RALEIGH — With a standing promise to adjourn by the first week of July, legislators are moving quickly to reach final agreement on a budget that includes a $22.9 billion spending plan.

After a day of hearings, the Senate, which released an 800-page budget document late Tuesday night, may conduct its first vote later Thursday.

North Carolina General Assembly building in Raleigh. Angie Newsome/Carolina Public Press

The Senate plan is based on an overall 3.75 percent growth in the state budget. It includes an increase in teacher pay averaging 3.7 percent per year for the next two years and a boost in pay for principals and assistant principals. The principal pay hike would come from lottery funds. Another $75 million in lottery funds would go to lower-wealth school districts for school construction and repairs.

State employees, including community college and university employees, would see a raise in pay of $750 or 1.5 percent, slightly lower than the raise of $800 or 2 percent in Governor Roy Cooper’s budget plan.

Overall, the Senate plan includes about $600 million less in funding than the plan announced by Cooper in February.

It includes a cut in both personal and corporate taxes, which should reduce revenues by an estimated $1 billion over the next two years and $800 million per year after that. The plan, initially approved by the Senate last month, lowers rates and raises the standard deduction from $17,500 to $20,000 for a married couple filing jointly.

The Senate also did not include a cost-of-living adjustment for state retirees, which Cooper had set at 1.5 percent.

At a press conference Wednesday representatives of retiree organizations called on House leaders to add the COLA, noting that retirees in the state have received only a two percent increase since 2009.

Senate leaders defended their decisions not to add a cost-of-living adjustment and the health care changes, saying alternatives could jeopardize the state’s retirement and health care system.

Another Senate provision eliminates retirees’ health care insurance benefits for all new state employees starting work after July 1, 2018. The change would not apply to current employees or retirees.

WNC projects and cuts

The Senate’s biennial budget includes several items targeted for the western region, including additional funding for the UNC School of Medicine’s Asheville campus at the Mountain Area Health Education Center, adding $8 million in the first year and $13.4 million in the second year to the program’s current annual funding of $3 million. The program is intended to increase medical school residences in WNC.

Also on the list is more than $2 million for capital improvements at the Asheville Regional Airport, part of roughly $194 million proposed for the next two years for airport improvements statewide.

Budget writers cut roughly $1 million each year in funding for energy centers at three state universities including Appalachian State University, leaving the program with a total of $636,240 each year.

The state’s Department of Environmental Quality also saw a round of personnel cuts, including two positions at DEQ’s regional office in Asheville.

The Senate also added $15 million annually for the state’s Film and Entertainment Grant Fund and added $1 million each year for increased travel and tourism marketing.

Next steps

While the Senate prepares to vote, House leaders are wasting no time trying to hammer out some of the differences between House and Senate priorities.

House members have not fully embraced the Senate’s set of tax reductions. The chambers also differ on funding education and juvenile justice reform.

House members met this morning to work on one likely sticking point, the Raise the Age legislation sponsored by Rep. Chuck McGrady, R-Henderson, one of the chief budget negotiators for the House.

The legislation would raise the age at which juvenile offenders could be tried as adults. North Carolina is the last state to try 16 and 17 year olds as adults and the change has been propelled by a major lobbying effort from the judicial branch and law enforcement agencies.

The change is included in the Senate budget, but has a later phase in than the House proposal and a lower price tag as a result.

At Thursday’s meeting of the House Appropriations Committee, McGrady said he was encouraged to sponsor the bill by state Supreme Court Chief Justice Mark Martin not because of his legal experience, but because he was a budget chair. Martin has been a strong proponent of the change.

“He knew this would ultimately come down to being about money and he wanted the bill sponsor to be doing the negotiating,” McGrady said.

Decisions on how to move ahead with the program would have an impact on the final budget, he said.

Although not a part of the state budget, another major source of funding is waiting in the wings. Next week, the House Education Committee is scheduled to vote on holding a statewide referendum on $1.9 billion in school construction bonds.

The spending formula for the bonds includes and emphasis on low-wealth counties.