Senator Dan Soucek
North Carolina District 45
Alleghany, Ashe, Avery, Caldwell & Watauga
Final Budget Invests in Public Education, Provides Major Tax Relief
With bipartisan support, the General Assembly passed a final, $21.735 billion state budget last week that includes a responsible 3.1 percent spending increase, cuts taxes, invests hundreds of millions of additional dollars in public education and other core priorities and shores up our state’s rainy day and repair and renovation funds by $600 million. I am grateful to members of the Senate and House for their hard work in reaching a final budget agreement that is fiscally smart, sustainable and saves for the future. This budget benefits all North Carolinians by providing families and small businesses hundreds of millions of dollars in tax relief, and by making a generous investment in public education, transportation and other core priorities.
The compromise plan contains a comprehensive tax reform package that reduces the tax burden on North Carolina families and small businesses by close to $400 million over the next two years.
It also increases funding for public education by more than $530 million in the first year alone and contains education reforms to reduce class sizes and ensure students receive the tools they need to succeed.
The budget boosts early-career teacher pay to from $33,000 to $35,000 per year and provides experienced-based step increases to teachers, assistant principals, principals, State Highway Patrol troopers, clerks and magistrates. In addition, all public school teachers and state employees will receive a $750 bonus.
The agreement funds all teacher assistant positions supported in last year’s budget, with a safeguard that school systems actually use those funds for TAs so their jobs cannot be eliminated to pay for administrative positions and other spending.
It provides an additional $705 million over two years for transportation needs, made possible in part by ending a $216 million transfer from the Highway Fund to the General Fund – ensuring that money is finally spent on building and maintaining safe roads and bridges.
An investment of $225 million over two years allows the state to begin the process of restructuring and reforming North Carolina’s chronically troubled Medicaid program.
Finally, the budget includes new local tax revenue to support education and economic development in counties with insufficient local sales tax dollars.
Some other key provisions of the budget compromise include:
In Education –
- Fully funds enrollment and enrollment growth for K-12, community colleges and universities.
- Reduces class size in first grade to a 1:16 teacher-student ratio in the second year – a step research has repeatedly shown is key to academic success.
- Enhances textbook and digital learning resources funding to ensure that students across the state receive the tools they need to succeed.
- Expands the Read to Achieve summer reading camps to first and second grades.
- Continues major education reforms and requires local districts to implement a plan to improve student performance at schools that earn a school performance grade of D or F.
- Increases support for the opportunity scholarship program by $14 million over two years to award more need-based scholarships to children from working families.
- Provides for comprehensive data collection and study of driver education to improve the program and help ensure better student outcomes.
- Allocates funding to the School Connectivity Initiative to bring better broadband and Wi-Fi access to all North Carolina schools.
In Taxes and Economic Development –
- Cuts the personal income tax rate to 5.499 percent beginning in 2017.
- Increases the zero percent tax bracket in 2016 – ensuring taxpayers married filing jointly pay no state personal income tax on their first $15,500 of income.
- Fully restores the state tax deduction for medical expenses.
- Encourages job creation and private investment in North Carolina by moving to calculate corporate income tax on the basis of a single sales factor over the next three years.
- Extends Historic Preservation Tax Credits for four years.
- Provides new local tax revenue to support education and economic development in counties with insufficient local sales tax dollars. The additional local revenue must be used to support public schools, community colleges or economic development in those counties.
- Maintains the existing system for allocation of local sales tax revenue, where 75 percent is allocated based on the county where a sale takes place and 25 percent is based on population – ensuring no local government will lose revenue under the changes.
In Salaries and Benefits –
- Allocates $313 million in the first year alone for compensation increases to state employees, including a $750 bonus for all teachers and state workers.
- Offers experienced-based step increases to teachers, assistant principals, principals, State Highway Patrol troopers, clerks and magistrates.
- Sets aside funding for pay raises to community college employees.
- Allocates funds for a 3 percent market-based salary increase for all sworn members of the State Highway Patrol and raises starting salaries from $35,000 to $36,050 per year.
- Funds Gov. McCrory’s recommendation to invest more than $38 million over two years to boost salaries for correctional officers.
- Funds Gov. McCrory’s plan to provide additional targeted, market-based pay raises to attract and retain highly effective workers.
- Provides $225 million over two years to begin the process of restructuring and reforming Medicaid.
- Increases funding for essential court system needs – like interpreters, expert witnesses and juror fees – and operations at the Administrative Office of the Courts.
- Lays the groundwork to give voters the opportunity to pass a $2 billion bond referendum to support improvements across state government.
- Adjusts fees at the Division of Motor Vehicles for the first time in more than a decade to support additional transportation needs. The change in fees will be more than offset by the major tax cuts also found in the budget.
- Adopts the governor’s proposal to create the Department of Information Technology, which is expected to save $30 million over the biennium by reducing duplicative spending and increasing consolidation.
- Implements the governor’s recommendation to establish a more efficient state Department of Military and Veterans Affairs and provides close to $1.7 million to support military installations.
- Expands the budget of the Office of the Chief Medical Examiner to ensure county medical examiners are better trained and better paid, replace obsolete equipment and make regional autopsy centers sustainable.
- Extends the foster care age to better support foster children as they transition to independence and provides funding for a new Foster Care Transitional Living Initiative Fund to improve outcomes for youth who are aging out of foster care.
- Funds an unprecedented budget transparency initiative designed to give taxpayers and decision-makers the accountability they deserve by requiring state agencies and local governments to post their budgets and spending on an easily accessible, user-friendly website.