- Associated Press - Tuesday, May 31, 2016

RALEIGH, N.C. (AP) - Senate Republicans said Tuesday their proposed North Carolina budget adjustments puts even more money aside in reserves to soften economic downturns than the House spending plan did while emphasizing performance-based raises for state employees and teachers.

Senate leaders released more details about their $22.2 billion plan, which the entire chamber was expected to vote upon later this week. The House approved its competing proposal less than two weeks ago. The quick pace reflects the desire of GOP lawmakers to finalize quickly changes to the second year of the current two year spending plan, beginning July 1.

With the actual proposal not expected to be filed until late Tuesday night, senators kept their focus on “highlights” that had been previously announced, including permanent pay raises for teachers that would bring their statewide salary average above $51,000 - more than what the House or GOP Gov. Pat McCrory proposed.

The Senate also accelerates the increases in standard deduction for income tax filers from $1,000 to $2,000 more, implementing them by 2017 compared to 2020 in the House plan.

“We can all see the big differences,” Senate leader Phil Berger, R-Rockingham, told reporters while discussing upcoming budget negotiations. “There’s a large tax relief in this budget … and there’s a large teacher pay raise.”

There are other variances with the House plan. The Senate budget would put another $583 million in the state’s rainy day reserves, raising it toward $1.7 billion. The amount would match the reserve level state law directs but has never been reached by lawmakers. The House plan puts $300 million in reserves.

Putting more into reserves and curbing growth in government spending show “tremendous discipline and a firm commitment to conservative budgeting priorities,” Berger said.

The Senate also emphasizes merit-based pay increases more than the House. Republicans unveiled a new $10 million pilot program that could give third-grade reading teachers up to $6,800 in bonuses whose students show the top growth scores in each school district and statewide. The House budget sets aside $1.1 million next year for a teacher compensation pilot.

While the House prefers across-the-board raises of 2 percent for rank-and-file state workers and $500 bonuses, the Senate would set aside $180 million for targeted pay - $95 million for permanent pay raises and $85 million for one-time bonuses. Agency heads would decide the criteria to hand out the permanent raises, which also could be based on retaining workers or bringing pay up to regional levels.

The Senate plan offers no cost-of-living adjustment for state retirees, compared to a 1.6 percent pension increase by the House.

As telegraphed last week, the Senate budget bill also incorporates components of a stand-alone measure that would ensure incoming freshmen to University of North Carolina system schools pay the same tuition for the next four years. And other provisions plan for five campuses - Elizabeth City State, Fayetteville State, UNC-Pembroke, Western Carolina and Winston-Salem State - to see tuition fall to $500 per semester in-state and $2,500 out-of-state - later this decade.

The Senate’s proposal also would:

- create a pilot program in five counties to reimburse teacher assistants tuition costs to obtain their teacher license.

- set an expectation to increase annually by $10 million through 2028 money for a program for students in lower-income families to receive scholarships to attend K-12 private or parochial schools. Future General Assembly sessions would still be free to stop the increase.


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