NCGA Budget Negotiation Released

At a press conference yesterday evening, House and Senate leadershipannounced that they had concluded budget negotiations and a conferencereport would be released later in the night. The budget is scheduled to beheard on the Senate floor today and tomorrow, and then in the House onWednesday and Thursday before heading to the Governor.

The budget should be sent to the Governor’s desk by the end of the week,according to House Speaker Tim Moore (R-Cleveland) and Senate President ProTempore Phil Berger (R-Rockingham).

For previous analysis of the chambers’ two-year budget proposals, followthe links below:

NC House Releases Budget Proposal
NC Senate Releases Budget Proposal

House & Senate Leadership Agree on Budget Deal

After weeks of negotiations, House and Senate budget conferees have agreedon a $23 billion budget. The conference report forSB 257: Appropriations Act of 2017includes:

• 3.3% average pay raises for teachers.
• $1,000 bonuses for most state employees.
• A permanent 1% cost-of-living increase for retired state employees.
• Reduced corporate and personal income tax rates. Beginning in 2019, the corporate income tax rate would fall from 3% to 2.5%, and the personal income tax would reduce from 5.499% to 5.25%.
• Provides an additional $100 million for supplemental disaster recovery funds.
• A $360 million investment to the rainy day fund.

Agriculture and Natural and Economic Resources

• Provides $2.3 million to purchase an airplane for firefighting readiness and response.
• Provides $250,000 to increase the availability of fresh food in food deserts across the state through the Healthy Food/ Small Retailer program.
• Establishes a Beehive Grant Fund to encourage the establishment of new beehives in the state.
• Provides additional funding for international and domestic marketing, including increasing funding to the Economic Development Partnership of NC by $2 million in 2017-18 and $500,000 in 2018-19 and beyond.
• Reduces funding for Job Development Investment Grants by $4.1 million.
• Reduces funding for the One North Carolina Fund by $8.9 million.
• Provides an additional $8.5 million for Downtown Revitalization and Economic Development Grants and an additional $500,000 for Main Street Solutions grants.
• Provides $2.5 million to the Carolina Small Business Development Fund, which provides small business loans and financial training to new and existing businesses.
• Establishes a Military and Veterans Healing Arts Grant Program to increase access to the arts for service members, veterans and military families.

Education

K-12 Education:

• Increases funding for textbooks and digital materials by $11.2 million in 2017-18.
• Provides an additional $2.4 million for the Digital Learning Plan.
• Provides $2 million in stabilization funds to support the operation of schools in Wayne County, the location of the Seymour Johnson Airforce Base.
• Establishes a one year Charter School Transportation Grant Pilot Program to provide transportation grants to charter schools where at least 50% of students are eligible for free or reduced lunch.
• Provides an additional $19 million in 2017-18 and an additional $10 million in 2018-19 for the implementation of the Business System Modernization Plan.
• Implements a pilot program with Life Changing Experiences to educate teenagers on dangerous behaviors and encourage healthy lifestyles.
• Increases funding for the Opportunity Scholarship program and establishes a task force to study the most effective method of evaluating learning gains or losses of scholarship recipients compared to public school students with similar socioeconomic backgrounds.
• Creates a Career and Technical Education (CTE) Grade Expansion Program to provide grants to local school administrative units to provide CTE courses to 6^th and 7^th grade students.
• Requires every local board of education to offer at least two work-based learning opportunities related to CTE instruction in the school.
• Requires local boards of education to work with a business advisory council to identify economic and workforce development trends related to the local community’s educational and training needs.

Community Colleges:

• Establishes a Board of Postsecondary Education Credentials tasked to review and make recommendations to improve the state’s workforce development training by connecting educators, community organizations, and governments with businesses and industries in the state.
• Directs the State Board of Community Colleges to study the costs of workforce training and academic instruction offered at community colleges.
• Establishes a Community College High-Cost Workforce Program Grant to allocate funds to community colleges to establish new high-cost workforce courses that require significant start-up costs.

Universities:

• Cuts funding to the UNC-Chapel Hill School of Law by $500,000.
• Provides $2.5 million to support existing doctoral programs at NC Agricultural and Technical State University.
• Establishes a new NC Teaching Fellows program to provide forgivable loans to students entering the teaching profession and concentrating on STEM courses or special education.

Finance

• Reduces the personal income tax rate from 5.499% to 5.25% in 2019 and reduces the corporate income tax rate from 3% to 2.5% in 2019.
• Increases the standard deduction to $20,000 (currently $17,500) if married, filing jointly; $15,000 (currently $14,000) for head of household; $10,000 (currently $8,750) for single; and $10,000 (currently $8,750) if married, filing separately.
• Expands the child deduction for people eligible for the federal child tax credit. Deduction ranges from $0 to $2,500.
• Lowers the franchise tax for s-corporations.
• Extends the renewable energy tax credit for facilities utilizing renewable biomass from January 1, 2017 to May 5, 2017.
• Exempts mill machinery from retail sales and use taxes and directs the Revenue Laws Study Committee to study ways to clarify the scope of the exemption.
• Does not implement Market Based sourcing, as the Senate had proposed to do.

Health & Human Services

• Increases funding to the NC Medication Assistance Program by $200,000 in 2017-18 and 2018-19.
• Increases funding for grants to health service provides in rural and medically underserved communities by $7.5 million annually.
• Provides $1.2 million annually to improve the Controlled Substances Reporting System.
• Reduces the NC Pre-K waitlist by 1,725 slots.
• Provides an additional $3.5 million in 2017-18 and $7 million in 2018-19 and beyond the Smart Start Reading Initiative to increase access to Dolly Parton’s Imagination Library.
• Provides $500,000 in both 2017-18 and 2018-19 to Eckerd Kids and Caring for Children’s Angels Watch Program, which provides temporary foster homes to children ages 0-10 whose parents are temporarily unable to provide care.
• Appropriates $500,000 annually to two existing smoking cessation programs – QuitlineNC and You Quit Two Quit – and provides $500,000 in both 2017-18 and 2018-19 to develop strategies to prevent the use of new tobacco products, like e-cigarettes, by youth.

Information Technology

• Increases funding to the Broadband Infrastructure Office by $250,000.
• Appropriates an additional $3 million in 2017-18 and $10 million in 2018-19 to continue development of a fully consolidated Enterprise Resource Planning system.

Justice and Public Safety

• Creates a pilot program with the City of Wilmington to establish a Quick Response Team to address the needs of opiate and heroin overdose victims who are not getting follow-up treatment.
• Creates a Community College Recidivism Pilot Program between Pamlico Community College and the Pamlico Correctional Institution.
• Increases the age of juvenile jurisdiction for all misdemeanors and two classes of felonies beginning in December 2019, a compromise on competing “Raise the Age” proposals considered by both the House and Senate.
• Strengthens human trafficking laws by requiring public awareness signs to be posted in emergency rooms, adult establishments, bars and other venues.

Military & Veterans Affairs

• Provides an additional $536,443 annually to grant scholarships to children of veterans killed or disabled during wartime.
• Appropriates an additional $2 million for community investment efforts to sustain and maintain NC’s military programs.

Transportation

• Establishes a fund for immediate need construction projects and provides $50 million annually to the fund.
• Provides an additional $40 million in 2017-18 and $75 million in 2018-19 and beyond for capital improvements at commercial airports.
• Provides an additional $5 million in 2017-18 and $15 million in 2018-19 and beyond for contract resurfacing.
• Increases funding for Strategic Transportation Investments by $139 million in 2017-18 and $180 million in 2018-19 and beyond.
• Requires the Department of Transportation to reimburse traditional and charter public schools for required road improvements adjacent to school grounds.