Greetings from Raleigh!
I know that we are all thankful for the welcome rain over the weekend even though it may have put a damper on some outdoor activities (the Butner Chicken Pickin’, the Tar River Festival, Special Olympics, etc.).
We have been quite busy in the Senate for the past few weeks. I wanted to share some highlights with you.
Senate Budget Includes $256 Million Tax Cut for Working Families
The Senate voted last week to keep the promise made to taxpayers of this state in 2001 that two tax increases would be temporary. In 2001, the General Assembly increased North Carolina’s sales tax by ½ cent and increased the personal income tax on the highest wage earners by ½ percent. The increases were necessary to meet the state’s needs in funding public education and basic health and human services, as the State was in a recession and there were budget shortfalls. Because the sales tax burdened working families disproportionately as compared to high wage earners, the legislature coupled the sales tax increase by increasing the income tax on families earning over $100,000 from 7.75 percent to 8.25 percent. (This income tax increase also increased the tax burden on unincorporated small businesses.)
In 2005, these taxes were to expire; however, there was a shortfall in State revenue, so the General Assembly extended these taxes two additional years, setting them to expire on July 1, 2007.
In 2006, the General Assembly cut each tax by one-half. Fortunately in 2006, there was a billion dollar surplus in State revenues, allowing the legislature to begin the process of keeping the promise made that these taxes were temporary.
This year, Governor Easley recommended that the tax be retained and the House budget passed did not eliminate the tax. This is a critical difference between the Senate and House budgets. However, the State has another billion dollar surplus in revenues. Having a surplus, the Senate believes that it is time to fulfill the pledge from 2001 and eliminate the remaining tax. As a result of these tax cuts, the Senate’s budget was crafted with a total of $300 million less than the budget crafted by the House.
If the Senate version of the budget ultimately passes into law, working families will pay $256 million less in 2007-2008 taxes.
JOBS
Senate Budget Matches House Budget in Expansion of Revenues for Broadband Connectivity for Rural Areas of the State
Most new jobs are created by small businesses. In order for small businesses to compete in today’s global economy, they must have high speed Internet access.
Most counties have broadband internet access for at least 70% of their population. On the other hand, Warren County has the second lowest percentage of citizens with high speed internet access. Vance and Franklin counties are also below the 70% threshold.
Both the House and Senate budgets include an expansion of $3 million for the E-NC authority to provide matching funds to private and public entities interested in expanding Internet services to the rural parts of the state. The E-NC authority will use these funds to reach the goal of having all counties reach 70% access to high speed Internet services.
EDUCATION
Senate Budget Allocates a Greater Share of the Budget to Education as Compared to the House Budget
The Senate budget expands education spending by $281 million as compared to the House that expanded education spending by $221 million. Our current total continuation budget for the allocation of all State revenue expenditures is $18.9 billion for 2007-2008. Out of the $18.9 billion, 7.4 billion state dollars are spent on public education for K-12, and 2.5 billion dollars go to the university system. The Senate budget and the House budget are similar in their expansion of the K-12 budget with the Senate proposing additional funds totaling $153.8 million, and the House budget proposing $151.5 million.
The key difference between the two budgets is in the increases for the University of North Carolina system. The Senate proposes to spend an additional $102 million, whereas the House only proposes to spend an additional $36.3 million. Some of the key initiatives in the Senate university budget for 2007-2008 that are not in the House budget are as follows:
This money will be used to conduct research in the areas of nanosciences, marine science, natural products, environmental science, information technology, biomedical sciences, etc.
These funds will be used to expand initiatives at North Carolina State University for the research and development of bio energy processes.
These funds would be used to attract federal investments for a program at Wake Forest University to conduct research on the development of regenerative techniques for soldiers’ wounds.
HEALTH CARE
Senate Budget Similar to House Budget in Commitment to Health Care Coverage for the Non-Insured
The Senate budget includes the following expansion items that reflect our commitment to expanding health care coverage for the uninsured:
This program, which receives federal matching funds, provides health insurance for the children of families earning income at 100% of the poverty level (family income of $20,000 for a family of four). There will continue to be no waiting list as a result of this expansion.
This new program, which will receive federal matching funds advocated by the Governor, will expand health insurance coverage to children of families earning up to 225% of the poverty level (family income of $45,000 for a family of four). This program will require families to pay a premium for this subsidized health insurance. The House begins this program in the fiscal year 2007-2008. The Senate is seeking to develop the program without having to expend millions of dollars in unnecessary administrative costs.
This program funds creation of a provider network of physicians who agree to serve as a primary physician donating free healthcare to working families who are uninsured and not eligible for Medicaid.
These funds are grant-in-aid money for free clinics, community health centers, and public health departments.
The next step in the budgeting process is the appointing of conferees from both the House and Senate who will work to find compromises incorporating the proposed budgets from the Governor, from the House, and from the Senate. Hopefully, this process can be accomplished smoothly. I will try to keep you posted.
As I have told you several times before, I do consider it a privilege to serve as your senator, and I will do everything that I can to serve you well. Please feel free to contact me with any questions, concerns, or thoughts you want to share.
Sincerely,
Doug Berger