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Last week Gov. Pat McCrory released his budget proposal for the 2015-2017 biennium, his spending plan for $22 billion in each of the next two fiscal years.  While there are some positive spending decisions in this budget, there are also some discouraging choices in certain areas of government.  On the plus side, the spending increase compared to last year is less than the rate of inflation plus population growth.  He chose to allocate money to a Medicaid risk reserve fund in case of cost overruns, as well directing additional monies to the savings reserve and repairs and renovations accounts.

The headline for most is going to be education.  As promised during last year’s budget debate, McCrory is increasing the teacher base pay to $35,000 a year and also funding salary increases through teachers moving to the next tier on their pay scale.  A performance pay plan was introduced to reward high-performing teachers and there was a significant allocation for more textbooks, equipment, and instructional resources.

The UNC System cannot spend more than a million dollars of state funds on private fundraising operations.  Community Colleges are getting funding to buy updated equipment for STEM activities.  Both systems of higher education will now offer in-state tuition to non-resident veterans as part of the Yellow Ribbon program.

The other major headline is corporate welfare, or incentives.  The expired NC historic preservation tax credits have been brought back to life in this budget.  McCrory feels it is necessary for state taxpayers to subsidize the preservation of historic properties in particular cities or towns, in addition to the federal tax credits they already receive.

More of your tax dollars are also going to corporate handouts.  McCrory plans to put more money into the failing JDIG program, as well as use the UNC System to conceal specialized programs to spend state money on private businesses.  If we take all the tax credits targeted at specific businesses or industries as well as the incentive programs McCrory has proposed in his budget over the two-year period, the governor will give away over $200 million dollars of your tax money to private corporations.

And we can’t forget that gas tax increase — even though the governor opened his press conference stating this was a budget that didn’t have any tax increases. Both the Senate and the House have proposed their versions of a gas tax increase, and this budget makes it clear the governor supports one as well. John Hood explained this problem with changing the gas tax in his column today,

The current gas tax formula includes a variable component tied to oil prices. Its justification was that when oil prices rise, the cost of asphalt  — and thus of paving roadways — also rises. Now that falling oil prices will result in a drop in the gas tax, however, policymakers say the system can’t afford to lose the revenue. But isn’t the price of asphalt falling, too? Either oil prices and construction costs are linked or they aren’t.

Aside from the major headlines, there are many other provisions in his budget.  In Justice and Public Safety, the governor wants to centralize services for military, both active duty and veterans, by creating a Department of Military and Veterans Affairs.  Also included is a step increase for State Troopers’ salaries, funding for state crime lab operations, a boost in salaries for corrections officers, and additional beds for mental health patients at the Central Prison Health Care Facility.  The court system also garnered some attention when McCrory proposed an increase in funding for jurors, witnesses, interpreters, indigent defense, and NC’s business courts.

Environment and Agricultural activities were more strategically focused to find efficiencies in operations rather than making hard spending changes.  He proposed transferring animal welfare from the Dept. of Agriculture to the Dept. of Public Safety to allow animal cruelty cases to be more effectively addressed by law enforcement.  He also moved the zoo, aquariums, museums, and state parks from the Dept. of Environment and Natural Resources to the Dept. of Cultural Resources so all state attractions are overseen by the same department.

The health care portion of the budget makes up more than 24 percent of the entire general fund, more than $10.8 billion over two years.  The most expensive item is Medicaid, which is expected to cost the state additional money because of changes in enrollment and anticipated costs per recipient.  The governor also allocated more funds for mental health and substance abuse services, as well as increasing the amount spent on the information technology program for the state’s health care services, NC TRACKS.

The John Locke Foundation realizes that creating a budget for a state as diverse as North Carolina is no easy task, and we respect the Governor’s attempt at incorporating efficiency and performance into the budget process.  No one will ever be completely satisfied with a spending plan, but this gives lawmakers and citizens alike a good idea of what the state’s priorities will be for the next next two years.

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