North Carolina House Releases Its Budget Proposal
North Carolina House Republicans released their proposed budget for the 2025-2027 Fiscal Biennium.
Topline Overview of Spending and Taxes
The budget spends $32.59 billion in the first year and $33.32 billion in the second year of the biennium. In the first year, the budget spends $970 million on new spending, and $1.3 billion in the second year.
The budget relies on the Consensus Revenue Forecast and expects $34.9 billion in tax revenue for the first year and $34.0 billion in the second year.
The House plan makes the first $5,000 in tips tax deductible and increases the standard deduction by $500 for an individual and $1,000 for couples filing jointly. Additionally, the House budget proposed reinstating the Back-to-School Sales Tax holiday. The Tax Foundation highlights that Back-to-School Sales Tax holidays have mixed results.
However, in contrast to the Senate budget which laid out a plan for income tax cuts, the House plan left the current tax plan in place and raises the revenue triggers. Some conservative leaders panned the House proposal as a $1 billion tax increase.
Additionally, the House budget returns the Rainy Day Fund to $4.75 billion.
State Employee Raises
Here is the House’s plan for state employee raises.
State employees would receive a 2.5% pay raise in the coming year, with no raise planned for the second year. However, the House plans to provide for a pay raise during the short session next year.
State retirees would receive a 1% cost-of-living increase in the first year and a 2% increase in the second year.
The House proposed increasing teacher pay by 8.7% over the next two years and plans to increase starting teacher pay to $48,000 in the first year and $50,000 in the second year of the budget.
Other items of interest
The House budget provides funds for a DMV Privatization Pilot program.
The House budget provides $50 million for safety and security grants for schools.
The House budget eliminates 3,000 vacant jobs to provide state agencies greater flexibility.
The House budget cuts $10 million from DEI programs.
What They Are Saying:
Speaker Destin Hall said, “The NC House budget puts working families first — just like President Trump. We’re slashing state taxes on tips so servers and bartenders keep more of what they earn.”
Minority Leader Robert Reives said, “The House Budget proposal gets us closer to what Governor Stein proposed on teacher pay and addressing our state’s fiscal cliff. Unfortunately, there are cuts to public safety, public services, and negative impacts on clean air and water efforts. Additionally, taxpayers funded private school vouchers continue to divert funds from public schools to send wealthy children to private schools. Democrats will be offering amendments to improve our public schools, invest in health care for working families, and protect public safety and clean air and water.”
Rep. Brenden Jones said, “The NC House budget delivers some of the largest pay raises in state history — because we’re serious about investing in our classrooms, not just talking about it.”
Republican Caucus Chair Rep. Matthew Winslow said, “Today, the North Carolina House of Representatives released a state budget that is Committed to Carolina, delivering meaningful pay raises for teachers and state employees, targeted tax relief for working families, and cuts to wasteful government spending.”
State Treasurer Brad Briner said, “The House proposal fully funds the pension plan and increases funding to the State Health Plan to help in our effort to provide affordable, high-quality health care for state workers. Investments made in salary increases and cost-of-living bonuses will help ensure that the state can retain top talent.”
