May 9, 2017

The N.C. Senate’s $22.9 billion General Fund budget plan would allow taxpayers to keep more of their own money, while also showing greater restraint than the governor in dealing with state spending growth.

The John Locke Foundation budget team offers that reaction to Senate budget highlights unveiled in a Tuesday afternoon news conference.

“We are glad to see the Senate limit actual spending growth to 3.75 percent, with an increase of just 2.5 percent more than the adopted budget,” said JLF Senior Vice President Becki Gray. “That falls below the combined rate of inflation and population growth of 3.8 percent. It’s much less than the governor’s proposed spending increase of 5.1 percent.”

“Restraining state spending growth shows a great deal of prudence, especially when a revenue surplus of $580 million means that special interests are placing more pressure on lawmakers to increase spending across state government,” Gray added.

Another sign of prudence is the Senate’s decision to set aside more money — $363 million — than Gov. Roy Cooper for rainy-day reserves, Gray said.

The Senate plan would boost state employee pay by $200 million, which represents 1.5 percent or $750, whichever is greater. “It is good to see them take care of the unsung heroes of state government, the regular state employees,” Gray said.

Senators combine this prudence with additional tax relief. “It’s impressive that the Senate exercises fiscal prudence while still managing to return money to North Carolinians with lower income tax rates and a larger standard tax deduction,” Gray said.

Significant increases in spending focus on high-priority items such as $150 million in disaster relief, the Raise the Age campaign to treat nonviolent 16- and 17-year-old criminal offenders as juveniles, and teacher and principal pay increases. “It’s especially helpful to see pay increases tied to hard-to-fill subject areas and hard-to-staff schools.”

There is room for improvement. “Senators would have had even more money for their top priorities if they would end targeted tax incentive programs, rather than expanding them again through programs like the proposed economic development fund,” Gray said.

Overall, the Senate plan represents a positive step in the ongoing state budget process, Gray said. “The Senate’s proposals offer a more sustainable approach to the state’s long-term fiscal health than the governor’s plan,” she said. “We appreciate the focus on tax relief, savings, and prudent spending. We hope the House will adopt the best of the Senate’s ideas and make even more improvements.”

For more information, please contact Becki Gray at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].