House, Senate Budget Strengthens Public Education and Cuts Taxes

House Speaker Tim Moore (R-Cleveland) and Senate Leader Phil Berger (R-Rockingham) held a joint press conference Monday to announce details of the $21.735 billion budget agreement reached by members of the House and Senate this past weekend. 

House Speaker Tim Moore (R-Cleveland) and Senate Leader Phil Berger (R-Rockingham) held a joint press conference Monday to announce details of the $21.735 billion budget agreement reached by members of the House and Senate this past weekend.

The compromise plan includes a responsible 3.1 percent spending increase, invests hundreds of millions of additional dollars in public education and other core priorities and shores up the state’s rainy day and repair and renovation funds by $600 million.

The plan increases early-career teacher pay to from $33,000 to $35,000 per year, fulfilling a promise made by state leaders last year. And over two years it preserves funding for driver education and for all teacher assistant positions supported in last year’s budget, requiring school systems to use the funds for those jobs.

The budget also invests an additional $705 million over two years for transportation needs, in part by ending a $216 million transfer from the Highway Fund to the General Fund and ensuring that money is finally spent on building and maintaining safe roads and bridges.

Finally, it 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 and fully restores the state tax deduction for medical expenses. The plan also extends Historic Preservation Tax Credits.

“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 – while still investing hundreds of millions of dollars for real needs in public education, public safety and transportation,” said Berger.

“Throughout this process, the House has remained firm on its priorities to reward our teachers and State personnel, preserve Driver Education, continue to employ valuable Teaching Assistants, find innovative ways to improve our education standards and to invest in North Carolina to strengthen our future. We can never afford to stop looking for ways to improve our State," stated Speaker Moore. "I am pleased that we have produced a responsible budget agreement that invests in North Carolina’s present and future, while it also puts more money back into taxpayers’ wallets. I commend the Budget Chairs and Conferees of both the House and Senate for their tireless efforts."

Additional key provisions of the budget compromise include:

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. 

In Education  –

-Increases funding for public education by more than $530 million in the first year alone.  

-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 in to first and second grades.

-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.

-Fully funds teacher assistant positions at the 2014-2015 level and includes language to protect those jobs.

-Allocates funding to the School Connectivity Initiative to bring better broadband and WiFi 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.

-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.

-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.

Elsewhere –

-Provides $225 million over two years to begin the process of restructuring and reforming the state’s chronically troubled Medicaid program.

-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.

 

The full budget compromise bill will be posted to the North Carolina General Assembly website at www.ncleg.net on Monday evening.

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