Legislative Republicans rolled out their consensus state budget proposal Tuesday and called on Gov. Roy Cooper to sign it into law without his biggest ticket item included: Medicaid expansion.
That is unlikely, setting up a standoff that could easily stretch past the approaching start of a new fiscal year. A Cooper spokesman called the proposal Tuesday "a bad budget that has the wrong priorities."
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Should this disagreement linger, North Carolina state government wouldn't shut down come July 1, but would simply continue with current budget funding levels until the two sides strike a deal, delaying raises for state employees and teachers and any other new funding in the two-year, $24 billion plan.
House and Senate Republicans said they were willing to talk Medicaid expansion in a separate legislative session, and they put language to that effect in their budget. But it was unclear what compromise a new session could accomplish, given Cooper's insistence on expansion of the taxpayer-funded health insurance program and GOP leaders statements against it.
House Speaker Tim Moore said Tuesday that the Republican majority's budget spends money in the right areas."
"This is a budget that's not about partisan politics," Moore, R-Cleveland, said. "It's a budget that's best for North Carolina."
The compromise budget between House and Senate Republicans includes teacher salary increases in the neighborhood of 2 percent a year over the next two years, but heavily weighted toward teachers with at least 15 years experience.
Teachers with 15 years on the job or less would get only their normal step increases on the salary schedule. Teachers with more would get additional raises between 1 and 3 percent in the budget's first year. Teachers with 25 years of experience or more would get $500 bonuses in each year of the two-year spending plan.
Past state budgets focused on younger teachers, and legislative leaders have said it's time to focus on veteran teacher salaries.
Most state employees would get 2.5 percent salary increases each year, budget writers said, with $15 million more earmarked to supplement salaries in hard-to-fill prison jobs.
Raises would kick in July 1 in each budget year. A previous version of the House budget would have delayed raises until Jan. 1 to save the state money.
State retirees would get 0.5 percent bonuses to their pensions, instead of a true cost of living increase, in both budget years.
The State Employees Association of North Carolina praised the proposal, with group president Jimmy Davis saying in a statement that, "for the first time in decades, the House and Senate prioritized state employee raises in the conference budget."
The budget also includes language requiring the state Department of Health and Human Services to move from Raleigh to Granville County, something legislative leaders proposed earlier this year to the Cooper administration's surprise. Senate President Pro Tem Phil Berger said Tuesday that it's "important for rural areas to reap the benefits of state jobs."
The proposal also has tax cuts the House and Senate have previously backed in other bills this session, raising the standard deduction for personal income taxpayers, increasing collections on internet sales taxes and rolling back the state's franchise tax on businesses. The GOP majority has been cutting the state's corporate tax rate for years, and Cooper has repeatedly criticized the approach. His spokesman said Tuesday that the latest tax plan "spends more on corporate tax breaks instead of significantly higher teacher pay."
Republicans say the franchise tax is a drag on North Carolina's economy and pointed to the state's healthy job market and state revenue surpluses under their management.
The new budget also rolls back a multimillion-dollar threat to Vidant Health in Greenville, restoring funding for its flagship hospital and planning for a new medical school at East Carolina University on the understanding that the University of North Carolina's Board of Governors will once again have the authority to appoint a significant number of Vidant's hospital board members.
Berger said details of the $24 billion budget could change in the coming days or weeks, based on suggestions from Cooper. But he also said no such ideas have been put forward over the past couple of weeks during negotiations.
Both sides have accused the other of refusing to negotiate in good faith, and the GOP's super-majority fell away in the last legislative elections, giving Cooper's veto new teeth.
This budget also lays the groundwork for a shift in local school construction funding, which is now largely a county function. The plan contemplates $4.4 billion over the next decade for K-12 school construction and repairs using an existing state infrastructure fund instead of putting a major state bond on next year's ballot as Cooper, and at one point, Moore, had proposed.
Cooper's spokesman called this "a slush fund that promises projects that may never be built rather than using a school bond at today’s historically low interest rates to help build new schools responsibly.
Senate Majority Leader Harry Brown said the legislature's plan "avoids wasting billions of dollars in unnecessary interest payments, which would take massive sums of money away from other budget priorities."