- Associated Press - Sunday, May 17, 2015

RALEIGH, N.C. (AP) - North Carolina House Republicans want the next state government budget to restore a tax deduction for older adults with high medical expenses and bring back a tax credit for repairing historic buildings.

House GOP leaders provided to colleagues and others Sunday night more portions of their proposed spending plan for the next two years, or through June 2017. The proposed fees and tax changes will be heard by the House Finance Committee on Monday. The chamber is expected to approve the full budget later this week. The Senate will then draw up its own version.

Legislative leaders and Gov. Pat McCrory have said they wanted to address the income tax deduction for medical expenses since learning earlier this month of a projected $400 million revenue surplus this fiscal year and more money than anticipated through mid-2017. Many older taxpayers complained they paid higher taxes this spring because the deduction was eliminated in the 2013 tax overhaul law. The restoration would apply to tax filers 65 and older.

The historic rehabilitation tax credit expired at the end of last year. The new provision follows a plan approved separately by the House earlier this year. Senate Republican leaders don’t like the credit and would prefer offering grant money for building repairs.

Many of the 43 pages distributed to Finance Committee members were discussed last week in budget subcommittee, such as proposals to raise Division of Motor Vehicles fees by 50 percent to boost transportation funding and to lower the gasoline tax from 36 cents to 33 cents starting next January. Diesel fuel, however, would be at 36 cents. The fuels would be subject to a new formula in 2017, not 2018 under a recently passed law.

The fee and tax package doesn’t propose broad income or sales tax increases or decreases. It does extend several tax credits for research and development and for renewable energy.

House Republicans have yet to release any proposed salary changes for state employees or teachers, although there’s consensus within the GOP to raise the teacher salary minimum to $35,000. More budget details were expected Monday, a spokeswoman for House Speaker Tim Moore said late Sunday.

The House and Senate want to get a final spending plan to McCrory before the new fiscal year begins July 1. He presented his own budget proposal in March that would spend $21.5 billion next year.


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