NC’s Budget – What’s in it for you?


North Carolina Gov. Roy Cooper signed the state budget into law this week, marking the second year in a row that he’s accepted the Republican’s comprehensive state spending plan after vetoing budget bills in 2017, 2018 and 2019. The budget alters the second year of the two-year budget bill Cooper signed last November. It also lifts the state of emergency in place since the coronavirus pandemic reached North Carolina in March 2020. Cooper’s office said the budget includes changes to “ensure flexibility” for the Department of Health and Human Services to respond to the pandemic and so the emergency order will lift on August 15.

The final bill means more money for state employees and teachers and changes to downtown Raleigh. It also means a big savings account because of inflation and concern about the potential for a recession. What it doesn’t mean: Medicaid expansion.

There are raises on the horizon. State employees will get a 3.5 percent raise this year, which is an increase of 1 percent beyond what they were already slated to receive this year.

Retired state employees and retired teachers will get a 4 percent cost-of-living bonus this year, a 1 percent increase over what would have happened without a 2022 budget. Retirees or their beneficiaries will receive their 4 percent bonus between Sept. 1 and Oct. 31.

The State Employees Association of North Carolina called on Cooper to veto the budget. Ardis Watkins, executive director of the State Employees Association, said those raises don’t go far enough to keep up with inflation and won’t do enough to keep employees on the job. 

“That’s a dire situation. We can’t recruit and we can’t even retain right now. Something has to be done,” said Watkins. “The state employees we have are trying to cover everything, but it becomes physically impossible at some point. And, so, I think the infrastructure collapses.” 

The biggest pay raise in the budget is for teachers, who will get an average raise of 4.2 percent this year. That’s an increase in the expected average raise of 2.5 percent written in the 2021 budget bill, which is a two-year spending plan.

Medicaid expansion was notably absent from the budget. This has been a top priority for Cooper and would have provided health insurance to an estimated 600,000 low-income North Carolinians. Cooper said he thinks a deal can be reached in the future.

“I signed the state budget (HB 103) that includes critical investments in education, economic development, transportation and the state workforce. This budget does not include Medicaid Expansion, but the leadership in both the House and Senate now support it and both chambers have passed it. Negotiations are occurring now and we are closer than ever to agreement on Medicaid Expansion, therefore a veto of this budget would be counterproductive” the governor said.

The governor’s criticisms include one regarding the North Carolina Opportunity Scholarship Program, created in 2013 to helping low-income families send children to private schools and religious schools. This year’s budget passed by the legislature puts an extra $56 million into the scholarship reserve fund – a program Cooper strongly opposes.

The bill actually spends $1 billion more on K-12 schools, community colleges and the University of North Carolina system compared to last year, or nearly $16.5 billion. But critics of Republican education policy say lawmakers have failed to comply fully with a judge-approved step-by-step plan to address state educational inequities. The state Supreme Court will hear arguments next month on whether courts can transfer money from state coffers to fulfill what is known as the Leandro decision.

The Leandro case started in 1994, when school districts in five low-wealth North Carolina counties (Hoke, Halifax, Robeson, Vance and Cumberland) and families sued the state, claiming that children were not receiving the same level of educational opportunities as students in higher-income counties.

In 1997, the state Supreme Court agreed, and ruled that the North Carolina Constitution guarantees every child in the state “an opportunity receive a sound basic education.” The court said that the state was failing to meet that standard. In 2004, the state Supreme Court said the state’s efforts to provide a “sound basic education” to poor children were inadequate.

Leandro is back in the news because the courts — along with educational coalitions, Cooper and state Democrats — argue North Carolina is still not doing enough to uphold the Leandro ruling. They say that a new plan, developed by educational consultants, would help provide better educational opportunities for students.

The Republican-controlled General Assembly argues the plaintiffs and the court has no authority to make them provide the funding. Terry Stoops, director of the John Locke Foundation’s Center For Effective Education, said Lee’s order is putting the state in line for a constitutional crisis.

The Leandro plaintiffs dispute this, saying the state Constitution empowers the courts to act when the other branches refuse to carry out their constitutional obligations. Democrats cite the current budget surplus as resources for the plan.

However, even with a projected surplus of more than $6 billion, legislative leaders decided against additional tax cuts beyond those approved last year and put billions of dollars into reserve accounts as concerns of a potential recession mount. 

In the House, Rep. Dean Arp, a Republican budget writer from Union County, referenced the 2009 Great Recession, and said that this year Republicans expanded the state’s savings. Inflation and a potential recession on the horizon were cited as for not spending more.

“Today, we have put our house in order,” Arp said during the House budget debate.

The budget puts $1 billion into a new fund, called the State Inflationary Reserve, as Republican budget writers wanted to have a way to pay for inflation-related cost increases for construction and infrastructure projects.

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