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Tuesday, September 15, 2015

North Carolina finally has something resembling a state budget

Posted by on Tue, Sep 15, 2015 at 10:22 AM

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Updated: The N.C. Senate voted to approve the budget 33-16 Tuesday afternoon. Sen. Josh Stein, D-Wake, who voted against the budget wrote on his Facebook page that it "it fails NC's school kids, teachers & future."

Stein said according to the General Assembly's Fiscal Research division, the cost of the corporate tax cuts and tax provisions in the budget will be $3.94 billion to the state over the next five years.

"And we don't have enough money to raise teacher pay? Hire more teacher assistants? Buy more textbooks? Give state employees a raise?," Stein wrote.

"I think schoolkids and teachers should be a higher priority than further breaks for out-of-state shareholders of large corporations."


A good budget is like a good employee: it shows up sober and on time, not a month after school has started, brimming with special provisions.

But hey, we finally got our two-year, $21.74 billion budget, and, while some of the more awful proposals were left out (see redistributing the sales tax), ALEC, the Koch brothers and the John Locke Foundation are probably handing out medals to lawmakers as we speak.

Here are some lowlights:

Veteran teachers and state employees will not receive a pay raise, but they will get a one-time, $750 bonus. Early career teachers will see their salaries increased from $33,000 a year to $35,000 over two years. Most state employees haven’t seen a meaningful raise since 2007, and retired state employees won’t see a cost-of-living increase.

Spending on K-12 education goes up by $410 million in the budget, though $25 million of that goes toward vouchers to pay for the private education of 6,000 students, an expansion of $14 million of the state's Opportunity Scholarship program. The budget continues to fund all teachers’ assistant positions (though there are 7,000 fewer TA's than before the Recession hit) as well as the driver’s ed program. The UNC system will receive $99 million, while $20 million will go to community colleges.

As mentioned, the current sales tax distribution system, where 75 percent of sales revenues goes to the county of purchase and the remainder is distributed across the state based on population will remain in place. But a new sales tax on repair and maintenance services will go into effect. Those revenues will go to needy rural counties as part of an $84.8 million fund to pay for schools, community colleges and economic development projects. The budget preserves the state’s 57 municipal services tax districts, which fund revitalization projects in downtowns and neighborhoods.

The personal income tax rate will be lowered from 5.75 percent to 5.499 percent by 2017, costing the state an estimated $437 million in annual tax revenues. 

Tax credits for renewable energy projects scheduled to sunset at the end of this year won’t be extended—a giant FU to the state's $2.6 billion solar industry—though tax credits for historic preservation projects, which ran out at the end of last year, will be back.

The budget sets aside $225 million for a program to reform the state’s Medicaid system, which covers 1 million poor and disabled North Carolina residents, over the next two years. A tax deduction for medical expenses for seniors will also be restored.

The state Division of Motor Vehicles will increase its fees, and cities and towns will be allowed to charge a “municipal vehicle tax” of up to $30 per vehicle (that’s now capped at $5). Funding for light rail transit will be capped at $500,000 per project, effectively steamrolling the Durham-Orange light rail plan. 

The budget will expand the Job Development Investment Grant Program to finally bag that elusive auto manufacturer, as well as the film grant, which will triple to $30 million a year. For TV series, the cap will increase from $5 million to $9 million.

Gov. McCrory’s $2 billion bond proposal to upgrade government buildings will go before voters in a 2016 referendum.

Victims of the state’s eugenics program will be compensated a further $15,000 each.

The state will spend $5 million on body cameras for police officers.

“Rather than making the truly tough choices that reflect the priorities of North Carolinians, policymakers have once again decided to cut taxes and forgo critical investments that boost the economy,” said Alexandra Sirota, director of the NC Budget and Tax Center in a statement.

“Such investments include providing every child with a sound education; bolstering the public sector foundation that supports innovation, builds opportunities for research and development, and trains workers; and protecting the health and well-being of our state’s residents and communities.”

The budget, which is 76 days late, was released online on Monday at around midnight. The Senate will vote on the nearly 500-page document at 2 p.m. Tuesday; the House will vote Wednesday or Thursday, before the September 18 deadline.

“This process has been an absolute disgrace to the taxpayers of this state,” said Senate Democratic Leader Dan Blue, Jr in a statement. “Even without addressing the wrong priorities put forward in this budget, the process itself has been a sham since day one, and the people of this state deserve better.”

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