- Associated Press - Wednesday, June 1, 2016

RALEIGH, N.C. (AP) - The state Senate’s proposed budget adjustments cleared several hurdles Wednesday despite being heavier on teacher pay raises and policy changes to taxes and the environment than the House plan approved two weeks ago.

The $22.2 billion spending plan is the same amount the House envisions for the new fiscal year beginning July 1. It was approved by three committees with little debate and few amendments on the way to floor votes Thursday and early Friday. The Senate’s passage would give the two chambers four weeks to work out their differences and send a budget to Gov. Pat McCrory’s desk.

Teachers would see average pay raises of 6.5 percent in the Senate plan - which would add up to about $120 million more than the 4.1 percent average increases proposed in the House budget - according to legislative documents. Neither plan would give permanent pay raises to the most veteran teachers, although the House also would give some bonuses. McCrory’s budget proposal envisioned average teacher pay raises of 5 percent.

Senators also would spend more on pilot programs to reward teachers for superior performance, including $10 million for third-grade reading teachers whose students make the most progress in standardized testing in each local district and statewide.

“We were using the same numbers that the House was using and we just prioritized the teacher pay raises in a different way than either the governor or the House did,” said Senate leader Phil Berger, R-Rockingham.

The Senate also parks another $584 million in the state’s rainy day reserve fund, increasing the fund to $1.7 billion. The House earmarked another $300 million. The House spends roughly $150 million more than the Senate in program funding not related to salaries and benefits across the five major categories in state government.

Adjustments designed to streamline which companies are subject to sales taxes on repairs, maintenance and installation services - first approved last fall and in effect for the past three months - would bring in an additional $35 million next year. Sen. Bob Rucho, R-Mecklenburg, said the changes are part of an evolving effort to base the state’s tax system more on consumption of goods and services than on income.

The legislation also includes tax policy that, starting in 2018, could require multistate television broadcasters and program producers to pay more than 10 times the state corporate income taxes they already pay, according to figures discussed in the Senate Finance Committee on Wednesday. It’s billed as a way to link the tax liability of companies such as Paramount Pictures, Sony Pictures and the Walt Disney Co. to their programs’ audiences.

“We’ve not been able to fund any other industry treated in this manner compared to every other corporation in the state,” Rucho said of the favorable tax treatment.

The Motion Picture Association of America, representing the broadcasters, calls the approach misguided and has proposed an alternate proposal that it says would still double members’ tax bills. Association executive Vans Stevenson said the Senate’s provision, if approved, likely would shift the taxes to cable and satellite TV providers, which would pay more for broadcasters’ programs to air.

“The cost will be passed ultimately to the subscriber,” Stevenson said in a phone interview.

The Senate provision also would direct the Environmental Review Commission to create by the end of the decade new statewide strategies to limit pollution in several watersheds. Current strategies require that land be left undisturbed along rivers and streams.

The bill’s text says existing strategies “have shown little to no improvement in water quality” and “have rendered thousands of acres of public and private property useless.”

Environmentalists criticized the provisions, saying they would block implementation of current rules for Jordan Lake and Falls Lake, which feed water to Triangle-area residents.

“This provision isn’t a tweak, it’s a sledgehammer,” state Sierra Club director Molly Diggins said in a news release. “It is as if the Senate has forgotten how important our waterways are for tourism, recreation, and drinking water.”

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