Senate Passes Budget Including $1 Billion Middle Class Tax Cut, Teacher Raises, Hurricane Matthew Relief


The North Carolina Senate on Thursday tentatively passed a $22.9 billion budget that focuses on improving outcomes in public education, providing generous tax cuts for the middle-class and job-creators, and saving for the future – priorities that have resulted in consecutive years of revenue surpluses, including a $580 million surplus this year.


Highlights of the Senate budget include:


  • It increases spending by 2.5 percent over last year’s budget and 3.75 percent over actual spending and focuses that increase in key areas, like providing about $600 million more for public education.


  • It continues the Senate’s ongoing efforts to dramatically increase teacher pay – providing teachers an average 3.7 percent raise this year and 9.5 percent raise over two years, while also ensuring they earn far more over the course of their careers. Along with substantially increasing school principal pay, it also directs roughly $200 million in the first year alone toward compensation increases to state employees.


  • It delivers nearly $1 billion in tax relief, with 99 percent of taxpayers either paying less or paying no state personal income taxes at all.


  • It includes provisions to fund public school construction in economically struggling, rural counties, add thousands of slots to the pre-K program, and create new economic development funds to help attract major manufacturing employers to the state.


  • It provides $150 million in disaster relief assistance to victims of Hurricane Matthew and adds $363 million to the state’s rainy day fund – bringing the savings reserve to its highest total ever.


“It is telling that the only criticisms we’ve heard about this budget are it ‘doesn’t spend enough’ and ‘gives taxpayers back too much of their own money.’ But rather than indulge the old tax-and-spend impulses that dragged our state into a $2.5 billion budget deficit and one of the nation’s worst tax climates, we are spending prudently on core priorities, saving carefully to protect against the next recession and returning a portion of the tax surplus back to the middle-class families and job-creators who paid it,” said Senate Leader Phil Berger (R-Rockingham).


“I am proud this budget delivers nearly $1 billion in tax relief, continues our multiple-year effort to dramatically increase teacher pay and improve education outcomes, and helps rebuild communities devastated by Hurricane Matthew – while bolstering our state’s rainy day fund to its highest total ever.”