Raleigh, N.C. – North Carolina lawmakers released details of a $24 billion compromise state budget on Tuesday that invests heavily in salary increases and a new statewide school construction initiative.
Public schools remain the top priority of the North Carolina General Assembly’s spending plan with more than half of state dollars budgeted to education in the proposal.
Salary increases will benefit state employees, teachers, assistant district attorneys, clerks of court, magistrates, university and community college faculty, correctional officers, highway patrol troopers and other law enforcement officials. State retirees will also receive a one-time cost of living supplement.
Senior Appropriations Committee Co-Chair Rep. Donny Lambeth (R-Forsyth) noted that the last several state budgets have included pay raises for state employees and teachers.
“We are going to maintain what we’ve been doing the last five years, investing in our teachers and our state employees,” Rep. Lambeth said.
Rep. Lambeth also emphasized funding for Medicaid transformation in North Carolina, a major shift from fee-for service payments to managed care that is currently ongoing to fix cost overruns and improve patient access.
“Fixing the current Medicaid problem is my priority,” Rep. Lambeth said.
“We had significant cost overruns, but we have a plan for transformation and we are getting it done. I can’t oversell how difficult that will be, and that is my priority.”
Rep. Jeffrey Elmore (R-Wilkes), a public school teacher and House Education Committee co-chair, said salary increases for educators in the state budget benefit veteran teachers most.
“In appreciation for our 25-plus year veterans, they will also be receiving two bonus checks,” Rep. Elmore said. “This is to say thank you for all their years of service to the state of North Carolina.”
“We know it takes strong leadership in our schools to deliver a great education to our children. We focused on all aspects of the salary package in the education budget.”
The budget also commits hundreds of millions of dollars to state capital infrastructure improvements across agencies and education campuses in North Carolina.
Transportation arteries including the state ports, airports, railroads, and highways will receive substantial investments to improve statewide mobility as North Carolina continues to experience rapid population gains.
Rep. Dean Arp (R-Union), a House Appropriations Committee co-chair, noted the budget includes billions of dollars for projects through the State Capital Infrastructure Fund.
“This budget authorizes construction on $3.4 billion of capital infrastructure – with no debt – to invest in our kids’ futures, in their classrooms and their communities,” Rep. Arp said.
Rapid job creation, low unemployment, and aggressive population growth in North Carolina have followed tax reforms and responsible spending plans passed by North Carolina Republicans this decade.
Senior House Appropriations Committee co-chair Rep. Jason Saine (R-Lincoln) said the House and Senate were working towards the same goals in the successful budget compromise.
“We want to make sure our state remains a leader and we’re doing a good job at that, making sure we keep North Carolina on the cutting edge,” Rep. Saine said.
Additional income tax relief for the workforce is included in the budget through another increase to the state’s standard deduction.
The ‘zero-tax bracket’ has more than tripled under Republican leadership in North Carolina for families since 2014, rising from $6,000 to $20,000 and saving low-income earners a larger percentage of their take-home pay.
The budget also includes franchise tax reductions to continue encouraging businesses to relocate and start doing business in North Carolina.
The spending plan commits substantial tax dollars to workforce development in the North Carolina Community College System and state universities.School safety is a focus of the spending plan with grants committed to mental health, classroom security, and funding for a new statewide anonymous reporting app rolling out in every public school this Fall.
Speaker Tim Moore (R-Cleveland) said Tuesday the budget shows a commitment to core priorities of state government, working families and businesses.
“The successful results of Republican state budgets compel us to continue in the direction that’s created a boom economic decade,” Speaker Moore said.
“We have realized our vision for a brighter future after years of strong budget leadership. North Carolina’s budget before you today takes a proven approach.”
“These priorities and tax reforms have a strong record of results. Our revenue surplus and record savings reserve were no accident. We plan for the future, like families and businesses.”
“This is a great budget today because it prepares North Carolina for tomorrow.”
State Budget Highlights
Transfers an additional $710 million into the Savings Reserve Account, replenishing all but $46 million of the $756 million transferred out to support Hurricane Florence Recovery; brings the total anticipated balance to $1.96 billion in 2021.
Provides Compensation increases and bonuses for Teachers, State Highway Patrol, Magistrates, Clerks and other State employees totaling $208 million in FY 2019-20 and $354 million in FY 2020-21.
Provides 5 non-expiring Bonus Leave days for eligible State employees and Community College employees.
Fully funds State Health Plan requirements and Retirement System requirements over the biennium;
Provides funding for a one-time 0.5% Retiree Supplement for each year of the biennium;
Reduces the Franchise Tax and Raises the Standard Deduction for all filing statuses by 5%, effective 2021;
Provides $325 million for repairs and renovations for State agencies and the UNC System;
Authorizes $448 million in capital projects for State agencies, $632 million in capital projects for the UNC System and $90.8 million in capital for Community Colleges.
Provides an additional $15 million to the State’s GREAT broadband initiative.
Community Colleges
Provides funds for NCCCS to implement a system-wide ERP ($5.8 million NR in FY 19-20 and $13.6 million NR in FY 20-21).
Provides funds to fully eliminate the funding disparity between workforce course and curriculum courses ($12 million, recurring).
Provides additional funding for NC Career Coaches, allowing for changes to the matching requirement to participate in the program as well as funds to hire additional coaches ($1.7 million in FY 19-20 and $2.3 million in FY 20-21).
K-12 Public Education
Provides recurring funding to fund the increase in the average salary of various public school positions ($47.5 million, recurring).
Provides recurring funding beginning in FY 2019-20 to fund average daily membership (ADM) adjustments ($3 million, recurring).
Provides funds for the School Business System Modernization project, which includes an ERP for increased efficiency in payroll, human resources, licensure, and financial information ($6.9 million in FY 2019-20 and $40.2 million in FY 2020-21).
Provides additional funding for the Textbooks and Digital Resources Allotment ($12 million in each year).
Increases funding to the Instructional Support Allotment, with the intent to be used by LEAs to hire additional school mental health support personnel: school psychologists, school counselors, school nurses, school social workers ($20 million in FY 2019-20 and $23 million in FY 2020-21).
Provides funds to NC Council on Economic Education to provide professional development to teachers for a new Economics and Personal Finance high school graduation requirement ($1 million NR in FY 2019-20).
Provides supplemental funding for five Cooperative Innovative High Schools (CIHS’s) which opened in FY 2018-19 and two CIHS’s approved to open in FY 2019-20 ($1.5 million, recurring).
Provides funds to offset the copays for students eligible for reduced-price lunches in schools participating in the National School Lunch Program ($3 million NR in FY 2019-20).
Provides funds to establish the new Transportation Reserve Fund for Homeless and Foster Children, to help cover the extraordinary costs associated with transporting these students to/from their schools of origin ($3 million NR in FY 2019-20).
Increases funding to the Classroom Supplies allotment in each year of the biennium, and allocates $150 per eligible classroom teacher in FY 2019-20 and $200 per teacher in FY 2020-21 to purchase supplies through an online vendor ($15 million NR in each year).
Codifies the Advanced Teaching Roles program to enable additional local school administrative units to develop new models of job responsibility and compensation for participating teachers.
Adds Economics and Personal Finance as a high school graduation requirement and mandates related professional development for the teachers of those courses.
Caps the number of CIHSs that the State Board of Education (SBE) may approve each year to operate with supplemental funding at four.
Establishes the North Carolina Classroom Supply Program, which allocates $150 per eligible classroom teacher in FY 2019-20 and $200 per teacher in FY 2020-21 from the Classroom Supplies Allotment.
Establishes the Transportation Reserve Fund for Homeless and Foster Children, a grant program to help cover extraordinary transportation costs associated with transporting homeless and foster children to their school of origin, and allows LEAs to apply to the Special State Reserve Fund for grants to help cover the costs of transporting high-needs children with disabilities.
Directs DPI to use funds provided to pay the reduced-priced lunch copays for students qualifying in all schools participating in the National School Lunch Program, and directs the State Board of Education (SBE) to recommend policy options for on the uniform administration of unpaid meal charges in LEAs.
Excellent Public Schools Act 2019: directs the Superintendent of Public Instruction to convene a task force with members of UNC Board of Governors, the State Board of Community Colleges, the NC Independent Colleges and Universities, and the Professional Educator Preparation and Standards Commission (PEPSC) to develop a Comprehensive Plan to Improve Literacy Instruction.
University of North Carolina System
Provides additional funding for the increase in financial obligations for NC Promise institutions ($15.0 million recurring in FY 2020-21).
Provides additional funding for Faculty Recruitment and Retention ($6.0 million recurring in FY 2019-20 and $11.4 million recurring in FY 2020-21).
Provides funding for a one-year scholarship for students graduating from the North Carolina School of Science and Math in 2019-20 school year and subsequently enroll in a UNC institution the following academic year ($1.0 million, recurring).
Provides matching funds to the College Advising Corps (CAC) to expand the placement of college advisors in NC public schools. Funds made available to the CAC are matched on the basis of $2 non-State funds for every $1 in State funds ($1.9 recurring in FY 2019-20 and $2.5 million recurring in FY 2020-21).
Provides additional funding to the Western School of Medicine – Asheville campus ($4.0 million, recurring).
Provides funds to the Southern Regional Area Health Education Center ($4.0 million, recurring).
Provides additional funds for NC A&T’s doctoral programs ($3.5 million recurring and $4.0 million NR in FY 2019-20, and $7.5 million recurring in FY 2020-21).
Provides additional matching funds for NC A&T’s federal grants ($1.6 million, recurring).
Provides funds to North Carolina Central University for laboratory equipment and instruments ($3.0 million NR in FY 2019-20).
Provides additional funding for the North Carolina School of Science and Math – Morganton campus. ($1.4 million recurring and $5,150 NR in FY 2019-20, and $3.4 million recurring and $792,369 NR in FY 2020-21).
Allows the carryforward of unexpended FY 2018-19 enrollment growth funds for NC Promise requirements and for rapid growth at any of the 3 constituent institutions, through FY 2019-20.
Provides a matching grant to the College Advising Corps to expand the placement of college advisers in North Carolina public schools.
Increases the carryforward percentage for UNC institutions from 2.5% to 5.0% for one-time expenditures that do not impose additional financial obligations on the State through FY 2022-23. Effective July 1, 2023, the carryforward percentage is reduced to 2.5%.
Provides funding for a one-year tuition grant program for students graduating from the North Carolina School of Science and Math beginning with the graduating class of the 2019-20 school year, who subsequently enroll in a UNC constituent institution the following academic year.
Combines the Children with Disabilities Grant and the Personal Education Savings Account programs in FY 2020-21 into the North Carolina Personal Education Student Accounts for Children with Disabilities Program to provide the option for a parent to better meet the individual educational needs of the parent’s child. For FY 2020-21, funds for the Children with Disabilities Grant and the Personal Education Savings account will be eliminated and instead appropriated to the new combined program.
Health and Human Services
The Conference Budget for Health and Human Services in FY 2019-20 includes net appropriations of $5.6 billion, which is $218 million above the amount enacted for FY 2018-19. This is a 4.1% increase. FY 2020-21 includes net appropriations of $5.8 billion, which is $207.6 million above the amount in the Conference budget for FY 2019-20. This is a 3.7% increase. The highlights of the Health and Human Services adjustments follow below:
Expands the Home and Community Care Block Grant (HCCBG). The HCCBG provides funding for in-home and community based services for older adults, allowing them to continue residing at home. Funding includes $2.3 million R and $1.3 million NR net General Fund appropriation in FY 2019-20 and $4.8 million R and $1 million NR net General Fund appropriation in FY 2020-21. The funding increase will allows an estimated 1,500 additional seniors to access services in FY 2019-2020 and 2,725 seniors to access services in FY 2020-21.
Increases the State-County Special Assistance Personal Needs Allowance from $46.00 per month per recipient to $70.00 per month per recipient effective October 1, 2019. Funds to support this change are located in the Division of Social Services Budget (total requirements of $ 4.5 million R in FY 2019-20 and $6 million R in FY 2020-21).
Provides funding for NC FAST including funding for the Child Welfare case management system and changes due to State and federal laws; 24 hours a day, 7 days a week access, hardware and software purchases and the development and implementation of a document management component of NC FAST. Funding includes $5.7 million R and $18 million NR net General Fund appropriation in FY 2019-20 and $7.9 million R and $11.2 million NR net General Fund appropriation in FY 2020-21. The nonrecurring funding comes from the Medicaid Transformation Reserve.
Provides $3.5 million NR in Year 1 and $1.0 million NR in Year 2 for loan repayment incentives to recruit doctors, physician assistants, dentists, nurse practitioners, and certified nurse midwives to practice in rural areas of the State.
Provides approximately $1 million in Year 1 and $1.2 million in Year 2 for additional prescription assistance services for indigent and uninsured persons.
Provides $450,000 NR and $950,000 NR expansion to the DHHS competitive grants for NC food banks, NC Senior Games, and Special Olympics NC
Authorizes DHHS to work with the Department of Military and Veterans Affairs, Community Care of NC, and Maxim Healthcare to develop and implement a two-year pilot program in Cumberland County to 1) provide care coordination services to veterans to increase their access to healthcare and 2) to recruit and train un/underemployed veterans as community healthcare workers
Provides 2 million NR and $400,000 R in each year of the biennium for Smart Start.
Increases the NC Pre-K rates for child care centers by 2% in FY 2019-20 and by an additional 2% in FY 2020-21 with the intent that the funds be used to increase the salaries of teachers working in child care centers to address the disparities in teacher salaries among those working in child care centers compared to those working in public schools or Head Start centers. Funding of $1.7 million R FY 2019-20 and $3.5 million R in FY 2020-21 is provided for this purpose.
Increases funding for the Child Care Subsidy Program by $3.7 million NR each year of the biennium. The additional funding will serve an estimated 500 children each year.
Provides an additional $5.4 million in FY 2019-20 and $16.3 million in FY 2020-21 to add 1,000 Innovations Waiver slots, 500 effective January 1, 2020, and 500 effective January 1, 2021. The slots allow individuals with intellectual and developmental disabilities to access home- and community-based Medicaid support services. The fully annualized recurring net appropriation for the additional 1,000 slots is $21.7 million.
Provides funds to increase the wages paid to direct support personnel working in group homes that care for individuals with intellectual and developmental disabilities. The increased payments will be implemented no sooner than January 1, 2020.
Increases Medicaid recipient copayments to $4 from the current $2 or $3 level, effective November 1, 2019. Providers collect the beneficiary copayments, and the amount paid to providers for Medicaid claims is reduced, saving the State an estimated $3.5 million R in FY 2019-20 and $5.0 million R in FY 2020-21.
Budget a total of $232.9 million in FY 2019-20 and $198.4 million in FY 2020-21 to support Medicaid Transformation projects, including net appropriations totaling $28.6 million R in FY 2019-20 and $40.2 million R in FY 2020-21. The items receiving funds include a contract for managed care program design, enrollment broker services, ombudsman programs, upgrades to NC FAST needed for managed care, provider data management systems, new positions, and other Medicaid Transformation needs. The State’s share of nonrecurring project costs – $27.3 million in FY 2019-20 and $11.0 million in FY 2020-21 – is funded by transfers from the Medicaid Transformation Fund to the Division of Health Benefits.
Requires DHHS to reduce administrative costs across the Department by $30.7 million R in net General Fund appropriations in FY 2019-20 and by $42.7 million R in net General Fund appropriations in FY 2020-21 as the State transitions some of its administrative functions to prepaid health plans in managed care.
Provides $30.7 million NR and $21.3 million NR in FY 2019-20 and FY 2020-21, respectively, for additional administrative needs at DHHS while the State transitions most Medicaid beneficiaries from the current fee-for-service system to managed care. The funding will be transferred from the Medicaid Transformation Fund.
Rebases Medicaid with additional net General Fund appropriations of $33.8 million in FY 2019-20 and $199.8 million in FY 2020-21. The rebase includes $105.5 million R in FY 2019-20 and $214.9 million R in FY 2020-21, as well as nonrecurring reductions of $71.7 million and $15.1 million, respectively, due to the temporary enhanced federal match for the Children’s Health Insurance Program. The enhanced match will phase out by October 1, 2020.
Budgets $150.2 million NR in FY 2019-20 and $11.4 million NR in FY 2020-21 from the Medicaid Transformation Fund to pay the runout of claims for individuals transitioning to Medicaid managed care.
Revises the existing hospital assessments for the transition to Medicaid managed care. DHHS will calculate the hospital assessment rates annually, the Governor will propose the rates, and the General Assembly will set the assessment rates. Because FY 2019-20 will be the first year that the revised hospital assessments are used, the provision defines contingency plans for under- or over-collections resulting from revisions to the assessments. The provision also revises the existing supplemental payment program for eligible physicians to continue the program in Medicaid managed care.
Imposes the State’s existing 1.9% insurance premiums tax on prepaid health plans.
Reduces Single Stream funding by $7.5 million R in FY 2019-20 and FY 2020-21.
Provides $4.9 million R for staffing and other operating costs at the new Broughton Hospital beginning in FY 2020-21.
Provides $5 million NR for Substance Abuse Services in FY 2019-20 and FY 2020-21.
Provides $1.8 million NR for Group Homes bridge funding in FY 2019-20 and FY 2020-21.
Increases the rates paid for foster care effective July 1, 2020. Total requirements are $20.7 million in FY 2020-21.
Agriculture, Natural, and Economic Resources
The Conference Budget for Agriculture, Natural, and Economic Resources in FY 2019-20 includes net appropriations of $639.2 million, which is $36.4 million above the amount enacted for FY 2018-19. This is a 6.0% increase. FY 2020-21 includes net appropriations of $652 million, which is $12.8 million above the amount in the Conference budget for FY 2019-20. This is a 2.0% increase. The highlights of the Agriculture, Natural, and Economic Resources adjustments follow below:
Provides $787,815 recurring and $170,085 nonrecurring in the first year to create 10 new positions in Agronomic Services, Emergency Programs, Plant Industry, and Soil and Water.
Provides $115,220 recurring and $5 million nonrecurring in the both years of the biennium for operating reserves to open the new Ag Sciences Center.
Provides $1 million nonrecurring in the first year and $1.5 million nonrecurring in the second year for the Eastern NC Food Commercialization Center.
Swine Biogas and Innovataive Lagoon Sludge Treatment transfer $450,000 each from the Ag Gas fund or cost share assistance to swine farmers.
Provides $150,000 recurring for a Certified Sites Program Director.
Provides $2.5 million nonrecurring for affordable housing matching grants.
Increases the appropriation to the NC Biotechnology Center by $500,000 recurring, and by $500,000 nonrecurring in the second year.
Provide $1.5 million nonrecurring for tourism advertising and $1 million recurring for business marketing for the EDPNC.
Transfers $23.5 million in the first year and $9 million in the second year from the Film Grant cash balance to the Department of Natural and Cultural Resources for Clean Water Management Trust Fund and Parks and Recreation Trust Fund.
Reduces the minimum spend requirement and increases the maximum grant award for film projects.
Provides $3.5 million recurring for the State match for federal Clean Water and Drinking Water State Revolving Funds.
Provides $9 million recurring for the Viable Utility Reserve to provide grants to water and sewer authorities identified as distressed.
Creates the Viable Utility Reserve to meet the needs of distressed water and wastewater systems.
Provides $500,000 recurring for historic site maintenance.
Provides $930,517 recurring and $750,000 nonrecurring in the first year, and $1.8 million recurring in the second year for operating reserves for nine State parks expanded or improved through Connect NC bonds.
Provides $8 million nonrecurring in additional funding for the Parks and Recreation Trust Fund for a total of $24.2 million in the first year of the biennium. Also provides $1.4 million
Provides $4.5 million recurring and $9.1 million nonrecurring in the second year for a total of $26.7 million.
Justice and Public Safety
Raise the Age: Provides funding for 7 deputy clerks, 9 assistant district attorneys (ADAs), 3 DA legal assistants, and 7 district court judges to support implementation of the Juvenile Justice Reinvestment Act, or “Raise The Age:” $1.8 million in FY 2019-20, $2.8 million in FY 2020-21, and 26 FTE.
District Attorney Offices: Provides funding for 7 ADAs in FY 2020-21, 3 ADAs in both years of the biennium to act as Special Assistant US Attorneys, 5 DA Investigators in both years of the biennium, and an Election Crimes Investigative Consultant pilot project with the Conference of DAs: $780,855 in FY 2019-20, $1.9 million in FY 2020-21, and 15 FTE.
Support for Commissions: Provides funding for the Human Trafficking Commission, Innocence Inquiry Commission, and the Sentencing and Policy Advisory Commission for positions and operating costs: $520,394 in FY 2019-20, $542,525 in FY 2020-21, and 3.5 FTE.
Guardian ad Litem: Provides funding for 9 Guardian ad Litem positions across the biennium: $277,981 in FY 2019-20, $952,611 in FY 2020-21, and 9 FTE.
Courthouse Renovation and Repair: Provides directed grants to 11 counties to assist with courthouse renovations and repairs: $26.1 million in FY 2019-20.
e-Courts: Provides funds to AOC to begin implementation of the e-Courts project: $3.8 million in FY 2019-20 and $2.6 million in FY 2020-21.
Innovative Court Pilot Projects: Provides directed grants to 5 counties for innovative court pilot programs: $725,614 in FY 2019-20 and $439,136 in FY 2020-21.
Continues a funding mechanism to allow AOC to build a fund balance over time to support the e-Courts technology project.
Private Assigned Counsel Rates: Provides funding to increase Private Assigned Counsel rates: $3 million in FY 2019-20 and $4 million in FY 2020-21.
Provides funding for a juvenile resource defender position to support implementation of Raise the Age: $87,681 in FY 2019-20, $109,131 in FY 2020-21, and 1 FTE.
Sexual Assault Evidence Collection Kits: Provides funding to analyze and outsource untested sexual assault evidence collection kits: $3 million in each year of the biennium.
Base Budget Technical Adjustment: Makes a technical adjustment to the Legal Services base budget in accordance with the State Budget Act: Reduction of $3.1 million annually.
Legal Services: Provides funding to the Criminal Division of DOJ Legal Services: $508,759 in each year of the biennium.
State Crime Lab Positions: Provides funding for 3 Forensic Scientists and 2 Drug Chemists: $258,464 in FY 2019-20, $516,928 in FY 2020-21, and 5 FTE.
Criminal Justice Fellows: Provides funding for the Criminal Justice Fellows program: $332,000 in FY 2019-20 and $664,000 in FY 2020-21.
Justice Academy Shoot House: Provides funding to repair and renovate the shoot house at the North Carolina Justice Academy in Salemburg: $1 million in FY 2019-20.
State Bureau of Investigation (SBI): Provides funding for lease expenses and 16 additional SBI agents, including support for human trafficking investigations and the new Behavioral Threat Assessment (BETA) program: $1.28 million in FY 2019-20, $1.8 million in FY 2020-21, 16 FTE.
Prison Security Equipment: Provides funding for equipment to improve prison security and reduce contraband: $2 million in FY 2019-20.
Provides funding for inmate pharmacy drugs to address structural budget issues: $2.5 million in both years of the biennium.
Long-Term Care Facility. Provides funds to create a 16-bed long-term care facility at Central Prison: $3.5 million in FY 2020-21 and 35 FTE.
Inmate Substance Abuse Treatment: Provides funding to create a new 32-bed, in-prison intermediate substance abuse treatment beds: $351,657 in FY 2019-20, $388,873 in FY 2020-21 and 5 FTE.
Raise the Age: Provides funding to the Division of Juvenile Justice to support implementation of Raise the Age. This includes new court counselors, new administrative and management positions, support for additional detention beds, support for community-based and residential programs, and expanded funding for the county-based Juvenile Crime Prevention Councils: $22.9 million in FY 2019-20, $39.6 million in FY 2020-21, and 179 FTE.
VIPER Tower Upgrades: Provides funding for equipment and software upgrades for the Voice Interoperability Plan for Emergency Responders (VIPER), the statewide radio system used by the State Highway Patrol and other first responders: $9 million nonrecurring in FY 2019-20 and $1.5 million recurring in both years of the biennium.
National Guard Equipment: Provides funding for the National Guard to purchase high-frequency radios, live-tracking devices, and personal protective equipment: $2 million nonrecurring in FY 2019-20.
Reallocates $500,000 from the NC Sheriffs’ Association to the SBI for upgrading the State’s sex offender registry.
General Government
Provides $1 million recurring to the State Construction Office for capital projects implementation
Provides $7.5 million in for development and implementation of a new e-procurement system for State agencies
Provides $4.5 million nonrecurring in each year of the biennium to eastern triad counties for workforce development efforts
Provides $1.2 million nonrecurring in for implementing voter ID requirements
Provides $1 million nonrecurring in for IT upgrades in the legislative complex, including the expanded use of video conferencing for committee meetings
Funds the Workforce Housing Loan Program at $20 million in FY 2019-20 for the development of multi-family affordable housing
Provides $2 million for the Military Presence Stabilization Fund to sustain North Carolina military installments
Consolidates the funding for State Veterans Cemeteries in the DMVA Special and provides an additional $246,520 recurring for cemetery operations
Expands the line of duty death benefit coverage paid to firefighters to include oral cavity and pharynx cancers
Transportation
The Conference Budget for Department of Transportation in FY 2019-20 includes net appropriations of $3.9 billion, which is $138 million above the amount enacted for FY 2018-19. This is a 3.7% increase. FY 2020-21 includes net appropriations of $4.0 billion, which is $156.9 million above the amount in the Conference budget for FY 2019-20. This is a 4% increase. The highlights of the Department of Transportation adjustments follow below:
Combined Highway Fund and Highway Trust Fund revenues are projected to increase by approximately 3.7% in FY 2019-20 and by another 4% in FY 2020-21.
General Maintenance Reserve. This budget provides an additional $164 million for GMR to address critical maintenance needs.
Commercial Airport Grant This budget provides additional funding for the commercial airports. The total available for each year of the biennium and ongoing is $75M.
Rail Infrastructure Efforts Approximately $23 million is appropriated over the biennium for North Carolina’s rail infrastructure, including overhauling locomotives for the Piedmont and Carolinian trains, local train station repairs, and commuter rail improvements.
DMV Move Assistance The Division of Motor Vehicles is receiving nearly $8 million over the biennium to support its headquarters move to Rocky Mount and pay for the new lease.
NC Ports Authority Provides $11 million over the biennium to raise power lines across the Cape Fear River near the Port of Wilmington.
Public Transportation Provides an additional $8.5 million annually for the State Maintenance Assistance Program (SMAP), an operating assistance program for fixed-route transit systems.
Powell Bill Provides an additional $7.4 million in FY 2020-21 for municipalities with populations of 200,000 or less to maintain road infrastructure.
Strategic Transportation Initiatives Provides an additional $130 million over the biennium for highway and transportation construction projects out of Highway Trust Fund.
Capital, Repairs, and Renovations – Provides approximately $15.9 million for needed repairs to DOT division offices and DOT office space. Included are Polk Maintenance Shop, Ocracoke Ferry quarters, Currituck Maintenance & Storage and Northampton County – Jackson shops.
Information Technology
The Conference Budget proposal for the Department of Information Technology (DIT) totals $67.8 million in FY 2019-20 or 26.8% above the FY 2019-20 base budget and is $69.9 million in FY 2020-21 or 3.0% above the FY 2019-20 Conference budget proposal. The highlights of the Information Technology adjustments follow below:
Provides $11.1 million over the biennium for NC HealthConnex, Criminal Justice Information Network (CJIN), Cybersecurity Upgrades, 3 Data Analytic positions, 1 Office of Administration technology support position, and NC Outcomes Longitudinal Data System.
Provides a directed grant to Montreat College for the Cybersecurity Regional Training Center. The grant in total is $20 million over the biennium ($10 million in FY 2019-20 and $10 million in FY 2020-21 on a nonrecurring basis in both years)
Salaries and Benefits
State Employees
The Conference budget appropriates $111 million in FY 2019-20 and $205 million in FY 2020-21 to provide salary increases for State employees. Specifically:
A 2.5% across-the-board increase in each year of the biennium to most State employees in State agencies.
• $15 million in targeted salary supplements to improve recruitment and retention at high-need prisons.
• $2 million to tie SBI/ALE law enforcement pay to the revised salary schedule established by the General Assembly for the State Highway Patrol.
• $15 million in FY 2019-20 and $30 million in FY 2020-21 to increase salaries of UNC system employees based on the priorities of the Board of Governors.
• $6 million in FY 2019-20 and $11.4 million in FY 2020-21 to improve UNC faculty recruitment and retention.
• $1 million to restructure pay for Clerks of Superior Court based on number of supervised employees instead of county population.
• $800,000 to increase pay for Assistant District Attorneys.
State-Funded Local Employees (excluding Teachers/Instructional Support and Principals)
The Conference budget appropriates $27.8 million in FY 2019-20 and $55.6 million in FY 2020-21 for the following:
• $12.4 million in FY 2019-20 and $24.8 million in FY 2020-21 to provide salary increases to Community College personnel based on the priorities of the Community College System and local community colleges.
• A 1% across-the-board increase in each year of the biennium for noncertified public school employees.
Teachers and Instructional Support Personnel
The Conference budget appropriates $57 million in FY 2019-20 and $85.4 million in FY 2020-21 to increase teacher and instructional support compensation. Specifically, the Conference budget:
Increases the base teacher salary schedule for steps 16-20 by 1% in each year of the biennium
• Increases the base teacher salary schedule for steps 21-24 by 3% in FY 2019-20, and an additional 1% in FY 2020-21.
• Increases the base teacher salary schedule for steps 25+ by 1.2% in FY 2019-20 and an additional 0.9% in FY 2020-21.
• Provides teachers with 25+ years of experience a $500 bonus in each year of the biennium.
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• Provides funding for recruitment bonuses to school districts receiving funding from the small county allotment.
• Provides licensed school counselors with an additional $80 monthly supplement in addition to their pay provided under the teacher salary schedule.
The estimated average State-funded salary increase for teachers and instructional support personnel who are employed in FY 2018-19 and remain employed through the upcoming biennium is 2% ($1,000) in FY 2019-20 and 3.9% ($1,875) in FY 2020-21 compared to their FY 2018-19 salary.
The FY 2019-20 individual increases range from 1% to 5.2% (individual base salary increases range from $500 to $2,600). The average State-funded salary base for teachers and instructional support is projected to grow by approximately 0.73% in FY 2019-20 and 1.2% in FY 2020-21 relative to FY 2018-19.
The estimated annualized average teacher pay, including local supplements and recurring bonuses, is approximately $54,350 in FY 2019-20 and $54,600 in FY 2020-21. The average nonrecurring bonus amounts not included in these averages total approximately $70 in each year of the biennium.
Principals and Assistant Principals
The Conference budget provides $18.1 million in FY 2019-20 and $19.2 million in FY 2020-21 to increase principal and assistant principal compensation. Specifically:
Implements a revised principal schedule that increases all levels of the current principal salary schedule and includes a new ADM tier of 201-400 (previously ADM range from 0-400 paid the same).
• Adjusts the ADM level for the top tier of the schedule from 1,301+ to 1,601+.
• Modifies the existing principal bonus program by increasing the bonus amounts for principals in the top-5% and top-10% in growth from $10,000 and $7,500 to $15,000 and $10,000 respectively, and eliminates the doubling of the bonus for principals in “D” or “F” schools.
• Creates a new principal recruitment program that provides up to 40 principals currently paid on the “exceeded” growth column of the schedule a $30,000 annual salary supplement for 3 years if they accept employment at a school in the bottom 5% in school performance.
• Provides AP salary increases in-line with the revised teacher salary schedule.
The annualized average State-funded salary base for principals is projected to grow by approximately 6.2%, or $4,650. The estimated average State-funded AP salary increase for APs employed in FY 2018-19 and who remain employed through the upcoming biennium is 1.9% in FY 2019-20 and 3.5% in FY 2020-21 compared to their FY 2018-19 salary.
Benefits Summary
The Conference budget provides additional net appropriations of $206.6 million in FY 2019-20 and $491.6 million in FY 2020-21 to support increasing costs associated with benefits provided to State-funded employees. In summary, the Conference budget provides the following:
• $17.4 million in FY 2019-20 and $17.4 million in FY 2020-21 to provide a one-time 0.5% retirement supplement for retirees in each year of the biennium.
• $51.0 million in FY 2019-20 and $137.1 million in FY 2020-21 to increase employer premiums to the State Health Plan for active employees.
• $132.0 million in FY 2019-20 and $331.0 million in FY 2020-21 to increase contributions to State retirement systems and the Retiree Health Benefit Fund for retiree medical benefits.
• $6.1 million in both FY 2019-20 and FY 2020-21 to provide funds to State employers to pay short-term disability benefits under Session Law 2018-52. There is a corresponding reduction of the same amount reflected in the contributions to State retirement systems above.
• Provides 5 non-expiring bonus leave days for eligible State employees and Community College employees. The days cannot be cashed out or converted to sick leave and therefore have no impact on the retirement systems.
Taxes
The Finance Provisions in the Conference Budget reduce net revenue by $14.0 million in FY 2019-20 and by $180.5 million in FY 2020-21. The highlights of Finance section follow below:
Increase Standard Deduction – Raises the Standard Deduction for all filing statuses by 5%, effective for taxable years beginning on or after January 1, 2021.
Income Exclusion for IRA Distributions to Charities by Taxpayers Age 70 ½ or Older – Allows an income exclusion for IRA distributions to charities by taxpayers age 70 ½ or older, effective for taxable years beginning on or after January 1, 2019.
Franchise Tax Changes – Reduces franchise tax rate from $1.50 to $0.96 over two years, 2020 and 2021. Eliminates one of the three methods used to determine a corporation’s franchise tax base. Creates a new definition of holding company, effectively capping the franchise tax on that holding company to $150,000.
Use Market-Based Sourcing for Multistate Income Tax Apportionment – Enacts market-based sourcing, effective for taxable years beginning on or after January 1, 2020. Uses commercial domicile method for broadcasters, with a floor of 2%.
Marketplace Facilitators to Collect Sales Tax – Obligates a marketplace facilitator that meets the same threshold applicable to remote retailers to calculate, collect, and remit sales tax on a third party seller’s behalf.
Deduction for Amounts Received as Economic Incentives – Allows a tax deduction for amounts received by a taxpayer as an economic incentive under the Job Maintenance and Capital Development Fund, the Jobs Development Investment Grant Program, and the One North Carolina Fund.
Extend Various Sunsets and Reenact Mill Rehabilitation Credit – Reinstates Mill Rehabilitation Tax Credit for projects that meet certain conditions. Extends the sunset by four years (from 2020 to 2024) for the following:
o Historic rehabilitation tax credit
o Sales tax exemption for sales of aviation gasoline and jet fuel to an interstate air business for use in a commercial aircraft
o Sales tax exemptions and refunds for professional motorsports racing teams
Facilitate Response to Disasters – Excludes certain nonresident businesses and employees from income and franchise tax, business registration, and NC’s unemployment tax requirements. Allows the Secretary of Revenue to issue a temporary license to an importer, exporter, distributor, or transporter of motor fuel during times of declared disasters.
Capital
Provides $325 million for repairs and renovations for State agencies and the UNC System; $200 million in FY 2019-20 and $125 million in FY 2020-21.
Authorizes $448 million in capital projects for State agencies; $97.8 million of which is appropriated in FY 2019-20 and $93.1 million of which is appropriated in FY 2020-21
Authorizes $632 million in capital projects for the UNC System; $96.5 million of which is appropriated in FY 2019-20 and $94.5 million of which is appropriated in FY 2020-21
Provides $453.8 million in capital for Local Education Agency (LEA) projects; $281.3 million is appropriated in FY 2019-20 and $172.5 million is appropriated in FY 2020-21. The aggregate amount authorized over 10 years is $1.5 billion, with amounts fo each LEA specified in the provision
Provides $90.8 million in capital for Community Colleges; $56.3 million is appropriated in FY 2019-20 and $34.5 million is appropriated in FY 2020-21. The aggregate amount authorized over 10 years is $400 million, with amounts for each college specified in the provision
Funds Water Resources Development Projects at $11 million in FY 2019-20.
Provides $15 million recurring to the GREAT grant program for broadband providers and co-ops to expand broadband infrastructure in rural areas.
There is allocated from the State Capital and Infrastructure Fund the following amounts for capital improvement projects at local school administrative units in this State in the aggregate amount of one billion five hundred million dollars ($1,500,000,000). The General Assembly intends to appropriate at least five hundred million dollars ($500,000,000) for local school administrative unit capital projects by the end of the 2021-2022 fiscal year.
Local School Administrative Unit Proceeds Allotment for School Construction from State Capital Infrastructure Fund
| Alamance-Burlington $18,428,823
Alexander County $12,411,156 Alleghany County $10,353,574 Anson County $11,884,154 Ashe County $10,775,162 Asheboro City $ 4,396,455 Asheville City $ 2,713,629 Avery County $10,511,929 Beaufort County $12,165,414 Bertie County $11,234,254 Bladen County $12,277,125 Brunswick County $13,315,336 Buncombe County $14,687,531 Burke County $15,756,422 Cabarrus County $17,220,503 Caldwell County $15,402,161 Camden County $10,666,626 Carteret County $12,158,044 Caswell County $11,332,269 Catawba County $11,116,803 Chapel Hill-Carrboro $ 9,532,195 Chatham County $12,337,946 Cherokee County $11,136,538 Clay County $10,335,402 Cleveland County $16,605,277 Clinton City $ 4,357,148 Columbus County $10,632,523 Craven County $14,384,993 Cumberland County $28,886,745 Currituck County $11,067,730 Dare County $11,381,585 Davidson County $14,998,456 Davie County $11,627,851 Duplin County $15,498,144 Durham County $18,587,527 Edenton/Chowan $10,729,020 Edgecombe County $13,427,241 Elkin City $1,616,987 Forsyth County $24,142,940 Franklin County $14,047,855 Gaston County $20,416,874 Gates County $10,913,914 Graham County $10,336,858 Granville County $14,143,141 Greene County $12,000,632 Guilford County $28,758,346 Halifax County $ 5,201,993 Harnett County $21,892,627 Haywood County $11,889,100 Henderson County $13,511,592 Hertford County $11,524,488 Hickory City $ 2,861,982 Hoke County $15,821,609 Hyde County $10,156,538 Iredell-Statesville $13,034,411 Jackson County $10,974,793 Johnston County $27,659,803
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Jones County $10,399,503
Kannapolis City $3,000,295 Lee County $14,032,240 Lenoir County $14,071,824 Lexington City $ 2,423,631 Lincoln County $13,071,054 Macon County $11,156,512 Madison County $10,666,773 Martin County $11,558,269 McDowell County $12,814,262 Mecklenburg County $48,448,911 Mitchell County $10,546,702 Montgomery County $11,488,434 Moore County $13,314,557 Mooresville City $ 3,829,900 Mount Airy City $ 2,259,667 Nash-Rocky Mount $16,943,741 New Hanover County $16,843,283 Newton-Conover $ 2,095,306 Northampton County $10,865,984 Onslow County $18,360,133 Orange County $ 5,612,793 Pamlico County $10,324,498 Pasquotank County $12,451,049 Pender County $13,872,281 Perquimans County $10,472,554 Person County $11,454,025 Pitt County $19,856,962 Polk County $10,546,975 Randolph County $15,742,900 Richmond County $14,202,934 Roanoke Rapids City $ 6,041,637 Robeson County $25,780,597 23 Rockingham County $15,686,829 Rowan-Salisbury $17,608,410 Rutherford County $14,040,176 Sampson County $11,949,305 Scotland County $13,570,841 Stanly County $13,731,951 Stokes County $12,719,108 Surry County $10,800,912 31 Swain County $10,615,809 32 Thomasville City $ 1,796,180 33 Transylvania County $10,895,356 Tyrrell County $10,313,374 Union County $20,751,542 Vance County $13,614,718 Wake County $52,215,430 Warren County $10,668,056 Washington County $10,703,586 Watauga County $11,217,518 Wayne County $19,103,192 Weldon City $ 1,891,823 Whiteville City $ 4,312,611 Wilkes County $14,016,757 Wilson County $14,881,132 Yadkin County $12,532,520 Yancey County $10,572,504
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There is allocated from the State Capital and Infrastructure Fund the following amounts for capital improvement projects at community colleges in this State in the aggregate amount of four hundred million dollars ($400,000,000).
Funds allocated pursuant to this section shall be used for the purpose of issuing allotted proceeds to community colleges for new construction or rehabilitation of existing facilities and repairs and renovations in accordance with the following:
Community College Proceeds Allotment from State Capital Infrastructure Fund
| Alamance CC $ 7,938,704
Asheville-Buncombe TCC $ 8,265,643 Beaufort County CC $ 4,149,414 Bladen CC $ 3,520,119 Blue Ridge CC $ 2,905,574 Brunswick CC $ 2,278,736 Caldwell CC and TI $ 6,909,954 Cape Fear CC $ 9,986,372 Carteret CC $ 3,375,700 Catawba Valley CC $ 8,655,880 Central Carolina CC $10,031,233 Central Piedmont CC $20,000,000 Cleveland CC $ 7,598,247 Coastal Carolina CC $ 8,460,455 College of the Albemarle $ 6,376,529 Craven CC $ 5,765,056 Davidson County CC $ 6,755,089 Durham TCC $ 6,188,478 Edgecombe CC $ 5,417,837 Fayetteville TCC $20,000,000 Forsyth TCC $14,572,113 Gaston College $ 9,009,858 Guilford TCC $19,525,968 Halifax CC $ 2,996,526 Haywood CC $ 2,105,434 Isothermal CC $ 5,007,321 James Sprunt CC $ 3,144,017 Johnston CC $ 5,111,793 Lenoir CC $11,826,322 Martin CC $ 2,190,242
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Mayland CC $ 3,829,850
McDowell TCC $ 2,173,649 Mitchell CC $ 3,397,210 Montgomery CC $ 1,860,231 Nash CC $ 7,753,111 Pamlico CC $ 1,222,332 Piedmont CC $ 3,001,442 Pitt CC $14,535,241 Randolph CC $ 5,418,451 Richmond CC $ 7,526,958 Roanoke Chowan CC $ 2,217,281 Robeson CC $ 6,555,976 Rockingham CC $ 4,407,523 Rowan-Cabarrus CC $12,614,170 Sampson CC $ 5,203,976 Sandhills CC $ 4,970,448 Southeastern CC $ 6,701,009 South Piedmont CC $ 5,560,411 Southwestern CC $ 5,020,226 Stanly CC $ 5,610,190 Surry CC $ 7,888,312 Tri-County CC $ 2,055,656 Vance-Granville CC $ 7,394,217 Wake TCC $20,000,000 Wayne CC $9,149,360 Western Piedmont CC $ 3,947,229 Wilkes CC $ 5,514,320 Wilson CC $ 4,402,607
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State Government Capital Infrastructure Projects
Total Authorization Through 2028-2029
Mountain Island Improvements – $1,500,000
Eaddy Bldg Renovation/Addition – $967,000
Tidewater Research Station Swine Building – $1,429,000
NCFS-County Offices (Wat,Jones,Dup,Van,Madi) – $7,314,000
Reedy Creek Laboratory – $30,008,000
Eastern Data Center Improvements -$5,741,000
Western Data Center Improvements – House CF – $3,150,000
History Museum Renovation/Addition – House CF – $60,000,000
Fort Fisher Hist. Site – Visitor Center – $8,000,000
NCZoo – Asia – House CF – $20,014,500
NCZoo – Australia – House CF – $20,000,000
NCZoo – Parking/Trams – House CF – $4,900,000
Art Museum Light Control – $1,000,000
Art Museum-Amphitheater Restoration – $4,500,000
Transportation Museum – $4,500,000
Thomas Day House – $625,000
State Capitol Historical Monuments – $2,500,000
State Gvmt. Complex – Chiller Plant – $12,523,000
DHHS – Dix Relocation – Granville – $244,000,000
Nat Guard – Federal Match Funding Pool – Senate $ 2,000,000
RaisetheAge – Perquimans YDC – $1,731,000
RaisetheAge – Juvenile Detention Beds – Specify Moore Co. – $2,000,000
Ad. Corr – Black Mountain Mod. Classrooms – $1,013,000
SHP – Renovate Troop B – $2,152,000
Samarcand – Live Fire Training Bldg. – $1,499,000
Prison IT Security – $2,448,102
Renovations/Elevator Repair – $2,097,635
ECU – Brody School of Medicine – $215,000,000
ECSU-Library – Senate – $32,000,000
ECSU-Crime Lab – New – $2,500,000
ECSU – HVAC – $4,000,000
ECSU – Chiller – $2,000,000
FSU – Rosenthal and Chick Renovation – $13,700,000
FSU – Dormitory Demolition and Removal – $2,500,000
NCA&T – Carver Hall Renovation – $18,500,000
NCCU – Lee Biology Reno-Phase 2 – House CF – $8,100,000
NCSU – Apiculture Facility – $2,000,000
NCSU – STEM Building – House CF – $80,000,000
UNCC – Cameron/Burson Bldg. Renovation – $45,000,000
UNC-G – Jackson Library Reno/Addition – $84,000,000
UNCP-Health Science Center – $91,000,000
WSSU – Hauser Building Renovation – $15,100,000
WCU Steam Plant – $16,500,000
Guilford Mental Health – Directed Grant – $7,700,000
Carolina Museum of the Marine – $26,000,000
Civil War Museum – Directed Grant – $46,000,000
Medical Examiner’s Office – Forsyth – $15,021,000
Fayetteville – MLK Jr. Park – $1,500,000
Maritime Museum-Require Match, No Add. Authorization – $2,000,000
NCFFA Center – $500,000