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House Unveils Budget in Busy Week
The state House unveiled their budget proposal last week and while the full plan will come out early this week, the nearly $22 billion proposal reflects aclear upswing in the economy, with less cuts to major policy areas. Indeed, education, transportation and health care were all allocated additional fundsin this budget, evidence of the $400 million projected revenue surplus that was announced in recent weeks.
Agriculture and Natural and Economic Resources
The Agriculture and Natural and Economic Resources proposal includes additional funding for clean water grants and water infrastructure, as well as moneyfor the dredging of Oregon Inlet. The Parks and Recreation Trust Fund will see a substantial increase, with a $12.5 million increase in the first year, to$1.5 million in subsequent years. This would bring the overall funding for the Parks and Recreation Trust Fund up to $42.5 million.
Additionally, more funding would be committed for the N.C. Biotechnology Center, to continue to fund discoveries.
The North Carolina Wildlife Resources Commission would take a 23 percent cut to money it receives from the General Fund, although its overall budget wouldincrease slightly.
The proposed House capital improvements budget includes a provision that would pay for five construction projects at major North Carolina universities witha special type of bond package called “two- thirds bonds,” should voters fail to approve the larger bond proposal in 2016. Two-thirds bonds do not requirevoter approval and are frequently used by cities and counties to fund building projects.
The proposed capital budget also includes $3 million to help repair the hull of Battleship North Carolina in Wilmington, $5 million for water resourceprojects, including dredging projects, and $4 million to replace the third floor roof at the Legislative Building in Raleigh.
The initial House education budget proposal would increase K-12 school spending by $269 million, adding new funds for charter schools and teacher bonuses.A large portion of the increase is $100.2 million to handle enrollment growth, with North Carolina public schools expected to add 17,000 more students overthe course of the next year. The spending proposal does not yet show any raises for teachers or other school personnel. Budget writers said those detailswon’t be released until the full budget draft is completed early next week. House leaders have said they plan to raise starting teacher salaries to$35,000, a priority that both Governor Pat McCrory (R-NC) and Senate leaders say they share.
The North Carolina Government Efficiency and Reform initiative (NC GEAR), one of the signature initiatives of Gov. McCrory, is in serious trouble since theHouse’s general government budget proposal fails to fully fund the program’s essential personnel. Gov. McCrory had requested $872,000 for new positions toinstitutionalize the work of NC GEAR, but the committee’s budget includes no such allocation. NC GEAR was established by Gov. McCrory and the GeneralAssembly in 2013 to develop a strategic transformation plan for state government, to streamline services and departments. The legislature granted NC GEARthe authority to evaluate “all executive branch departments, agencies, boards, commissions, authorities, and institutions in the executive branch of stategovernment.”
Some of the NC GEAR recommendations, however, did make it into the general government budget proposal. Key among them was establishing a new, cabinet-levelDepartment of Military and Veterans Affairs, something Gov. McCrory pushed for in his State of the State speech in February. The entire Division ofVeterans Affairs would be transferred to the new department, which is supposed to improve services for the more than 110,000 active duty members and770,000 veterans who call North Carolina home.
Health and Human Services
The health and human services budget includes an additional $287 million added to pay for increases in Medicaid enrollment and use of medical services; inaddition to setting up a Joint Legislative Oversight Committee on Medicaid.
Additionally, the budget includes a provision for establishing an Office of Program Evaluation Reporting and Accountability within the Department of Healthand Human Services (DHHS). The DHHS Secretary would hire the program director, but he could only be fired by the governor.
As written, the budget features more than $4.9 million in additional funds for mental health, bringing the total mental health budget to $43 million. Thebudget also features a $970,000 block grant allocation to pay for services offered to the elderly.
The information technology budget includes a $1.5 million allocation to aid in building FirstNet, a nationwide wireless network dedicated to public safety.Additionally, the budget allocates over $3 million for IT modernization throughout the state’s Office of Information Technology Services. Other items ofinterest include $500,000 for an economic development modeling plan at UNC Charlotte, $4.5 million to increase the state IT security and $8 million tosupport the Government Data Analytics Center (GDAC).
Justice and Public Safety
The House’s proposed spending plan for the courts does not include everything Chief Justice Mark Martin asked for when he addressed legislators in Februaryof this year. This year’s budget, however, does include an overall increase in funding for the courts, including $6.3 million added to the operating budgetand $11.9 million for technology that could help bring an antiquated court-filing system into the digital age.
The budget also allocates $3.3 million toward the establishment of the first four behavioral health units planned at eight high-security prisons throughoutNorth Carolina. Additionally, money is included to provide $1.16 million for 35 new workers starting Jan. 1 at the Central Prison health care facility,which is adding 72 new beds.
The transportation budget includes a provision to decrease the gas tax from the current amount of 36 cents a gallon to 33 cents in January 2016. Whiledrivers who use diesel fuel have always been taxed at the same rate in the past, the diesel tax would be set at 3 cents higher than the gas tax starting inJanuary 2016, at 36 cents per gallon. Notably, the Division of Motor Vehicles would collect an additional $289 million a year under a provision that callsfor a 50 percent increase for driver’s licenses, vehicle titles and other fees. The annual car registration renewal fee, not including county propertytaxes, would rise from $28 to $42, with the increase largely going to pay for road construction.
Other Items of Interest
In addition to the House’s budget proposal, Gov. McCrory, House Speaker Tim Moore (R-Cleveland), and Senate Pro Tempore Phil Berger (R-Rockingham) issued ajoint statement declaring that an economic development plan for the state will be finalized in the next two weeks.
H562, Second Amendment Affirmation Act, was abruptly pulled from consideration this week, after an announcement from Speaker Moore that new provisions forthe bill would be added in the coming days. Among other things, the bill would require schools to allow gun owners with concealed weapons permits to bringtheir guns onto school property as long as they leave the gun locked in their vehicle.
The House unanimously passed H182, Property Insurance Fairness, which allows for bonds to cover a coastal insurance pool’s catastrophic damage payouts.