Democrats cross aisle to back NC budget, setting up battle over taxes within GOP

Yahoo

22-05-2025

A majority of North Carolina House Democrats crossed the aisle to vote for a GOP-written state budget Wednesday, a surprisingly bipartisan show of support that also sets up a fight within the Republican Party over taxes.
The bill passed 93-20 in the first of two required votes.
As the House took a break after hours of debate, Democratic Leader Robert Reives told reporters that he would support members of his caucus however they were to vote on the bill. And hours later, he voted with Republicans for the budget, as did 26 other members of his party in a split vote within the Democratic caucus.
'The most important point that I think you've got to understand about this budget that's going to be a tough decision for everybody sitting in that House chamber, is the horrible fiscal condition that we're in right now as a state,' Reives said.
The budget bill written by House Republicans keeps the upcoming reduction in North Carolina's individual income tax rate, but requires a sunnier state budget picture before future tax cuts kick in, a move that the Senate opposes and could be the key rift between the House and Senate as they work next to negotiate a final budget to send to the governor.
Democratic Gov. Josh Stein visited the Legislative Building and talked with lawmakers on Wednesday, ahead of announcing that the House budget has several things in it that he likes.
'The House's proposed budget isn't perfect. But I am pleased that the House raises teacher pay to make North Carolina's starting teacher salaries the second-highest in the Southeast and rewards our state employees with a raise. The House budget also makes important investments in public safety, child care, and workforce training,' Stein said in an emailed statement.
Reives told reporters before the vote that the budget isn't one he would have written or wants to support.
'But I also understand that we've got a duty to govern, and at some point, the hard decision that's going to have to be made by everybody, whenever it is, is governing,' he said.
Just ahead of the last round of debate before the vote, Reives and top Republicans left the chamber together, and returned to the floor talking and smiling.
Republicans have control of the House, but are one vote short of a veto-proof supermajority.
Democratic Rep. Terry Brown Jr. praised parts of the Republicans' budget during the debate, saying that it listens to Democrats and the people of North Carolina on restoring master's degree pay for teachers and restoring the state income tax holiday. He also criticized the budget for not doing enough for state employees. Brown, who represents Mecklenburg County, called the bill 'a good start.'
Other Democrats urged their colleagues to vote against the bill because of tax cuts and cuts to so many vacant jobs.
The House would give higher raises than both the Senate's proposal and Stein's pitch, with 2.5% across-the-board salary boosts for all state employees in the coming year.
The House bill also cuts thousands of state employee jobs, most of which are vacant.
Of the 3,000 state employee positions to be cut, about 2,000 of them come as part of a demand that state agencies and the UNC System cut 20% of their vacant positions. Money saved from those cuts would go to the agencies to be used at their discretion for higher raises for their employees.
'We are now in a revenue deficit, no ifs, ands or buts about it, because we would not cut one job if we were not in a revenue deficit,' Reives said.
The budget would increase starting teacher pay to $48,000 in the coming year and $50,000 the following year, bringing the total salary for a new teacher to $56,593 in two years, with supplements, which would make it the highest in the Southeast.
The House budget keeps the planned individual income tax rate reduction planned for 2026, down to 3.99% from 4.25%, but would set new levels for the future state tax collections that 'trigger' additional tax cuts. Future triggers are harder to meet than the Senate's plan.
Carolina Partnership for Reform, a political group that generally promotes ideas in line with Republican Senate leader Phil Berger, called the House Republicans' plan a 'tax hike' in an email Tuesday.
Budget documents say that the change 'increases net General Fund revenue' by keeping the projected tax rate at 3.99% in the 2027 tax year, rather than dropping the rate further as would happen under existing triggers.
'Having no budget deal is a better outcome than this one,' Carolina Partnership for Reform wrote in the email to its distribution list.
But House Republicans felt differently. Every one of them voted for the budget plan.
House Rules Chair John Bell told The News & Observer on Wednesday that 'just because we didn't aggressively lower taxes, as their budget did, doesn't mean we raised taxes.'
He also said that 'petty shots' make negotiations between Republicans in both chambers 'that much harder.'
Bell said you can always find things you don't like in a budget bill. 'But overall, I feel like that we've put forth a good product, a product that shows our priorities here in the House, our commitment to Carolina. I think you're gonna see a strong bipartisan vote today,' Bell said during a House recess ahead of the vote.
Rep. Allen Chesser, a Nash County Republican, also told The N&O that 'the claim that it increases taxes is just inaccurate entirely. Our budget focuses on lowering the tax burden on North Carolina citizens, and we're committed to that.'
During the floor debate, Republican Rep. Keith Kidwell, who is part of the ultra-conservative Freedom Caucus, said: 'This bill is a good bill when it comes to taxes.'
'We've got a better bill (than the Senate), one of the best bills from a tax perspective I've seen since I've been in this General Assembly,' Kidwell said.
The House budget would also restore the back-to-school sales tax holiday in August 2026, as well as making the first $5,000 of tips tax-free.
It would also increase the standard income tax deduction by $500 for individual tax filers, or $1,000 for married couples filing jointly, making more income tax-free.
Stein also weighed in on the inter-chamber tax debate.
'Importantly, the House budget cuts taxes for working families while recognizing that North Carolina is a growing state and reduces personal income tax rates after this year only when the economy is growing. In contrast, the Senate's fiscally irresponsible revenue scheme will result in fewer teachers and law enforcement officers and diminished services that would harm our people,' Stein said.
Reives criticized the Senate, and urged House Republicans to negotiate hard on the final budget bill.
'When I kept listening to the Senate ... it sounded like that we had decided we were going to do all kinds of crazy things and spend all kinds of crazy money. I'm just like, are you looking at the same budget? I'm looking at this budget making some hard decisions and hard cuts, because that's what governing is, and that's what being an adult is,' Reives said during debate.
House Republicans shut down several Democratic amendments during hours of debate on Wednesday. One of them would have changed how vacant jobs would be eliminated. Wake County Democratic Rep. Maria Cervania's proposal would have given the Office of State Human Resources more authority in choosing job cuts.
Rep. Donny Lambeth, one of the top House Republican budget writers, said that the amendment would take away the flexibility offered to state agencies to choose which vacant jobs to cut.
Rep. Erin Paré, a Wake County Republican and budget writer, also urged Republicans to preserve a budget provision that would publish public schools' central office salaries. Democrats tried to remove it, but Paré said posting the salary information would provide transparency.
Another Democratic amendment defeated, from Rep. Carolyn Logan of Mecklenburg County, would have provided free school lunch in public schools, funded by money allocated for private school vouchers.
Some of the budget debate centered on vouchers, known as the Opportunity Scholarship Program, which sends hundreds of millions of dollars to private schools and has long been a Republican priority. Democrats tried to amend the bill to add accountability measures to the program.
Republicans did take some Democratic input. On Tuesday, four Democratic amendments received support from Republicans and were rolled into the final budget, including Democratic Rep. Carla Cunningham's bid to restore and rename the Office of Health Equity in the N.C. Department of Health and Human Services. Republicans had proposed eliminating the office.
Reives told reporters that Stein is never going to tell Democrats how to vote, but rather explain the advantages and disadvantages of the budget.
'The Senate budget is completely irresponsible. We've got to get a budget that recognizes the fiscal position that we're in, and we've got to get a budget that starts talking about the tough questions,' Reives said.