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NC legislative leaders agree to 6.5% budget increase

Medicaid Expansion North Carolina
Hannah Schoenbaum
North Carolina House Speaker Tim Moore, center, speaks at a news conference about a Medicaid expansion agreement, Thursday, March 2, 2023, at the Legislative Building in Raleigh, N.C.

Legislative leaders announced Wednesday that they’ve agreed on how much to spend in the state budget for the next two years.

The agreement between the House and Senate is one of the first steps in the budget process, and it’s ahead of schedule this year.

Lawmakers said they’ll increase spending by 6.5% in the fiscal year that begins in July — to a total of $29.7 billion — and 3.75% the following year. Revenue projections show the state has a surplus of about $3 billion this year, but revenue growth will be relatively flat in the next two years.

The budget target is still less than the amount the state expects to take in. This year’s $29.7 billion budget compares to a forecasted $33.7 billion in revenue, while the $30.8 billion budget target for fiscal year 2024-2025 is less than the $33.6 billion in revenue expected that year.

“It’s an increase of 6.5%, which initially, we thought, 'Wow, do we really want to do that?' But with inflation, inflation itself is 6.1%,” House Speaker Tim Moore said. “That'll give us an opportunity for meaningful salary increases for teachers and state [employees]… And really because we have budgeted so well and been so fiscally responsible, the state's in a great position right now.”

Gov. Roy Cooper has called for “double-digit” raises for state workers and teachers, but Moore said he wasn’t yet ready to announce the size of the raises under consideration. He said raises could vary between positions in order to make sure salaries are competitive to fill vacancies.

Senate Leader Phil Berger says he would have preferred a smaller spending increase. But the numbers announced Wednesday reflect a compromise with the House.

“We’re very concerned that if just because we have more money, we spend more money, then that may not create a problem this year, but it will in years ahead,” he said.

Moore says he expects the first draft of the budget to be released by next month. The House will vote on a spending plan, then the Senate will develop its own version before a final compromise goes to Gov. Roy Cooper. Cooper will likely release his own spending proposal in the weeks ahead as well for lawmakers to consider.

The governor’s office didn’t respond to an inquiry about whether Cooper agrees with the spending amounts announced Wednesday.

The faster timeline is a big contrast from the budget process two years ago, when the House and Senate didn’t agree to a spending number until June. House leaders had wanted to spend more than the Senate.

They eventually settled that year on spending increases of about 3.5% for both years of the budget cycle between 2021 and 2023.

“I think this is probably the earliest that [an agreement on a budget amount] has happened in many decades, so we’re very proud of that,” Moore said.

Colin Campbell covers politics for WUNC as the station's capitol bureau chief.