Senate budget proposal highlighted by tax cuts, more Helene relief funding

RALEIGH, N.C. (WTVD) -- On Monday, Senate Republicans presented their proposed budget for the next two years, one month after Gov. Josh Stein presented his $33.6 billion budget proposal.

The Senate proposal recommends a smaller budget increase than Stein's -- $32.6 billion in year one and $33.3 billion in year two -- both up from the current budget of $31.7 billion. It includes raises for most state employees, teachers, and law enforcement, as well as hundreds of millions in new Hurricane Helene relief funding and additional tax cuts.

"Address our most pressing needs, including Hurricane Helene recovery, increase salaries for most state employees and teachers and cut taxes for all North Carolinians," said Senate President Phil Berger, laying out his party's vision for the next two years.

The budget sets aside $700 million for Hurricane Helene relief, as well as $633 in reallocation of funds within the Department of Transportation toward those efforts.

"Six months removed from (Hurricane Helene), a lot has improved. A lot of the debris has been cleaned up. Our waterways are starting to improve," said Shannon Odom, the Executive Director of Destination McDowell.

He said visitor metrics are slightly behind the same time frame last year, a trend he anticipates will continue this summer, though he was encouraged by turnout this past weekend.

"I feel like we're on the incline as more things open here. Luckily, parts of our county were not as devastated as others. We do have particularly the Marion area, a number of businesses that are fully open and welcoming visitors," said Odom.

Now, the goal is making sure they can maintain that momentum.

"Particularly getting our roads back open. Highway 80, which is one of the main access points up to the Blue Ridge Parkway, is still closed. We understand the challenges there. We are thankful that highway is open, but we still have a number of temporary bridges in place, particularly on U.S. 70 and on Highway 221. Getting our roadways back open and really not just the patches, but a full repair to those road's signage as well. Many of the road signs were gone or blown away, so we need the signs replaced. On the marketing side of things, we really still rely heavily on Visit NC to make our state competitive against other states, and North Carolina is now underfunded as far as a tourism entity," said Odom, who said the tourism industry is one of the biggest employers in McDowell County.

Funding for Hurricane Helene relief includes $8 million toward UNC System schools in the region (Appalachian State, UNC-Asheville, Western Carolina, as well as the North Carolina Arboretum) and improved emergency response capabilities, $2.5 million for the Community College System to schools that saw a decrease in enrollment, $5 million toward the Division of Community Revitalization at the Department of Commerce, and $10 million to the Governor's Recovery Office for Western North Carolina.

It's not just the amount of funding that is drawing attention, but the expediency in which it's being dispersed.

"The longer the funding takes, the longer the process is, the more barriers they are to project completion. The more we're going to see, businesses go out, people leave this region. We've already seen an exodus of service industry folks. Getting them back is really critically important. I can't express the need for speed and efficiency in times like this," said Jason McDougald, Executive Director of Camp Grier, a nonprofit in McDowell County.

Both Odom and McDougald acknowledged progress and coordination between local, state, and federal officials in addressing needs while highlighting further areas that need attention.

"We would love to see support and getting our recreation assets back open because that's such a large part of our economy, and it supports so much of the small business infrastructure that's here in this part of the state. Helping us get our parks and our trails and our public lands back open is really important. Specifically supporting our rural communities and their recovery, just being innovative how they help businesses in rural communities recover," McDougald said.

Last week, a bipartisan and bicameral group of North Carolina lawmakers on Capitol Hill wrote a letter to Department of Housing and Urban Development Secretary Scott Turner, urging the agency to approve North Carolina's Proposed Action Plan for $1.4 billion in Community Development Block Grant Disaster Recovery. The funding would go toward housing, infrastructure, and economic needs in western North Carolina.

Senate Republicans said further specifics regarding allocated funding for Hurricane Helene relief would be dependent on Congressional action.

Education Funding, Teacher Pay A Hot Topic

One of the first points Berger laid out at Monday's news conference was about pay raises. Under the Senate proposal, most state employees would get a 1.25% pay increase in year one, plus a $3,000 bonus paid out during the two years. Teachers would receive an average 2.3% pay increase in year one and an average of 3.3% during the two years, plus the same $3,000 bonuses.

"The proposed raises coming from the Senate falls short of what educators need in order to stay in this profession and also recruit bright, qualified educators to teach in our classrooms every day," said NCAE President Tamika Walker Kelly.

WATCH: Educators react to funding in budget proposal

Factoring in the $3,000 bonus, Senate leadership says the average teacher pay increase during the two-year period will be 8.9%. Comparatively, Stein's budget calls for teacher pay raises of 10.7% during that same timeframe.

Another difference between the two proposals revolves around the Opportunity Scholarship Program. While Stein's plan calls for the scaling back and ultimate elimination of the program, the Senate funding supports further funding.

"We believe that public dollars belong in our public schools. And so the Senate's investment in Opportunity Scholarships diverts that money away from our public schools who need that funding to address the educator shortage that we continue to see in our classrooms every day, but also the investment that we need in much needed repairs of our school buildings and also other student supports," said Kelly.

"The legislature, by protecting the funding for the Opportunity Scholarship Program in this budget, is honoring parental demand for this program. They're also reinforcing what we continued to say all along, and that is education funding should follow the child and not the system," said Mike Long, President of Parents for Educational Freedom in North Carolina.

Long said more than 40,000 parents have applied for scholarships during this school year.

"The growth is phenomenal. Just a few years ago, there were about 30,000 families on the program, and when the Legislature expanded it just last year, over 70,000 families applied for it," said Long, who said that was a mix of students already currently enrolled in non-public schools and those looking to transfer to a non-public school.

State law enforcement officials, correctional officers, and Capitol Police would receive 5.25% raises, while local law enforcement officers would receive $3,000 bonuses.

"The budget makes a concerted effort to target areas with the most pressing workforce shortages," Berger said.

The proposal also includes more tax cuts, slashing personal income tax rates to 3.49% in 2027 and 2.99% in 2028. Berger said that was keeping with Republican promises that they've made a priority since 2011.

"Our state has faced significant challenges over the last year, in part because of the devastating impact of Hurricane Helene; this budget reaffirms our commitment to western North Carolina and continued economic growth," Berger said. "We took a critical look at all state spending to find opportunities to cut obsolete or outdated programs to better reflect today's needs and continue to provide tax relief for North Carolina's people and small businesses."

On Tuesday, a group gathered at Halifax Mall, urging voters to contact their lawmakers and speak out against the proposed cuts.

"We believe the responsible thing to do at this point would be to pause these tax cuts that really don't benefit most North Carolinians and provide outside, outside benefit to the very wealthiest and to corporations and use those funds to address needs that have been long neglected and that North Carolinians have been asking about, asking for a long time, from public education funding to child care funding," said Sally Hodges-Copple, a Public Policy Analyst with the North Carolina Budget & Tax Center.

She dismissed concerns that pausing corporate and personal income tax cuts would affect the state's business climate, which has received national praise for its overall performance during the past several years.

"State and local taxes are something like 1/4th of 1% of costs for businesses, so it's extremely unlikely that they would make hiring decisions based on such a small cost. We know that corporations really care about their workers having access to childcare so that they can enter the workforce. They really care about the quality of public schools that are in their community for their children to attend. It's really a short-sighted plan and not really evidence-based at all," said Hodges-Copple.

North Carolina does not have line-item vetoes, meaning Stein would not have the option to veto individual parts of the proposed budget should it land on his desk. Unlike the last legislative session, when Republicans held a supermajority in both chambers, they are one seat short in the House, meaning they would need Democratic support to override a potential veto from Stein. On Tuesday, Rep. Deborah Butler, a Democrat who represents New Hanover County, criticized Republicans, claiming her party was excluded from the budget process.

"I rise as not just a legislator, but a person who has witnessed a broken process firsthand. One that continues to shut out the people of North Carolina and silence the voices they elected to represent them," said Butler.

ABC11 reached out to Stein's Office for comment regarding the Senate's proposed budget. A spokesperson has not responded.