More NC budget changes made before House gives initial OK

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RALEIGH, N.C. (AP) — A solid bipartisan majority in the House gave initial approval Thursday night to the chamber's state budget proposal for the next two years that was buoyed by additional expected funds from a recovering economy for pay raises, reserves and Medicaid.

The House voted 94-23 just before midnight for the spending plan written mostly by Republicans after seven hours of debate and several dozen amendments. The chamber reconvened just after midnight for the second of two required votes early Friday.

Unlike recent years of mostly partisan votes for the budget — one the most important bills of the year — support for the measure crossed political lines, with 33 of the 45 Democrats voting for the plan.

That help across the political aisle gave the Republicans a comfortable margin since 11 GOP members decided to vote against it. Some of them were unhappy that the two-year plan spent too much compared to this year and extended too many incentives to business. Other adjustments were made in committees earlier in the week and discussed within the GOP caucus.

The plan benefits from a projected $400 million surplus for the year ending June 30, the result of strong growth in business income in a recovering economy. GOP leaders attribute a 2013 tax overhaul that cut personal and corporate income tax rates for the improvements.

Overall public education spending, including salaries, would grow by nearly 6 percent next year. The budget also puts aside more than $50 million more for K-12 textbooks and $150 million to educate more public school and UNC system students next fall. Most public school teachers and state employees would get 2 percent raises, with higher percentage increases for early career teachers who will see their minimum salaries rise from $33,000 to $35,000.

"This budget provided for the needs of our people in education and in the classroom," said Rep. Nelson Dollar, R-Wake, senior co-chairman of the House Appropriations Committee.

Extra funds at their disposal have helped budget writers restore cuts that Republicans said they had to make since taking over the Legislature in 2011. They gave the court system $23 million over two years for technology upgrades and $9.7 million next year to replace aging Highway Patrol and State Bureau of Investigation vehicles. There's also $3.5 million next year to expand mental health treatment in the prisons.

The proposal spends $748 million over two years to pay for projected increasing medical expenses and enrollment for Medicaid.

House Democratic leaders and their allies have argued the GOP budget doesn't go far enough to address education reductions made under Republican rule and to improve economic development. They say there would be more money if income taxes hadn't been cut so deeply.

"We have not fully funded the needs of the state," said Rep. Paul Luebke of Durham, one of the Democrats that voted no. But Rep. Duane Hall, D-Wake, said he voted yes because of the pay raises for state employees and increased funding for some environmental programs.

Earlier Thursday, Republicans dialed back in the budget proposed motor vehicle fee increases and new money to lure movie and TV productions to the state in an attempt to win over more GOP votes.

Through committee work, GOP leaders decided against raising Division of Motor Vehicle fees by 50 percent after all, scaling them back to 30 percent. Still, an eight-year driver's license renewal would cost $41.60, up from the current $32.

The decision, however, meant $173 million less than anticipated over two years for ports improvements and road resurfacing. And a new film production grant program originally supposed to receive $60 million annually now would get $40 million annually. The film grant program replaced a tax credit program allowed to expire that many fiscally minded Republicans opposed.

The House proposal spends $22.2 billion in the fiscal year starting July 1, or nearly $1.1 billion over the current year, a 5.1 percent increase. Senate Republicans already have said they'll spend less than the House does and scale back tax incentives further when they draw up their budget next month. The two chambers will try to get a final budget to GOP Gov. Pat McCrory soon after.

McCrory got several provisions from his budget proposal inserted in the House budget, including a new Cabinet-level department for veterans and military affairs and a $40 million venture capital fund. But others were left out.

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