By John Trump
Carolina Journal News Service
RALEIGH — State Senate leaders will propose spending $3 billion over the next two years on capital and infrastructure projects. That money is part of a larger 10-year, $12 billion “cash” plan tied to the Senate’s budget.
Senators teased the capital plan as they announced a 2 p.m. Monday news briefing about their 2021-23 budget proposal. Senate leader Phil Berger, R-Rockingham, will join top budget writers to fill in details of the budget plan. The Senate expects to debate and vote on the budget in the next week.
“State coffers are flush because of a decade of prudent budgeting,” according to the Senate’s media advisory. “The Senate proposal will use the state’s strong fiscal position to cut taxes and advance infrastructure projects.”
“The proposal sets in motion a 10-year, $12 billion cash plan for capital and infrastructure projects, including $3 billion in cash over the next two years,” the advisory promises.
A pay-as-you-go approach to capital projects sets the Senate apart from Democratic Gov. Roy Cooper. His March 24 budget plan called for a $4.7 billion statewide bond package. Rather than using cash on hand, Cooper would ask voters to approve borrowing money for building projects.
The Senate and House already have finalized total General Fund spending figures for the next two budget years. Earlier this month, top lawmakers concluded weeks of negotiations with an agreement to a top-line spending number of $25.7 billion in 2021-22 and $26.7 in 2022-23. That’s a spending increase of 3.45% in the first year of the biennium and 3.65% in year two. The 2021-22 budget year starts July 1.
The new budget proposal is likely to incorporate some version of the tax plan senators approved, 36-14, on June 9. Eight Democrats joined Republicans to support the tax bill.
The Senate’s version of House Bill 334 would raise the standard personal income tax deduction from $21,500 to $25,500 for joint filers, which would take about a quarter of a million of the lowest-income North Carolinians entirely off the tax rolls. It also reduces North Carolina’s flat income tax rate for remaining taxpayers from 5.25% to 4.99%.
The tax package also raises the per-child tax deduction by $500. Bill sponsors say that a family with two children earning $38,000 annually would get a 50% tax cut under this bill, while a family earning $200,000 would see a 7.1% cut. N.C. households earning the median income of $54,000 would enjoy a 21% decrease in their state taxes. By raising the minimum deduction, the poorest taxpayers move into the zero-tax bracket.
Senators also would phase out the state’s 2.5% corporate tax rate by 2028 and change the way companies calculate their franchise tax burden.
Less than a week after the Senate approved its standalone tax bill, lawmakers learned that N.C. state government had collected $6 billion more than expected in taxes.
“A huge surplus does not mean we’re spending too little. It means we’re taxing too much,” Berger said in a prepared statement responding to the tax collection news.
Carolina Journal reported June 15 that updated revenue numbers “open the possibility that the Republican tax relief plan could go further and faster than initially planned, possibly accelerating the phased elimination of the corporate income tax and larger cuts to the state franchise tax, and even larger cuts to the state’s personal income tax.”