March 4, 2015

RALEIGH — Gov. Pat McCrory’s new $21.5 billion General Fund spending plan would focus government resources on education and other high-priority items, without reversing important elements of the state’s sweeping 2013 tax reform plan.

“This budget meets the needs of a growing system of public schools by directing millions of dollars for enrollment increases and classroom resources,” said Dr. Terry Stoops, JLF Director of Research and Education Studies. “It is encouraging to see a budget that provides targeted increases in teacher pay, including funding for a performance pay program.”

While devoting more funds to education, McCrory does not roll back any of the tax code changes that helped North Carolina jump from 44th to 16th in the Tax Foundation’s State Business Tax Climate rankings. “We are also pleased to see that spending the governor’s budget would grow slower than the combined rate of inflation and population growth,” said Sarah Curry, JLF Director of Fiscal Policy Studies. “That fits within the guidelines of a Taxpayer Bill of Rights.”

McCrory made a prudent choice in avoiding any funding for controversial Medicaid expansion proposals, said Katherine Restrepo, JLF Health and Human Services Policy Analyst. “With all of the uncertainty surrounding the future of the Affordable Care Act — including the U.S. Supreme Court case over health care subsidies that won’t be resolved until June — it just makes sense to wait before making any decisions about expanding Medicaid, which is a major component of the Affordable Care Act’s implementation.”

Curry is concerned about McCrory’s incentives proposal. “Legislators should take a long look at any plan to expand the state’s main targeted tax incentive program, along with reviving recently expired tax credits for the film industry and for historic preservation,” she said. “They will likely find other higher priorities that could be addressed with that funding.”

McCrory’s decision to add money to state reserves makes sense, Curry said. “The governor’s budget provides an additional $47 million to the Rainy Day Fund, adds $47 million for repairs and renovations, and establishes a Medicaid Risk Reserve fund of $175 million,” she said. “Legislators should follow suit.”

For more information, please contact Sarah Curry at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].