After weeks of public and closed-door Appropriations Committee meetings, the North Carolina House worked until the early morning hours Friday, May 22, to approve its version of the two year state budget. Total debate time exceeded six hours, but if you consider recesses to amend the budget in the Rules Committee, caucusing, delays, and meal breaks, House members spent more than 16 straight hours at the General Assembly on Thursday and into Friday morning working to pass the budget. Despite many of them being sleep deprived and hungry, 93 House members voted to support the final bill, while 23 voted against it.
For the first time in recent memory, a large number of members from the minority party voted for the budget and a smaller, but still significant number of members from the majority party, voted against it. On third reading, 61 Republicans voted for the bill while 11 opposed it. One Republican who voted against it commented that while he was disappointed to break with his party, he was unhappy with the bill's proposed level of spending and fee increases.
The budget was able to satisfy the majority of House Democrats, though, with 32 voting for it and 12 against it on third reading. One Democrat and three Republicans had excused absences from the vote. The final voting record can be viewed here.
During the debate marathon that took place on Thursday and spilled over into Friday, House members approved 39 amendments while rejecting 13. These proposed changes were in addition to the countless other amendments offered in committee meetings throughout the week, with nearly 100 amendments put forth in Tuesday's House Appropriations meeting.
The House's $22.2 billion budget does exceed the $21.5 billion proposal released by Governor McCrory in February. The Senate budget also is expected to call for less spending than the House's plan and probably will end with a number much closer to Governor McCrory's budget proposal, although the Senate's priorities will not match up exactly with the Governor's goals.
While the budget does not increase personal or corporate income tax rates, it does authorize a significant increase to most Department of Motor Vehicles ("DMV") fees. Earlier versions of the House budget proposed a 50% increase in most DMV fees, but the final version settled on a 30% increase.
The budget also funded a revised historic tax credit program that many developers and cities argued was needed to encourage economic development. The budget also added a $40 million per year appropriation to pay for grants to support television and movie productions filmed in North Carolina, both of which were allowed to expire at the end of 2014 despite objections from both sides of the aisle. This news was welcomed with enthusiasm by many, but the House budget is perhaps most celebrated for including two percent pay raises to teachers and employees throughout state government. The budget also would provide a two percent cost of living adjustment increase to state government retirees.
Many interest groups woke up to disappointing news last Friday over tax credits that were and were not included in the House's final version. After splitting the House Republican Caucus seemingly down the middle, an amendment to eliminate renewable energy tax credits this year failed by a margin of 38-77, allowing the credit to continue for two years. An appropriation to extend the state tax credit for research and development was not as lucky, failing to make the final House budget.
The third round of the state budget process will continue for the coming weeks as Senate Appropriations Committee and Subcommittee leadership begin outlining their own spending plan. The Senate hopes to complete its budget work by mid-June, after which House and Senate budget conferees will be appointed to negotiate a final plan for the state, likely behind closed doors. Check back soon for more updates on the budget process as well as all legislation currently pending before the General Assembly.
For more information on the legislative session, please call:
- Whitney Campbell Christensen, 919.277.9113
- Angie D. Harris, 919.277.9163
- Lee C. Hodge, 252.672.5430
- James W. Norment, 252.672.5453