Raleigh — The N.C. General Assembly gave final approval to an $18.9 billion state budget for 2006-07 on Thursday, and now legislators are shifting their attention to finishing up other legislative work before adjourning for the year.
House budget negotiators called the spending proposal “the best education budget passed by the Legislature” and pointed to the more than $10.8 billion in resources dedicated to improving education and increasing teachers’ salaries. This total represents more than $943 million above last year’s budget and is in addition to $425 million in expected revenues from the new North Carolina Education Lottery.
Supporters of the budget stated that the bill dedicates much-needed funding to education, health care and public safety programs, all of which are vitally important to improving our state’s economy and creating new jobs, while also providing close to $200 million in tax relief and capping the state’s gas tax.
The lean 156-page budget agreement, reached Friday after only two weeks of negotiations between the House and Senate, keeps non-budget-related provisions or policy issues out of the bill, at the insistence of House leaders. The Senate in its budget included an increase in the state’s minimum wage and a moratorium on landfills. The House has already passed legislation to increase the minimum wage by one dollar and the Senate is expected to pass the measure; it is unclear if the Senate will take up the landfill moratorium in a stand alone bill.
Members of the House gave initial approval of the budget on Wednesday afternoon by a vote of 82-35, and final approval on Thursday, 82-31. The Senate approved the bill on Wednesday, 32-16, and on Thursday by a vote of 31-15. No Democrats voted against the budget in either chamber. Four Senate Republicans and 22 House Republicans voted for it on Wednesday. Governor Mike Easley must still sign the bill into law.
“This budget moves North Carolina forward in education, health care, public safety and economic development, while also providing tax relief to all North Carolinians,” said Rep. Michael H. Wray, D-Northampton. “Improving and investing in education continues to be our number one priority, and this budget helps provide a quality education to every child in our state and gives our valuable teachers and state employees a well-deserved pay raise.”
“This is a budget that is very hard to criticize, very easy to like … and one that all of us should support,” House Majority Leader Joe Hackney, D-Orange, said during the House debate. “Our state is one of the fastest growing in the nation,” House Speaker Jim Black, D-Mecklenburg, said after Wednesday’s vote. “Those who voted against this budget want to maintain the status quo, but if you do that, you go backward. This budget moves our state forward and keeps us on the right track by making education our number one priority.”
This week’s passage of the budget conference report, which makes adjustments to the second year of the two-year budget passed last year, marks the end of the budget process in the Legislature, which began in May. The Legislature must still complete work on numerous other pieces of legislation before adjourning for the year, which could occur in the next week or two.
On Wednesday, House and Senate leaders expressed their intention to adjourn for the year by next weekend if all legislative work can be completed by both chambers. The House is trying to wrap-up its work on lobbying reform, economic development programs, sex offender registration laws and several other education bills, while the Senate must still complete its work on several House bills including a minimum wage increase and eminent domain restrictions, as well as numerous campaign finance, ethics and lobbying reform bills.
HIGHLIGHTS OF THE $18.9 BILLION BUDGET:
Increase North Carolina’s Commitment to Education
The budget provides $10.7 billion for education, which is $943 million over last year’s education funding level, and in addition to the expected $425 million in lottery proceeds for early childhood education, reducing class size, school construction and college scholarships. The budget funds education at our state’s K-12 schools, community colleges and universities, including $165 million to cover the more than 28,000 new students who will show up at our schools this fall.
Increase Resources for Low-Wealth and At-Risk Schools
Legislators dedicated over $75 million to address the on-going Leandro school funding lawsuit, which will dedicate additional funding to low wealth schools districts, disadvantaged students, literacy coaches and high school reforms, while also eliminating a $44.3 million recurring reduction in public school budgets ordered annually since 2003.
Recruit and Retain High Quality Teachers in the Classroom
Public school teachers will receive an average 8% salary increase, in addition to $90 million for ABC bonuses. Community college faculty and professional staff will get a 6% raise, with a 2% one-time bonus. University workers will get a 6% raise, with an additional $5 million given to university chancellors to improve the salaries of recruited professors and to help hold onto current staff. In addition, more than $2 million is provided to expand teacher training opportunities through our universities and community colleges, scholarships to prospective teachers, and more professional development for teachers and principals.
Improving and Expanding our State’s Universities and Community Colleges
UNC campuses across the state will receive $185.7 million to help build new classrooms and buildings. The budget also substantially increases financial aid available for students attending our state’s universities and community colleges.
State Employee Pay Raises
State employees will receive a pay raise of 5.5%, which is the highest increase in 16 years. State retirees will receive a 3% COLA. Legislators also raised the minimum wage requirement for all state employees to at least $20,112.
Medicaid Relief for Counties
The conference report provides $27.4 million in relief to all 100 counties to freeze the counties’ portion of Medicaid expenses at this year’s level. The House budget included a total of $53 million to cap the rate and provide additional assistance to counties with high numbers of Medicaid recipients; the Senate did not provide any assistance.
Improving Mental Health
As part of an on-going reform effort that began in 2001, the budget provides $95 million in new funds for mental health, developmental disabilities and substance abuse programs, including $14.4 million for the Mental Health Trust Fund.
Caring for and Protecting Children
More than $30 million is provided for child care services and subsidies, which will maintain the current 2,650 child care slots, remove 3,096 children from the waiting list and create 3,100 new slots. The budget also provides more than $1.4 million to protect children from sex offenders by requiring GPS monitoring of the most violent criminals and establishing an email alert system which would notify people when a sex offender moves into their neighborhood.
Growing the Economy and Creating Jobs
The budget makes numerous investments in job creation efforts and provides much-needed funding for programs that help attract new jobs to North Carolina, including: 1) $15 million for the One North Carolina Fund, which since 2001 has helped create more than 19,000 jobs and $3 billion in investment in local economies; and 2) $5 million for the One North Carolina Small Business Fund for the Federal Small Business Innovation Research/Small Business Technology Transfer Research matching programs. The small business fund provides incentive funds to small business to apply for federal innovation grants. The budget provides $1.75 million ($875,000 recurring, $875,000 non-recurring) to promote the international home furnishing market in High Point; $1 million ($500,000 recurring, $500,000 non-recurring) to promote North Carolina as a business destination; $250,000 to expand and promote the film industry in North Carolina; and $100,000 to promote motor sports in North Carolina. The budget also provides $3,750,000 to the Advanced Vehicle Research Center Reserve.
Protecting Our Communities
The budget provides $27 million to improve our court system by establishing 90 new Assistant District Attorney positions, 75 Deputy Clerk positions, 17 District Court Judge positions, 6 new magistrates, 13 new Guardian ad Litem staff positions, 9 victim witness legal assistants, and several other categories of positions across the state. The budget also provides funds for upgraded technology for local law enforcement officials and courthouses, increased protection against convicted sex offenders and gangs, and SBI agents to address drug and computer crimes.
Preparing for Natural Disasters and Medical Emergencies
In addition to dedicating more than $560 million to our state’s Rainy Day Fund and other reserves, which could be used in case of a natural disaster or emergency, the budget also dedicates $20 million to establish the State Emergency Response Account, a new reserve that will be used for State disaster preparedness and response programs. Legislators also approved $8.5 million to establish a new National Guard Readiness Center in Raleigh, which will help consolidate most Raleigh-based Division of Emergency Management personnel in one building, and $101 million for a new state public health lab.
Tax Relief for All North Carolinians and Small Businesses
The budget provides close to $200 million in tax relief for all North Carolina consumers by cutting two “temporary” ½ cent taxes early that were initiated in 2001 at the height of the recession, which were set to expire next year. The budget reduces the state’s sales tax by a quarter of a penny on December 1 — just in time for the holidays — and will reduce the top income tax bracket for individuals and approximately 30,000 businesses from 8.25% to 8% starting January 1, 2007. Small businesses will also receive a $250 tax credit for providing health insurance to employees making less than $40,000 per year.
Gas Tax Capped
Legislators also capped the state’s gas tax rate at the current level while at the same time increasing funding for road construction by $195 million through a reduction of the longstanding transfer from the Highway Trust Fund to the General Fund. In 1989, then Gov. Jim Martin and the General Assembly put the transfer in place as a means of compensating the General Fund for the highway use tax, or the sales tax on cars. Since 1992, North Carolina law has required the state’s gas tax to be adjusted once every six months based partially on the previous six-month average of wholesale gas prices. Now that the cap is in place, the state’s gas tax cannot rise even if oil and gas companies continue to raise prices at the pump.
The complete budget (Senate Bill 1741, proposed Conference Committee Substitute) can be found on the N.C. General Assembly’s website at: www.ncleg.net.