The North Carolina General Assembly in Raleigh. File photo by Angie Newsome/Carolina Public Press

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House vote on state budget expected next week

RALEIGH — On the heels of new revenue projections showing a $400 million surplus for this fiscal year, House Speaker Tim Moore announced that his chamber would vote out a budget next week.

Budget writers in the House have been waiting on the analysis of April revenue numbers before setting final spending targets.

Moore told legislators last week that there would be fewer regular committee meeting to allow for budget work. The House’s four main budget chairs, including Rep. Chuck McGrady, R-Henderson, met last week to set budget goals.

Once the House settles on its version of the budget, it will be up to the Senate to come up with its version. Although the target for a final deal is usually the end of the fiscal year, which is June 30, it is not unusual for the negotiations to extend past that date.

The new revenue projections were announced by Gov. Pat McCrory on Wednesday morning. They mark a considerable turnaround from an estimate in February that the state could end up the year with a $271 million deficit.

The governor said he wants to see the money go to reinstate a medical expense tax reduction for seniors, a raise for state workers and to help cover the debt burden from his proposed bond packages.

Moore said he wants to see further tax relief because of the turnaround in the budget.

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Not everyone saw good news in the surplus report. House and Senate Democratic leaders said the details show that most of the $400 million came from increases revenues from individuals and small businesses.

“Thanks to this Republican tax code, people are making less money, giant corporations are keeping more and middle class families are paying an enormous price,” Senate Democratic leader Dan Blue said statement sent out after the announcement.

An analysis by the legislature’s Fiscal Research Division and the Office of State Management and Budget showed that North Carolina’s growth in revenue was consistent with other states, a sign of growth in the national economy. It attributed an increase in revenue of $375 million over projections to a drop in tax refunds of about 57 percent. The original prediction was for a 35 percent drop in refunds.

The surplus is large enough that the state will hit revenue totals high enough to trigger the next round of corporate income tax reductions. That rate will drop from 5 percent to 4 percent in 2016 and 3 percent in 2017, according to tax law changes passed two years ago.

The analysis said the official revenue outlook for the next two years “reflects a continuation of moderate, steady economic growth.”

As much as the revenue jump got everyone’s attention in Raleigh, it represents less than two percent of the state budget, which exceeded $2.1 billion last year.

To offer some perspective, restoring the medical deduction of seniors would cost about $38 million next year. Raising pay across the board for state workers would cost roughly $140 million for each 1 percent of a hike.

Local bills moving

A fox trapping bill is on its way to the governors desk. The Senate passed the bill last Tuesday. It allows for open season on foxes with no bag limit during trapping season in Wilkes, Cherokee and New Hanover counties.

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A proposal to de-annex a 162-acre retreat from the town of Lake Lure is also moving. The bill, which puts a referendum on the plan before the town’s voters this fall, would take effect June 30 of next year if approved by voters. It received a favorable vote in the House local government committee and will be heard by the House finance committee this week with a possible floor vote after that.

A handful of other local bills passed by the House during the crossover rush are heading to Senate committees this week.

They include changes to the Cherokee and Rutherford county boards of election and bills on annexation in Waynesville

On Wednesday, the Senate Agriculture/Environment and Natural Resources committee is expected to take up a bill sponsored by Rep. Roger West, R-Clay, to exempt possum from state wildlife laws around New Years.

Kirk Ross

Based in the Triangle, Kirk Ross is the capital bureau chief for Carolina Public Press. Contact him at kross@carolinapublicpress.org.

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