RALEIGH, N.C. (AP) — Gov. Pat McCrory’s two-year state budget proposal Thursday seeks to use taxpayer dollars to encourage new private-sector jobs and investment in North Carolina and targets government pay raises toward hard-to-staff and early-career teaching positions.

The $21.5 billion plan for the year starting July 1 is barely 2 percent higher than the current year’s budget approved last summer by the General Assembly, or almost $440 million.

The proposal spends $291 million more on public-school spending next year, with nearly three-quarters of it going to pay raises and to teach an additional 17,300 K-12 students next fall. An extra $287 million is needed to cover the expected increasing Medicaid patient rolls and medical costs. And $100 million is earmarked to meet current obligations for economic incentives for companies that are creating and retaining jobs. The amounts rise if tax breaks for certain industries and for research and development set to expire in 2016 are extended, as the governor wants.

To help balance the budget, McCrory said, most every agency was directed to locate reductions of 2 percent. The share for the University of North Carolina system would be $50 million, the governor’s spending plan said. There are no tax increases sought to fund general operations.

“This budget is still extremely tight,” McCrory told reporters in releasing the proposal. The governor said state officials “had to make some tough choices in this budget, but we are investing in the areas that will have the biggest impact on the citizens of North Carolina.”

Some critics of GOP policies in state government have blamed McCrory for approving income-tax rate reductions in 2013 that they say have led to lower than expected revenues and in turn led to additional spending cuts. Fiscal forecasters for McCrory and the legislature agree for now the state estimate a $271 million shortfall for this current fiscal year.

“The ‘tough choices’ Gov. McCrory says he made were self-inflicted,” Alexandra Sirota, director of the North Carolina Budget & Tax Center, a liberal-leaning economic study group, said in a news release.

But there’s enough money set aside to cover the expected hole, and State Budget Director Lee Roberts pointed out in a presentation that general operating revenues are still expected to increase by almost 3 percent this year and 4 percent next year. McCrory and other Republicans also argue the tax-rate reductions have contributed to improving the state’s economy and lowering unemployment.

The legislature will consider McCrory’s spending blueprint while fashioning its own budget through mid-2017, beginning with the House in early April. GOP legislative leaders hope McCrory will sign any final proposal into law.

Rep. Nelson Dollar, R-Wake, the House’s senior budget writer, called McCrory’s plan “a very responsible budget.”

Senate leader Phil Berger, R-Rockingham, agreed.

“I don’t think there are any gimmicks in there,” Berger said, adding that while there may be some different priorities compared to the governor, “we’ll work through it.” Democrats offered mixed reactions to the proposal.

McCrory should get support from the General Assembly on his proposal to raise starting teacher salaries from $33,000 to $35,000, since legislative leaders backed a two-year pay plan last year.

The pay floor rose from $30,800 to $33,000 last fall. McCrory would fund experienced-based salary increases for teachers as well, but a consolidated, pay system approved last year means those increases now usually occur once every six years, not annually. Another $5 million would go to give out performance-based pay to teachers.

Raises for state employees wouldn’t be across the board, either, but they would be targeted over the next two years to benefit hundreds of troopers and also nearly 10,000 correctional officers.

The incentives request included at least one tax break contained in legislation that passed the House on Thursday. That bill goes above the budget proposal and gives more money to the Job Development Investment Grant — the state’s chief incentives tool — to attract new businesses looking to expand.

The court system also would receive $16 million for operations over two years in McCrory’s budget. Chief Justice Mark Martin asked lawmakers for assistance Wednesday during his State of the Judiciary address.

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