— new “driver safety incentive program” that reimburses students up to $275 for a public or private driver education course necessary to obtain a learner’s permit, while eliminating the $65 cap that school districts can now charge students for such training: $25.8 million.
— classroom textbooks and digital materials: $11.1 million.
— expand bonus programs for teachers with students in Advanced Placement, International Baccalaureate and industry certification classes to charter schools: $400,000.
— modernize Department of Public Instruction business systems: $18.8 million.
— cover legal fees by Superintendent of Public Instruction’s office: $300,000.
— reimburse initial teacher licensure application fee for first-time applicants: $245,000.
— fund up to five positions in the Superintendent of Public Instruction’s office: $433,000.
— cut funding by 25 percent to Department of Public Instruction, with spending reductions determined by agency: -$13.2 million.
— eliminate four State Board of Education staff positions: -$513,000.
— reduce funding to North Carolina Education Endowment Fund for start-up to reinstate N.C. Teaching Fellows Program: -$4.6 million.
— pay for 800 additional full-time equivalent students in the state community college system this fiscal year: $4.9 million.
— expand NC Works Career Coaches, employed by community colleges to work with high school students: $1.1 million.
— transfer state apprenticeship program from Department of Commerce to community college system.
— University of North Carolina operating budget reductions, with cuts determined by UNC Board of Governors: -$1.9 million.
— improve and modernize UNC system data collection on students and outcomes: $9 million.
— reduce funding for UNC centers and institutes by 10 percent, in keeping with 2014 UNC Board of Governors report: -$8 million.
— expand North Carolina New Teacher Support Program, which provides one-on-one coaching with new teachers: $1 million.
— establish Future Teachers of North Carolina program, which helps high school teachers with curricula designed to attract high-achieving students to teaching profession: $278,000.
— Food Processing Innovation Center on the North Carolina Research Campus in Kannapolis: $5.1 million.
— reduce UNC-Chapel Hill law school funding by 30 percent: -$4 million.
— 15 new slots for medical students at UNC School of Medicine: $3 million.
— add funds to UNC School of Medicine’s Asheville campus project: $8 million.
— funds to stabilize East Carolina University’s medical school: $4 million.
— funds to continue stabilizing enrollment at Elizabeth City State University to hire temporary faculty and start-up funds for aviation science program: $2.8 million.
— establish “Personal Education Savings Account” program, providing additional scholarship awards of $9,000 annually to children with disabilities for qualifying education expenses, including those in non-public settings: $450,000.
HEALTH AND HUMAN SERVICES
— continue compliance with U.S. Justice Department settlement to improve housing and other home and community-based support for the mentally ill: $8.9 million.
— community and rural health center grants: $7.5 million.
— use $18.2 million in federal block grants to serve additional 2,350 children in North Carolina Pre-Kindergarten program.
— increase Smart Start funds to increase access to early literacy program known as Dolly Parton’s Imagination Library, which sends books to children every month: $3.5 million.
— develop overhaul of child welfare system that would regionalize social services departments by 2022: $161,000.
— implement improvement plan for state child welfare system after a recent critical federal review: $8.7 million.
— increase smoking cessation programs: $500,000.
— cover state public health state laboratory budget deficit: $3 million.
— reduce funding to regional managed care organizations that treat the mentally ill, substance abusers and people with developmental disabilities, forcing them to use more cash reserves: -$69.4 million.
— close the Wright School in Durham, a residential mental health treatment center for children, eliminating nearly 40 positions: -$2.3 million.
— legal fees for Department of Health and Human Services with anticipated or pending litigation over delays in construction of new Broughton mental hospital in Morganton: $3.5 million.
— increase staff to improve inspections of hospitals, hospices and adult and family care homes: $473,000.
— provide Medicaid funding to continue services at expected demands and use rates: $3.8 million.
— reduce Division of Medical Assistance funding, with cuts determined by agency: -$20 million.
AGRICULTURE, NATURAL AND ECONOMIC RESOURCES
— purchase airplane and maintain and operate firefighting equipment by state Forest Service: $2.3 million.
— international marketing of state agricultural products: $500,000.
— Tobacco Trust Fund, which provides grants to tobacco-related farms and businesses: $664,000.
— agricultural conversation easements and other programs to sustain family farms: $1 million.
— eliminate funding, three positions for Department of Agriculture’s Small Farms Program: -$238,000.
— reduce Department of Environmental Quality by 9 percent, in part by eliminating 45 positions, including the department’s chief deputy. Funding would be eliminated for the department’s environmental assistance and customer services programs, as well as for energy research for energy centers at N.C. State University, North Carolina A&T State University and Appalachian State University: -$7.2 million.
— create state-of-the-art Department of Commerce web site: $500,000.
— create new Site and Building Development Fund, designed to help prepare sites to attract major manufacturing employers: $2.5 million.
— tourism and economic development advertising by the Economic Development Partnership of North Carolina: $4 million.
— digitize historic publications held by the state: $185,000.
— Clean Water Management Trust Fund: $3.5 million.
— Grassroots Arts and Rural Touring Arts grant programs: $875,000.
— maintenance of state historic sites: $500,000.
— cover debt service to pay for more borrowing approved by voters in 2016: $24 million.
— continue film production grant program: $15 million.
JUSTICE AND PUBLIC SAFETY
— pilot program in Wilmington for quick response team to help opiate and heroin overdose victims lacking follow-up treatment: $250,000.
— State Bureau of Investigation funds for undercover drug purchases and telephone records: $500,000.
— eliminate 69 long-vacant positions in the Division of Adult Correction: -$3.4 million.
— create 200-bed facility in Buncombe County for female offenders who are subject to jail time for violating the terms of their probation: $865,000.
— eliminate funding for emergency judges: -$654,000.
— hire 56 new deputy court clerk positions in districts having trouble meeting workloads: $2.7 million.
— create 37 new assistant district attorney positions across the state: $2.5 million.
TRANSPORTATION
— purchase 1,700 credit card readers for the Division of Motor Vehicles and License Plate Agency offices: $2.1 million.
— create new Mobility/Modernization fund to fund construction with immediate needs, including intersection improvements, economic development assets and congestion-reducing projects: $40 million.
— bridge preservation and replacement with some of the funds coming from the Highway Fund’s general maintenance account: $117 million.
— decrease funds for road contract resurfacing: -$10 million.
— pavement preservation activities: $30 million.
— create new Roadside Environmental Fund for vegetation management, litter removal, rest areas and guardrail replacements, with money coming from general maintenance account: $104 million.
— increase Highway Trust Fund money toward strategic transportation projects that have ranked the best through the Department of Transportation scoring system: $140.1 million.
OTHER AGENCIES, SPENDING AND RESERVES
— increase state contributions to pension funds for National Guard members, firefighters and rescue squad workers: $756,000.
— increase community investments in maintaining local military programs and activities: $2 million.
— use $10 million from Dorothea Dix property sale proceeds to set aside hospital beds in local psychiatric units and to develop mental health crisis centers for children.
— transfer state Human Relations Commission from the Department of Administration to the Office of Administrative Hearings, eliminates commission director’s position.
— supplemental relief and recovery funds after Hurricane Matthew: $150 million.
— increase savings reserve: $363.1 million.
— repairs and renovations to state and university buildings: $120 million.
— infrastructure improvements to North Carolina Zoological Park: $5 million.
TAXES
— reduce individual income tax rate from 5.499 percent to 5.35 percent in 2018.
— increase standard deductions for individual income tax filers.
— lower corporate income tax rate from 3 percent to 2.75 percent in 2018 and 2.5 percent in 2019.
— overhauls and reduces business franchise tax, creating flat $200 tax on first $1 million of a business’ net worth.
SALARIES AND BENEFITS
— average 3.7 percent increase in teacher salaries: $131 million.
— use $24 million in lottery proceeds to increase principal compensation and create a new salary schedule based on experience and performance.
— assistant principal pay increases: $4.5 million.
— rank-and-file state employees pay increases of the greater of 1.5 percent of their salaries or $750: $142 million.
— complete multi-year effort to increase pay of state correctional officers: $18.4 million.
— boost salaries for state employee positions considered difficult to retain or recruit: $5 million.
— eliminate retiree medical benefits for new state employees hired after June 2018.
POLICY PROPOSALS
— create a new Department of Adult Correction and Juvenile Justice out of the current Department of Public Safety.
— end in late 2020 the practice of 16- and 17-year-olds being tried in adult criminal court for misdemeanor charges.
— place a moratorium through 2020 on state permits for wind farm projects while lawmakers study whether more restrictions are needed to protect military installations.
— phase out by 2025 “certificate of need” laws requiring state approval before hospitals and health facilities can offer more beds or build new locations.
— fund web site to make all state and local government budgets available online.
— require UNC Board of Governors to be given 10 business days before voting on items on its agenda.
— allow people at least 65 years old to audit UNC and community college classes for free.
— limits or prevents use of state funds by agencies to pay for outside counsel without the General Assembly expressly approving the spending.
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Source: Senate Bill 257; Senate Appropriations Committee budget report; Senate leader Phil Berger’s office.