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August 5, 2021

NC Republicans finally agree on next year’s spending total

By Gary D. Robertson
Associated Press

RALEIGH — Republicans in the North Carolina legislature have finally agreed on how much they want to spend on state government next year, loosening a fiscal knot that delayed House and Senate budget work for weeks.

GOP leaders in the two chambers have set their spending cap for the year starting July 1 at $25.7 billion, or 3.45% above current fiscal-year spending. House Speaker Tim Moore and Senate leader Phil Berger also said in a Tuesday news release that they are committed to cutting taxes “for the vast majority” of North Carolina residents, but didn’t firm up a figure for revenue they would forgo. A Senate finance package that cuts income taxes by $584 million next year is expected to receive a floor vote Wednesday.

Until last week, the two chambers were hundreds of millions of dollars apart on a spending target, with the Senate wanting to spend less than the House. Settling on a dollar amount now is designed to ease negotiations between the two chambers on the back end, once each side approves competing plans on how to spend the money.

The front-end disagreement meant the Senate, which by tradition passes a budget this year, delayed action on a spending plan it was supposed to complete by late April. Patience waned last week as Moore said publicly that his budget writers would pass their own plan if there weren’t significant steps toward a spending cap. Berger returned the volley by threatening to approve smaller spending measures this year, rather than pass a comprehensive budget bill.

“This agreement builds on the last decade of responsible Republican-led budgets resulting in a boom decade that put North Carolina on a strong trajectory to recover from the recession,” Berger and Moore said in the release.

Reaching this milestone means Senate Republicans can roll out a budget and pass it in roughly two weeks, with the House offering a competing plan soon after. The two chambers will then negotiate a final package to send to Democratic Gov. Roy Cooper. Cooper’s budget proposal would spend $26.6 billion. Both figures are below the $27.35 billion in revenues that state economists estimated four months ago would come in next year.

Cooper’s successful involvement in those negotiations will say a lot about whether he will sign the budget into law or veto it, as he’s done three times since 2017. A budget stalemate between Cooper and legislative leaders in 2019 never got fully resolved, leading to the passage of category-specific spending bills similar to those Berger suggested would have emerged without an agreement.

The crux of the 2019 impasse centered around Cooper’s insistence for lawmakers to consider expanding Medicaid to hundreds of thousands of additional adults. The Republicans’ news release Tuesday said they had agreed their competing budgets would not contain expansion. And instead of any bond package for school or government building construction, the GOP leaders said they have committed at least $4.2 billion in cash toward capital spending through mid-2023.

Democrats contend more spending is needed to address education, health care and environment needs. They say it can be done even while raising the state’s emergency reserves because state government coffers are so flush following the pandemic. Another revenue forecast is expected very soon and could boost revenue expectations next year. And that’s all on top of billions of dollars in federal coronavirus relief aid yet to be spent.

Arguments between the House and Senate on the bottom-line spending figure centered on a formula that takes into account inflation and state population growth. Senate Republicans have expressed more allegiance to that recipe over the years than the House. Tuesday’s agreement also says the GOP’s 2022-23 budget would spend no more than $26.7 billion.

 

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