RALEIGH — The Senate’s proposed biennial General Fund budget includes the largest pay raises for state employees in more than a decade, but doesn’t include a cost-of-living increase for state retirees.
Senate leader Phil Berger, R-Rockingham, and top appropriations chairmen held a news conference on Tuesday, May 28, to announce key provisions of the budget.
The proposal for the fiscal year starting in July includes more spending on Medicaid. But it doesn’t fully expand the program under the Affordable Care Act, as Gov. Roy Cooper wants. It cuts business and personal taxes, shifts $1.1 billion into a rainy day savings fund, and increases the amount of income people can earn without paying income taxes.
Education spending would increase more than $1.3 billion over the next two years. K-12 capital funding for new schools and repairs is $4.8 billion over 10 years: $1.67 billion from the State Capital and Infrastructure Fund; $1 billion from the Public School Capital Fund; and $2.1 billion in needs-based capital funding.
Senate Majority Leader Harry Brown, R-Onslow, said teachers will get an average 3.5% raise over two years, with average pay climbing to $54,500.
The budget also gives a raise to state employees. Their pay hikes averaged 7.6% over the past five years while teachers got an average 20% boost, Brown said.
Rob Broome, State Employees Association of North Carolina executive director, joined lawmakers at the announcement. He said state employees received no pay raises in five of the past 10 years, and praised the Senate proposal to add $220 million over the biennium to increase most state employees’ pay by 5%.
Berger defended not adding a COLA for state pensioners because of pressure on the retirement system. It lost $4.1 billion in 2018, and has $17 billion in unfunded liabilities.
Sen. Brent Jackson, R-Sampson, said the state is fully funding its share of the retirement system and State Health Plan in this budget.
The Senate version of the spending plan differs marginally from both House Bill 966, a $23.9 billion budget the House passed along party lines earlier this month, and Cooper’s proposal.
“We think this is a good budget,” Berger said. “We think the House would be wise to take this budget.”
He expects continuing disagreements with Cooper over budget priorities. Many observers think Cooper will veto anything the General Assembly sends him.
Berger said budget plans passed under Republican leadership has sparked an economic boom. “I think [Cooper] should sign a budget that we worked out with the House.”
Cooper and legislative Democrats have been adamant they would not support a budget without Medicaid expansion. The Governor’s Office doubled down in a written response to the Senate plan.
“This budget leaves out Medicaid expansion that would close the health care coverage gap and it shortchanges public schools in exchange for more corporate tax cuts,” Cooper spokesman Ford Porter said. “The Governor hopes to continue working with the House and Senate on a budget that does more to help hard working North Carolinians.”
Medicaid spending will increase several hundred million dollars in the Senate budget, Berger said.
“Some people would call that expansion,” he said.
The budget appropriates more than $32 million over two years to fund 1,000 slots on the Intellectual/ Developmental Disability Medicaid Program waitlist. Recipients receive personal care services and other in-home assistance. Senate Bill 361 included similar provisions but has not been voted out of committee.
Berger said one reason not to expand Medicaid is the possibility the federal government will stop covering 90% of the costs of coverage. He pointed to a federal decision to reduce funding to N.C. Health Choice, which provides government insurance to children whose families earn too much to qualify for Medicaid but not enough to afford private insurance. As a result, the state must pay an extra $100 million next year to keep those children insured.
Most of the people who would qualify for Medicaid under expansion are healthy males between 18 and 50. They would lose Medicaid benefits if they got a job, which discourages people from looking for employment, Berger said. About 40% of people in the targeted Medicaid population would no longer be able to get subsidies for private insurance under Medicaid expansion.
The budget would reduce the number of state certificate of need laws that decide when and where medical facilities may be built, and whether providers can purchase expensive equipment. Lawmakers are pushing CON reform bills this session.