Tax and Budget Changes Likely to be Modest | Eastern North Carolina Now

    Publisher's note: The author of this post is Barry Smith, who is an associate editor for the Carolina Journal, John Hood Publisher.

Top GOP lawmakers say 2017 session likely to keep major reforms in place as increases in teacher compensation kick in

    Top legislative budget and tax writers say the N.C. General Assembly isn't likely to tackle more extensive tax reform next year. Nor are major spending changes in the works.

    However, they do plan to implement budget changes made during the 2016 short session.

    "It's going to be a tighter budget for two reasons," said Sen. Harry Brown, R-Onslow, the Senate's senior Appropriations Committee chairman. He said the state will be in the second year of a three-year phase-in of teacher pay adjustments and it will be entering the second year of a plan to increase the standard deduction - or "zero tax bracket" - to $17,500 for married couples filing jointly.

    "I see this as being one of the tighter budgets we've had in a while," said Brown, who is also the Senate majority leader. "We just need to see how the revenue piece looks at the end of April."

    Rep. Nelson Dollar, R-Wake, the House's chief budget writer in recent years, agreed. "From my perspective, I think that it would be a good year to let the tax code settle out some," Dollar said.

    "We have been making very substantial changes," Dollar continued. "We certainly believe what we've been doing is working."

    "We're going to move cautiously, but still consider what might be next," said Rep. Jason Saine, R-Lincoln, a co-chairman of the House Finance Committee.

    The General Assembly enacted its major tax reform bill in 2013, which established set a flat personal income tax rate and lowered personal and corporate income taxes. The reform also expanded the income- and sales-tax base. Since then, lawmakers have focused much of their tax-writing efforts on tweaking that law.

    Saine said lawmakers may work on moves to make North Carolina more competitive with other states economically by looking at the franchise tax, the mill machinery tax, and by reviewing the Department of Revenue's study on "market-based sourcing," which could benefit companies with headquarters and manufacturing plants in North Carolina.

    "Everyone is open to seeing what we can do and not break the bank," Saine said.

    Brown noted that this past session, the General Assembly approved a plan to bring the average teacher salary in North Carolina up to about $55,000 a year. He said that legislators will continue to review the teacher pay scale.

    "We certainly made quite an investment in teacher salaries," Dollar said, adding that lawmakers also will continue to look at state employee salaries, improve mental health services, and make sure the state's court system is "appropriately funded." He added that lawmakers also will be interested to see what comes of President-elect Donald Trump's efforts to invest in infrastructure.

    "Jobs continues to be our No. 1 focus," Dollar said. "We want to keep the momentum going." Dollar said that would include work force development programs in public schools, community colleges, and the university system.

    The General Assembly's 2017 long session is scheduled to begin Jan. 11, 2017, when newly elected lawmakers return to Raleigh for an organizational meeting to elect their top leaders.