North Carolina Senate Releases Budget Proposal

Speeds up planned tax cuts, shores up reserves

Targets labor market shortages in government agencies

Raleigh, N.C. — Today, Republicans in the North Carolina Senate unveiled their fiscal year 2023–25 budget proposal. In keeping up with previous budgets, this spending plan preserves the fiscal stability of the state, returns a significant sum of money to taxpayers, spends appropriately on a variety of public interests, and creates a bold new fund to help commercialize research in North Carolina.

“This is a strong budget that addresses our state’s needs without breaking the bank,” said Senate Appropriations Chair Sen. Brent Jackson (R-Sampson). “We increase spending where it is needed, bolster our reserves in light of economic uncertainty, and give money back to the hardworking people of North Carolina.”

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.

“What we have been doing has been working, and this budget is largely a continuation of the responsible spending that has gotten us to where we are today,” said Senate Appropriations Chair Sen. Ralph Hise (R-Mitchell). “We are keeping North Carolina attractive to businesses and showing our competitors that North Carolina plans on staying the best state for business.”

Senate Appropriations Chair Sen. Michael Lee (R-New Hanover) said “The Senate’s budget proposal addresses the entire workforce pipeline — from our youngest students to our most experienced professionals. North Carolina’s commitment to fund students combined with the historic new innovation reserve opens the door for endless possibilities for our state.”

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 $469.75 million in FY 2023–24 and $604.5 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.

The Senate’s budget will be heard in committees on Tuesday, with anticipated votes on Wednesday and Thursday.