North Carolina Senate Budget Passes, Final Negotiations to Begin

Spending plan increases starting teacher pay by nearly 11%, expands school choice, and targets healthcare needs

Includes tax cuts for ALL North Carolinians

Raleigh, N.C. — Today, the North Carolina Senate approved its fiscal year 2023–25 budget proposal. The budget passed 36–13 with bipartisan support. A third procedural vote will be held tomorrow before the Senate and House begin negotiations on a final budget to present to the governor.

Senate Appropriations Chair Sen. Brent Jackson (R-Sampson) released the following statement on the Senate’s budget:

“This is a conservative budget that hits our spending target while aggressively cutting taxes and being good stewards of your tax dollars. We spend one-time funds on one-time needs and keep recurring costs in check. After more than a decade of responsible fiscal policy North Carolina remains on steady ground as we continue to face economic uncertainty.”

Below are details on several provisions of the Senate budget plan:

Topline Figures

• Net appropriation for FY 2023–24 is $29.8 billion and net appropriation for FY 2024–25 is $30.9 billion.
• Almost doubles the Stabilization and Inflationary Reserve with an increase of $900 million for a total of $1.9 billion.
• Rainy Day Fund balance will be increased by $250 million for a total of $5 billion.
• Total of $6.6 billion in tax savings for North Carolinians over the next five years.

Taxes

• Cuts taxes by $1.2 billion for all North Carolina families and businesses over the next two years.
• Accelerates the scheduled reduction of the personal income tax dropping it to 4.5% in 2024 and ultimately to 2.49% by 2030.
• Total of $6.6 billion in tax savings for North Carolinians over the next five years.

Education

• Spends over $17.2 billion on education in FY 2023–24 and over $17.6 billion in FY 2024–25.
• Expands the Opportunity Scholarship Program to all families.
• Increases funding for Opportunity Scholarship Grant Fund Reserve by $105 million in FY 2023–24 and $163 million in FY 2024–25.
• Creates a new School Health Personnel Allotment and increases funding by $10 million recurring to help public K-12 schools hire around 120 more nurses, counselors, social workers, and psychologists.
• Provides almost $70 million to develop and expand community college courses in high-demand career fields, including nursing and other health-related programs.
• Supports North Carolina A&T in their efforts to become the first HBCU to obtain the R1 Carnegie Classification with an additional $10 million recurring in each fiscal year and $5 million non-recurring in the first fiscal year.

Transportation

• Increases funding for the Strategic Transportation Investments Prioritization Program by $473.85 million in FY 2023–24 and $611 million in FY 2024–25 to help prioritize and fund large transportation projects across the state.
• Provides an additional $75.6 million for contract resurfacing.
• Spends over $400 million in each year on the replacement and preservation of bridges.
• Boosts funding for the General Maintenance Reserve, used to help with upkeep of roads, by over $311 million.

Salaries

• Appropriates $94 million into the Labor Market Adjustment Reserve (LMAR).
• Doubles the LMAR allocation to state agencies and community colleges to 2%.
• Provides the UNC System $15 million in LMAR funds.
• State employees will receive a 5% pay raise over the biennium.
• Teachers will receive an average raise of 4.5% over the biennium, and starting teacher pay will increase by nearly 11% over the same time period.
• Average teacher pay will be $59,121 by the end of FY 2024–25, just under North Carolina’s median household income.
• Nursing faculty at community colleges and the UNC System will receive a minimum 10% salary increase.
• The State Highway Patrol, State Bureau of Investigation, and Alcohol Law Enforcement will get a 12% pay increase across the biennium.
• Creates a pay scale for Juvenile Justice employees that aligns with the structure of the correctional officer salary schedule.

Healthcare

• Enacts Medicaid expansion.
• Appropriates the $1.5 billion of non-recurring funds from the federal “sign-on” bonus for expanding Medicaid, including:
• $370 million for NC Care Initiative between ECU and UNC Health systems that will feature the construction of 3 regional health clinics and rightsizing existing parts of their health systems.
• $96 million for rural loan repayment incentive programs for primary care and behavioral health providers.
• $60 million for start-up costs and expansion of healthcare programs at community colleges.
• $20 million for UNC-Pembroke’s new healthcare-oriented programs.
• Significant Certificate of Need reform, including repealing the CON requirements for mobile MRI machines, linear accelerators, physician office-based vascular access for hemodialysis, and kidney disease treatment centers.
• Repeals CON for ambulatory surgical centers and facilities with MRI machines in counties with a population under 125,000 that do not have a hospital.
• Includes $110 million to increase behavioral health provider rates on a recurring basis.
• Allocates $60 million recurring in each year for direct care worker wage increases.
• Provides $50 million recurring to permanently retain half of the COVID-19 rate enhancement for skilled nursing facilities.
• Increases Medicaid reimbursements for private duty nursing services from $45 per-hour to $52 per-hour.
• Provides $15 million in each year of the biennium for the Free and Charitable Clinics to provide care to low-income families and individuals across the state.

Other Items

• Allocates $1.4 billion, available for drawdown by NCInnovation, to improve applied research outputs at UNC System schools and to help commercialize the results of that research.
• Directs the Economic Development Partnership of North Carolina to expand its study of megasites to include sites with fewer than 1,000 acres.
• Provides $10 million in reserves to support local governments conduct their due diligence on the new megasites identified in the study funded last year, and making those sites shovel ready.
• Expands the post-election audit report to include a summary and detailed description of the results, and information on any items that could have affected the outcome of the election.
• Includes an additional $35 million for the school safety grant program.
• Increases funding for anonymous tip line which facilitates anonymous reporting of school safety threats.
• Gives NC Emergency Management an additional $2.5 million in recurring funds to hire new support staff and to continue developing statewide school safety programs.
• Includes $1 million for the N.C. National Guard to support the Joint Cybersecurity Response Force, which will partner with the National Guard and N.C. Emergency Management to combat cyber-attacks across the state.
• Provides almost $19 million for a new N.C. Agriculture Manufacturing and Processing Initiative to incentivize the development of food processing facilities across the state.
• Sets aside $20 million nonrecurring over the biennium for the N.C. Housing Trust Fund to provide housing for homeless veterans, victims of domestic violence, sexual assault, and human trafficking.