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Yesterday, the NC Senate leaders held a press conference to announce to the public what their priorities are and what plan they have drawn up for the next two years for North Carolina’s state government.  While the budget itself was not released at the time of the press conference, the Senate Appropriations subcommittees met late Monday afternoon to review the various sections of the budget.  The complete budget proposal was made available to the public late last night.

You can read the text of the budget here.  In addition to the bill text, they released a easier-to-read money report that lays out each spending item with its accompanying amounts.  You can read that here. 

Overall, the NC Senate proposed a budget that increased around 2 percent from last year’s budget, to approximately $21.5 billion.  Unlike their House counterparts, the Senate decided to put an unexpected surplus into the rainy day fund and the repairs and renovations fund, more than $655 million.  The Senate also decided to reduce the personal income tax to 5.5 percent.  In response to the state’s growing demand for Transportation dollars, the Senate ended the transfer of hundreds of millions of dollars from the Highway Fund to the General Fund.  That will ensure that money earmarked for Transportation will be spent on transportation needs, and not other areas of state government.

There are many priorities found within the Senate budget, among which are increasing starting teacher pay, Medicaid reform, and more money for economic incentive programs.  Below are some of the highlights from the Senate budget as set out in their press release, categorized by major area of government.  Keep in mind, the budget is a two-year spending plan, so the budgeted amount is over a two-year time frame.

Tax Changes:

  • Reduces the personal income tax rate from 5.75 to 5.5 percent beginning in 2016.
  • Allows the corporate income tax rate to fall to four percent in 2016 and three percent in 2017; changes the calculation of the tax to a single sales factor.
  • Reduces the franchise tax by 33 percent.
  • Creates a new way to distribute the sales tax collected by counties.

Economic Development:

  • Extends the sunset for the state’s Job Development Investment Grants (JDIG) program for an additional two years and allows $5 million more in funding. Allocates additional funds to support Rural Economic Development grant programs, bringing total annual funding to $17.5 million.
  • Directs that Rural Infrastructure Authority Grants be allocated to local governments in Tier 1 & 2 Counties and in rural census tracts of Tier 3 counties.
  • Provides $6 million in nonrecurring funding for the One North Carolina Small Business program. 

Education:

  • Increases starting teacher salaries to $35,000; offers a step increase to teachers, assistant principals, and principals; and ensures that all classroom teacher salaries are paid for through recurring dollars.
  • Provides $21.3 million each year to raise pay for community college instructors.
  • Increases funding for K-12 public schools by $453 million, for community colleges by $5 million, and for the University of North Carolina system by $160 million over two years.
  • Funds anticipated enrollment growth for all levels of education.
  • Requires local districts to implement a plan to improve student performance at K-12 schools that earn a school performance grade of D or F.
  • Spends an additional $58 million for textbooks and digital resources over two years.
  • Allocates an additional $12 million to fully fund the requirements of the Excellent Public Schools Act, including the Read to Achieve program.
  • Supports the opportunity scholarship program by close to $7 million each year.
  • Provides in-state tuition for veterans at the state’s community colleges and universities and increases funding for the National Guard Tuition Assistance Program.

Health and Human Services:

  • Creates a new Health Benefits Authority to administer North Carolina’s Medicaid program.
  • Lays the groundwork for Medicaid reform that will hopefully lead to greater budget predictability.
  • Provides funding to implement the Achieving a Better Life Experience Act (ABLE Act).
  • Increases Medicaid payment rates to primary care physicians by 22 percent and to obstetricians by 26.5 percent to help expand the number of physicians accepting Medicaid patients.
  • Phases out of the Certificate of Need system by 2019.
  • Expands the budget of the Office of the Chief Medical Examiner by 35 percent in the first year and by 63 percent in the second year.
  • Increases the age for foster care.

Justice and Public Safety:

  • Offers a step increase for State Highway Patrol troopers, clerks, and magistrates.
  • Spends more than $38 million over two years to increase the salaries for correctional officers.
  • Increases funding for the Administrative Office of the Courts by an additional $5 million, or 30 percent.
  • Allocates approximately $1.5 million over the biennium to the state’s Business Court.
  • Creates six new technician positions at the State Crime Lab and provides more funding for outside toxicology and DNA analysis.
  • Funds equipment and instruction to train law enforcement offices on appropriate use-of-force.
  • Increases the recurring budget for vehicle replacement for the State Highway Patrol by 60 percent and provides significant additional resources for vehicles for the State Bureau of Investigation and Alcohol Law Enforcement.

Agriculture and Environment and Natural Resources:

  • Increases funding for the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund.
  • Improves efficiency by creating a new Department of Natural and Cultural Resources (DNCR) to oversee the state zoo, aquariums, Museum of Natural Sciences, and parks system.
  • Provides additional funding for dredging, oyster sanctuaries, and shellfish rehabilitation.

Transportation:

  • Eliminates $216 million in transfers from the Highway Fund to the General Fund.
  • Increases Strategic Transportation Investment (STI) funding by $334 million, which will add 70 new highway projects and allow numerous projects to be accelerated over a ten-year period.
  • Adjusts DMV fees to reflect inflation.
  • Increases aid for municipalities by providing close to $300 million over two years for maintenance of city roads.
  • Includes $445 million to replace structurally deficient bridges across the state, adds $66 million to improve the condition and safety of secondary roads and increases recurring funding for pavement preservation to $100 million.

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