North Carolina is growing, and it is not showing any signs of stopping. According to newly released Census data Thursday, the Tar Heel State grew 9.5% over the past decade, adding 903,905 residents. Nearly 80% of that growth was in the Triangle or Charlotte metro area, while more than half of the state's 100 counties - mostly rural - lost population. As the state legislature continues to debate a budget and begins the redistricting process, the rapid growth will be top of mind.

The COVID-19 case count continues to worsen. As of this morning, in the state of North Carolina, there were 5,900 confirmed cases of the coronavirus, 2,409 individuals hospitalized, and sadly, 13,806 confirmed deaths. There have been 10,020,873 doses of the vaccine distributed in NC, which is about 62% of the total adult population.

As we all continue to feel the effects of the global pandemic and adjust to a new normal, we want to highlight a few ways our clients across North Carolina have worked to support residents and make this time a little easier for those throughout the state. Read more about what our clients are doing to help by clicking here.

For more information on COVID-19 in North Carolina, click here to visit the Department of Health and Human Services website, and be sure to stay up to date on the latest federal guidelines issued by the Centers for Disease Control and Prevention (CDC) by clicking here.

House Budget

One week after hosting area-specific appropriations subcommittee meetings where topline spending figures were released, yesterday the House passed their version of the biannual budget. The Senate introduced and passed the first version of S105: 2021 Appropriations Act in June, and over the last week the House made significant changes but kept the overall spending number relatively close to the Senate counterpart. The measure would spend $25.7 billion in FY2021-22 and $26.7 billion in FY2022-23. If passed, this budget would be 3.45% larger than the base budget under which the state is currently operating.

The proposed budget would also issue significant tax relief, but not to the extent that the Senate desired. While the Senate version reduces the personal income tax rate to 3.99% by 2026, down from 5.25%, the House would reduce it to 4.99%. The Senate plan phases out the corporate income tax completely, but the House keeps a corporate income tax and lowers it from the current 2.5% to 1.99%. Both chambers raise the standard deduction from $21,500 to $25,500.

House leaders were happy with the budget and appear to be happy with the bipartisan process and vote it received. During Wednesday night’s session to give the budget its first vote, House Speaker Tim Moore (R-Cleveland) spoke from his floor seat to praise the process and the outcome. “I’ve been here for 18 years,” he said, “Can anyone tell me a time when the General Assembly invested this amount of money in salaries, capital and programming? Never, it’s never happened. We’ve talked and talked about priorities for years, and this budget takes care of the needs that have only been talked about.”

Some Democrats chided the process used, arguing that no one from their side of the aisle was involved with the crafting of the bill. Other Democrats rehashed a 2019 argument that the budget is inadequate because it does not expand Medicaid and does not raise per-pupil spending to the national average.

However, the final vote was bipartisan with every Republican voting in favor, and even nine Democrats voting for the measure, giving the bill a veto-proof majority if the vote total stands. The next step is conference: each chamber will appoint members to serve on a conference committee to work out an agreement before sending a finalized package to the Governor.

The budget is categorized in a committee report broken down by each state agency’s oversight. Here are the toplines mentioned by budget co-chairs this week:

Education

• Net appropriation: $15.3 billion in FY 2021-22, and $15.7 billion in FY2022-23
• Teachers would receive a 5.5% salary increase over the next two years. Most other state employees would receive a raise of 5% over two years
• Restoration of master’s degree pay for teachers
• Eight weeks of paid parental leave for new mothers
• $3 million recurring for a permanent charter school transportation grant program
• $10 million recurring for school safety grants and training
• $338.7 million of federal money non-recurring in FY-2021-22 to help schools respond to the pandemic
• Nearly $90 million across the biennium for the School Business Modernization Project
• Makes the virtual charter school program permanent, and extends a charter to the two currently operating virtual schools
• Requires public school units to publish classroom course materials online

Health and Human Services

• Net appropriation: $5.8 billion in FY2021-22, and $6.3 billion in FY2022-23
• $150 million non-recurring for rapid rehousing services
• $36 million recurring in FY 2022-23 for in-home health care services
• $36 million for local health departments to expand communicable disease prevention and protection

Agriculture, Natural and Economic Resources

• Net appropriation: $691.5 million in FY2021-22, and $701.1 million in FY2022-23
• $37.5 million across the biennium for farmland preservation
• $177 million for various programs to address the impact of the pandemic
• $100 million across the biennium for parks and recreation grants

Justice and Public Safety

• Net appropriation: $3.3 billion in FY2021-22, and 3.3 billion in FY2022-23
• $20.3 million for staff and implementation of E-Courts Implementation and E-Courts Warrants and Citations.
• Establishes the division of Juvenile Justice as a standalone division
• $18.7 million to ALE, State Capitol Police, SBI and Highway Patrol for equipment
• $2.2 million in FY 2021-22 and $2.4 million in FY 2022-23 for new assistant DA positions

General Government

• Net appropriation: $465.2 million in FY2021-22, and $467.8 million in FY2022-23
• $20 million non-recurring for RetoolNC grants
• $10 million non-recurring for the eight state recognized American Indian Tribes

Transportation

• Net appropriation to the Highway Fund: $2.8 billion in FY 2021-22, and $2.8 billion in FY2022-23
• Net appropriation to the Highway Trust Fund: $1.5 billion in FY2021-22, and $1.7 billion in FY2022-23.

Information Technology

• Net appropriation: $94.1 million in FY2021-22, and $74.5 million in FY2022-23
• $277 million non-recurring of federal funds for the GREAT program for broadband grants

Redistricting

Lawmakers successfully preempted the release of Census population data Thursday by approving guidelines to be used for this year's decennial redistricting process. After a lengthy committee meeting, the Joint Redistricting Committee adopted criteria to establish parameters for ensuring equal population in legislative and Congressional districts. The criteria forbids the use of racial and partisan data, and states that voting tabulation districts (VTDs) may only be split when necessary. One controversial sticking point for Democrats was an item allowing the committee to consider the residence of incumbents during the redraw. Several amendments were put forward by Democrats to soften or eliminate this criteria, but all failed.

Republicans are proud of the early steps taken on this year's redistricting process. Committee co-chair Rep. Destin Hall (R-Caldwell) said, "For the first time ever, without a court order but doing it voluntarily, the chairs have put forth a set of criteria before you voluntarily not using election data and partisanship."

The committee will meet again next week to begin reviewing the Census population data released yesterday. The committee's stated goal is to have the initial lines approved by early November.

Upcoming Legislative Meetings

Monday, August 16

4:00PM House Session

4:00PM Senate Session

Tuesday, August 17

10:00AM House: Health

1:00PM Senate: Agriculture, Energy and Environment

Wednesday, August 18

9:00AM Joint Redistricting

10:00AM House: Transportation