October 22, 2021

Man Fine

The Fine Art Of Education

Budget proposal including tax cuts, teacher raises passes NC Senate

RALEIGH, N.C. (WNCN) – A bipartisan supermajority in the North Carolina Senate passed a budget proposal that will slash income taxes, as well as provide pay raises and bonuses for teachers.

The budget proposal passed the state Senate, 32-18.

Among the items included in the proposal is a plan to reduce the personal income tax rate from 5.25 percent to 3.99 percent by 2026. It also raises the zero-tax bracket to $25,500 for married filers, according to a news release from Sen. Phil Berger’s office.

It would provide 3 percent raises over two years to most state employees, including teachers, UNC System employees, and community college employees. Federal funds will be used to give bonuses of up to $1,500 to all state employees.

The proposal would set in motion a $12 billion investment in capital projects and infrastructure over the next 10 years, the release said.

See below for more details on the budget proposal:


Topline

  • The total proposed General Fund allocation is $25.7 billion in 2021-22 and $26.6 billion in 2022-23. 
  • The total allocation of State Fiscal Recovery funds is $5.1 billion across the biennium. 
  • The total State Capital Infrastructure Fund allocation is $4.3 billion over two years. 
  • It replenishes the state’s reserves, including the Rainy Day Fund.  

Capital/Infrastructure

  • Dedicates $4.3 billion to the State Capital and Infrastructure Fund (SCIF) over the next two years, $3 billion of which is available for projects ($1.3 billion is obligated to pay for previous debt). 
  • Requires annual cash contributions to capital and infrastructure projects totaling $16.6 billion over 10 years, of which $12 billion can be used for infrastructure projects. (The remaining $4.6 billion will be put toward paying previous debts.)  
  • Allocates $2.8 billion over the biennium for Strategic Transportation Investments. 
  • Increases the General Maintenance Reserve by $250 million over the biennium to respond to storms and conduct routine maintenance. The reserve will be funded at a total of $1.4 billion over the biennium.  
  • Invests more than $1.2 billion over the biennium for road resurfacing projects.  
  • Provides more than $560 million over the biennium for the Bridge Program and over $140 million for bridge preservation. 
  • Fully funds the UNC System’s repairs and renovations request over the next four years, with $500 million allocated this biennium. 
  • Provides $400 million to state agencies for repairs and major renovations. 
  • Funds stream debris removal at $138 million over the biennium. 
  • Funds construction of the Brody School of Medicine with $76 million. The total authorized cost of the project is $215 million. 
  • Provides $55 million for NC State University’s new STEM building. The total authorized cost is $80 million. 
  • Funds the UNC-Pembroke Health Sciences Center with $32 million. The total authorized cost of the project is $91 million. 
  • Provides $64 million over the biennium to Elizabeth City State University for a residence hall, sky bridge, dining facility, and flight school. An additional $20 million to complete the flight school is also authorized.  
  • Uses $430 million in cash to pay down state debt: $400 million for the remaining Connect NC bonds left to be issued, and $30 million for the remaining balance owed to the federal government for the Falls Lake Recreation Area. This will eliminate future interest payments.

Tax Cuts

  • Increases zero-tax bracket to $25,500. 
  • Cuts the personal income tax rate from 5.25% to 3.99% by 2026, starting with 4.99% in 2022. 
  • Increases the child tax deduction by $500 per child.  
  • Otherwise mirrors the tax plan that previously passed the Senate. 
  • A family of four earning the median household income would see a 37% income tax cut. 

Salaries and Benefits

  • 3% raises over the biennium for most state employees, including teachers and UNC/community college employees. 
  • Creates a new experience-based salary schedule for correctional officers, which results in an average 7% raise.  
  • Bonuses for all state employees using federal funds: $1,500 for state employees who make less than $75,000, and $1,000 for state employees who make more than $75,000. Law enforcement, correctional officers and staff, and 24-hour residential or treatment facility employees receive $1,500.  
  • Gives an additional across-the-board teacher bonus of $300 from repurposed state funds previously appropriated for performance bonuses that cannot be paid due to COVID-19 related data issues.  
  • Gives an across-the-board additional principal bonus of $1,800 previously appropriated for performance bonuses that cannot be paid due to COVID-19 related issues.  
  • Provides a $13 minimum wage for non-certified employees in local public schools and community colleges.  
  • Fully funds retirement and state health plan, and appropriates $300 million to the State Treasurer to pay down unfunded retiree benefits.  
  • Uses $100 million of federal funds to provide a $1,500 bonus for eligible direct care workers who have worked on the front lines throughout the COVID-19 pandemic. An additional $17.5 million will be used to increase direct care worker wages.  

K-12 Education 

  • $10.4 billion in 2021-22 and $10.5 billion in 2022-23, which represents an additional half-billion dollars in state dollars to public school education.   
  • $40.9 million each year for school psychologists, which includes an additional $9.8 million to ensure that every school district has at least one psychologist. 
  •  $459 million transfer over the biennium from the N.C. Education Lottery to the Needs-Based Public School Capital Building Fund, and $200 million to the Public School Capital Fund. Over the course of the next 7 years, a projected $2.4 billion will be spent on school capital.      
  • $6 million for science of reading/Excellent Public Schools Act implementation. 
  • Continues funding to provide for a lower teacher-to-student ratio in districts with more disadvantaged students. 
  • Creates a $22 million reserve fund to cover increased costs for schools in the event DPI under-projects student enrollment growth. 
  • Appropriates the remaining $338 million in federal education relief funds, for a total of $3.6 billion, to address statewide education needs related to the pandemic.  

UNC System

  • Fully funds UNC building reserve request of $54.9 million over the biennium. 
  • Fully funds NC Promise tuition program at $137 million over the biennium. 
  • Consolidates two scholarship programs for students with special needs into the North Carolina Personal Education Student Account for Children with Disabilities Program, and fully funds the program by adding $15.6 million per year.  
  • Increases the University of North Carolina Need-Based Financial Aid Program by 5%.  
  • Funds NC A&T doctoral programs with $11 million over the biennium. 
  • Fully funds the NC School of Science and Math Morganton campus so it can open in 2022. 
  • Expands eligibility and increases funding for the Opportunity Scholarship program by $76.8 million.  
  • Provides $15 million for the North Carolina Policy Collaboratory’s research on PFAS as part of the 2021 Water Safety Act.  

Community Colleges

  • Funds community college system at $1.26 billion in 2021-22 and $1.32 billion in 2022-23. 
  • Allocates $76 million in federal funds to stabilize community college budgets due to enrollment declines.  
  • Provides $15 million in federal funds to improve broadband access for 25 rural community colleges. 
  • Increases the Community College Need-Based Assistance Program by 7.5%.  
  • Provides $5.2 million over the biennium to assist community colleges in starting programs in high-demand career fields that require significant start-up funds. 
  • Establishes the North Carolina Community College Short-Term Workforce Development Grant Program and allocates $3 million in each year of the biennium to provide up to $750 to students pursuing workforce credentials.   
  • Adds $1.5 million per year for childcare grant funding, which aids community college students with childcare expenses.  

Information Technology

  • Allocates nearly $700 million in federal funding for rural broadband, plus $30 million over the biennium using state funds, to the NC GREAT program.  
  • Allocates $10 million for cybersecurity risk management. 
  • Provides $600,000 for Department of Employment Security program integrity.   

General Government

  • Funds the JOBS and Small Business Recovery Grants with $1.5 billion in federal funding to provide economic support for businesses that suffered substantial economic damage during the pandemic.  
  • Appropriates $20 million from the State Fiscal Recovery Fund for the ReToolNC program, which administers grants to small, historically underutilized businesses.    
  • Allocates a combined $21.4 million for organizations to assist victims of domestic violence, sexual assault, and human trafficking. 
  • Provides $4 million in additional funds to Scholarships for Children of Wartime Veterans, bringing the total program amount to $21.8 million over the biennium.  

Justice and Public Safety

  • Allocates $10 million for testing of new rape kits and clearing the state’s rape kit backlog. 
  • Funds a $16 million grant to keep 150 victim services coordinators in district attorneys’ offices across North Carolina. 
  • Funds the creation of use-of-force database and officer discipline and decertification database. 
  • Appropriates $4 million over two years for addiction treatment in jails as part of existing reentry programs. 
  • Allocates $5.5 million for new prison security measures, including man-down technology and critical safety upgrades to facilities 
  • Provides funds to open a long-term care facility at Central Prison to ensure it is fully operational by FY 2022-23.  
  • Funds enhancements to the North Carolina Hazard Mitigation Plan through the North Carolina Office of Recovery and Resiliency (NCORR).  
  • Creates a new Department of Correction within the Governor’s cabinet and a separate Division of Juvenile Justice and Division of Community Supervision and Reentry within the Department of Public Safety. 
  • Provides $7.3 million in grant funding for sheriffs’ offices in Tier 1 and 2 counties to be used for expenses incurred by the offices.  

Agriculture and the Environment 

  • Allocates over $1 billion of federal American Rescue Plan funds to provide grants to local governments for water and sewer utilities.  
  • Provides $100 million in federal funding to create a new program to assist local governments with stormwater infrastructure and management.  
  • Allocates $40 million in federal funds to North Carolina food banks to meet increased demand. 
  • Provides $12.8 million in federal funds for the State Fair, $5.7 million for state aquariums, and $1.9 million for the North Carolina Zoo to replace receipt losses due to the COVID-19 pandemic. 
  • Provides $50 million in federal funding for rural downtown transformation grants in Tier 1 or Tier 2 counties. 
  • Transfers $2.7 million from the Jobs Maintenance and Capital Development special fund to the Film and Entertainment Grant special fund. 
  • Two dozen new positions for DEQ for emerging contaminant response, landslide mapping, dam safety, permit transformation, and underground storage tank management.  

Health and Human Services

  • Allocates almost $40 million of federal funds across the biennium to long-term care facilities that care for low-income residents and residents with developmental disabilities.  
  • Fully funds critical projects for the state to transition Medicaid from a fee-for-service system to one in which insurance companies are fully responsible for managing the health care needs of Medicaid patients. 
  • Extends full Medicaid benefits for eligible postpartum mothers from 60 days to 12 months beginning April 2022. 
  • $32.9 million to fund an additional 1,000 Innovations Waiver slots for individuals with intellectual and developmental disabilities to help families access additional healthcare supports.  
  • Directs $8.5 million of federal funds to free and charitable clinics across the state. 
  • Provides $3 million over the biennium for the Rural Health Loan Assistance Repayment Program to fund loan repayment incentives to recruit doctors and other healthcare professions to rural areas.