NC Senate and NC House Leaders Introduce Compromise Budget Full Details Not Available At Press Time Budget Has Been released to the Public

09/16/2015 7:00 am Update

The budget and conference report on the budget have been added to the website of the North Carolina General Assembly and Macon Media has embedded them below and made them available for the public to download from this page. The NC House convenes today at noon and the NC Senate convenes at 2:00 pm. The budget is expected to be the topic of discussion.

Table of Contents of Compromise Budget

Proposed Compromise Budget

Conference Committee Report 2015-09-14

Speaker of the NC House Tim Moore and Senator Phil Berger held a joint press conference to brief the press corps on the compromise busghet worked out in conference committee over the last few weeks. The full budget was not made available to the press or public at the time of the press conference, but was promised to be released later this afternoon or evening.

Macon Media recorded the audio stream from the North Carolina General Assembly website and, in the interest of time and portability, added the audio to a video so you could listen to the whole thing yourself. The audio has been amplified, but there are a couple of sections when one of the speakers drifted away from the microphone and you'll have to boost the volume to hear what they're saying. There was a brief period of 30 seconds where the audio completely dropped out and it has been left in the video.

So, without further ado, the audio is posted below, and a "highlight" of the budget has been posted below, all of which has been lifted from Representative Chuck McGrady's blog.

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House Bill 97
2015 Appropriations Act

Conference Committee Overall Highlights

September 14, 2015

• Appropriates $21.734 billion for FY 2015-16, an increase of about $652 million (or 3.1% percent) from the FY 2014-15 budget
• Increases State-funded positions by a net of 96.60 positions

Adjustments to Availability

• Increases the Savings Reserve Account by $200 million, bringing the total to $851.6 million. Another $250 million is transferred if House Bill 943 [Connect NC Bond Act of 2015] is enacted, increasing the total amount in the Savings Reserve to $1.1 billion;
• Appropriates $150 million to the Repairs and Renovations Account;
• Repeals the statutory transfer of $215.9 million in funds from the Highway Fund to the State’s General Fund;
• Reduces Availability by a net of $74.7 million in FY 2015-16 and $326.5 million in FY 2016-17 for various tax adjustments;
• Earmarks $75 million for FY 2015-16 and another $150 million in FY 2016-17 in non-recurring funds for deposit into the newly established Medicaid Transformation Fund;
• Returns $10 million each year of the biennium to Golden L.E.A.F. from Master Settlement Agreement funds.

Salary and Benefits

• Public Schools:
  • Increases starting teacher salary from $3,300 to $3,500/month ($35,000 per year);
  • Grants a step increase for eligible educators who gain a year of creditable service;
  • Grants a step increase for School-based Administrators (SBAs) (i.e. Principals and Assistant Principals);
  • Provides that no teacher or SBAs will receive a drop in pay;
• Provides $202 million for $750 bonuses for all State and State-funded local employees;
• Grants a step increase for Assistant & Deputy Clerks, Magistrates, the Highway Patrol;
• $12.5 million in FY 2015-16 and $25 million in FY 2016-17 to fund the Salary Adjustment Fund for market-based adjustments;
• $10 million in FY 2015-16 and $20m in FY 2016-17 for salary increases for NC Community College personnel (local Boards have flexibility in allocating the funds);
• $12.8 million in FY 2015-16 and $25.6 million in FY 2016-17 to implement Pay by Custody Level for Correctional Officer;
• $12 million in FY 2016-17 to implement OSHR’s Compensation Update;
• Maintains current benefits and policies in all State retirement systems;
• Increases benefits to members of the National Guard Pension Fund;
• Funds the State Health Plan at the level recommended by the Board of Trustees’ for FY 2015-16;
• Provides funds for Worker’s Compensation payments to accurately reflect projected spending.

 Other Areas

• Funds Teacher Assistant positions at the FY 2014-15 level;
• Funds Driver Education Training over the biennium;
• Provides funds $16.8 million in capital investments such as $5.8 million for Water Resources Development projects and $3.5 million for repairs to the USS North Carolina Battleship;
• Provides $30 million in non-recurring funds to the Film and Entertainment Grant Fund in each year of the biennium;
• Establishes a new Department of Military and Veterans Affairs.

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Tax Package

• Cuts Personal Income Tax Rate by 0.26% to 5.499%
• Increases Standard Deduction in 2016 from $15,000 to $15,500, non-taxable.
• Unlimited deduction for both Medical and Charitable.
• Maintains Corporate Income Tax rate reduction trigger (Current forecast has us hitting the trigger in 2016 dropping rate to 3%)
• Phases in Single Sales Factor over 3 years starting next year (study market based sourcing)
• No extension of the Solar Tax Credit or R&D Tax Credit

2017 Estimated Average Effective Tax Rate

Federal Adjusted Gross Income	Current Law	Proposed Law
$20,000 to $29,999	2.71%	2.47%
$30,000 to $39,999	3.40%	3.15%
$40,000 to $49,999	3.79%	3.54%
$50,000 to $59,999	3.97%	3.72%
$60,000 to $69,999	4.06%	3.82%
$70,000 to $79,999	4.10%	3.86%

(Estimates as produced by the North Carolina BearingPoint Individual Income Tax Model for Tax Year 2017)

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Education

K-12 funding: 5.0% ($410 M) increase from base budget

• Fully funds Teaching Assistants to secure better educational support and student outcomes.
• Fully funds Driver Education to help North Carolina train responsible drivers.
• Invests $l.5M over biennium for Transforming Principal Preparation to support innovative programs to dramatically improve the rigor of principal preparation in North Carolina.
• Increased funding for Textbooks & Digital Learning Resources.
• Invest in School Connectivity Initiative to bring broadband access to all K-12 schools.
• Increases Opportunity Scholarships by $14 million (129%) to award more scholarships to children of low-income and working-class families to attend a private school of their choice.
• $7.5M to 58 Community Colleges across the State for state-of-the-art equipment to keep up with the changing needs of employers and train future workforce.
• Increase capacity of training for medical residents, with a focus on primary care and general surgery.

Heath & Human Services

• Increased support for community mental health services, examples include:
  • 7% increase for three-way psychiatric beds in community hospitals.
  • Addition of 66 mental health beds at Central Regional Prison.
  • Establishes mental health treatment units at 8 custody prisons.
  • Traumatic Brain Injury waiver to provide victims better support.
  • Training for Paramedics for Behavior Health
    diversion.
• Foster Care: Raises age to 21yrs, provides funds for Youth Villages, increases funding by $12M for increased Foster Care caseload.
• Increases market rates for Child Care Subsidy and includes “Grandparent” fix.
• No changes to CON Laws.
• Does not eliminate Community Care of North Carolina (CCNC).
• Home and Community Care Block Grant: restores cut to services for seniors.
• Provides funds to  improve State Medical Examiner system.

Transportation

• Eliminates the transfer from the Highway Fund to the General Fund.
• $440M in additional road funding.
• $70M in for port modernization.
• Increased funding for contract resurfacing and the bridge program, and pavement preservation fund.
• Increased funding for capital construction projects through STI.
• Continued funding for modernization of DMV.
• Increased funding for state aid to municipalities.
• Reduce taxpayer dollars used for Board of Transportation travel expenses.
• Increases funding for airport development and the UAS program.
• Eliminates 50 Raleigh-based, non-field positions.

Agriculture & Natural Resources

• Support for Dredging of the coastal inlets to keep our waterways open for business and recreation.
• $1M for Military Buffers through Farmland Preservation.
  • $1M through Clean Water Management Trust Fund
• Additional funding to support Oyster Industry
• $1M FY1 and $2M FY2 for Tourism Funding to continue to encourage out-of-state tourism.
• $500k for Shale Gas Exploration
• Funds expansion of AgWRAP (well-drilling initiative for Ag).
• Eliminates $1.5M for state-wide branding initiative.
• $1.3M department-wide DENR administrative cut.

Salary & Benefits

• All teachers and State employees will recive a $750 bonus by the end of Fiscal Year 2015. Legislators do not receive this bonus.
• Teachers will still receive step increase raises based on experience.
• Starting teachers (0-4yrs) will see a salary increase from $33,000/yr to $35,000/yr.
• All Sworn Members of the Highway Patrol will receive a 3% salary increase.
• Starting Highway Patrol salary increase from $35k/yr to $36,050/yr.
• No reductions in the State retirement benefits.
• $38M in fund for Administration to adjust salaries of employees in hard to recruit areas.
• Increases General Fund appropriation to National Guard Pension Fund.

Justice & Public Safety

• Grants for Body-Worn Video Camera for Law Enforcement Agencies to protect our sworn officers. Optional- does not force Departments to comply.
• Provides remaining funds for cameras in Highway Patrol vehicles to keep our troopers safe.
• $1.6M for HERO Grants to combat sex crimes against children.
• Clerks and Magistrates will still receive step increase raises based on experience.
• Additional funds for court modernization.
• Funds for Managed Cell Access System to deter the illegal smuggling and use of cell phones by inmates.

General Government

• New Department of Military and Veterans Affairs
• New Department of Information Technology
• New Department of Natural and Cultural Resources to consolidate management of all state attractions.
• Additional funds for VIVA in FY 2015-2016 to execute voter outreach.
• $17.5M for Workforce Housing Loan Program, develop low-income housing.
• Align Agency Budgets to Actual Expenditures to track the use of taxpayer dollars.
• Governmental Budgetary Transparency/Expenditures Online to ensure an open, transparent, responsible state government.

Statewide Reserves

• $600M to Savings Reserve and R&R
• $186M to a Medicaid Contingency Reserve. This reserve is to address any budgetary shortfalls within the Medicaid budget.
• $225M over the biennium for a Medicaid Transformation Reserve. Will be used for when the State transitions to fee-for-service to capitation under Medicaid reform.

Other Highlights

• $3M for OneNC Small Business Fund
• $2.5M annually for Rural Economic Development Grants
• $30M for Film Grants
• $8M in FY 2016-2017 for Historic Tax Credit
• JMAC funded on recurring basis; $6.9 million in FY 2015-2016 and $7.5m in FY 2016-2017