Drumroll please! For the first time in his tenure as Governor, this week Democrat Roy Cooper signed a budget passed out of the General Assembly. The week still did not go without some controversy, with three controversial election bills passed out of the House Thursday, spurring hours of debate. The budget successfully being enacted represents months of successful negotiations between the legislature and the Governor.
There is more positive news out of Raleigh this week as COVID-19 cases and hospitalizations have continue to trend downward. As of this morning, in the state of North Carolina, there were 2,392 confirmed cases of the coronavirus, 1,048 individuals hospitalized, and sadly, 18,562 confirmed deaths. There have been 11,808,915 doses of the vaccine distributed in NC, which is about 72% 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.
Five months after releasing the initial version of the state budget and many compromises later, the NC General Assembly passed a state budget for the current fiscal biennium. On Thursday, the budget became law with Governor Roy Cooper’s signature. S105: 2021 Appropriations Act is a “transformative” bill, said Appropriations Chair Rep. Donny Lambeth (R-Forsyth) on the House floor this week. “We may have different philosophies,” Lambeth said, “but everyone is here because they love their communities.” The bill passed with bipartisan support, 41-7 in the Senate earlier this week, and 101-10 in the House on Thursday.
The State of North Carolina has not enacted a biennial budget since 2017, before Democratic legislators broke the Republican veto-proof majority in the 2018 elections. In 2019, Governor Cooper vetoed the state budget, and the Republican legislative leadership was unable to persuade enough Democrats to vote for an override. However, this year’s process was admittedly different. Both the Republican-led General Assembly and newly re-elected Governor Cooper compromised in good faith for several months and reached an agreement. On the House Floor Thursday, Majority Leader Rep. John Bell (R-Wayne) recognized the importance of legislative Democrats being involved in the process and thanked the nine House Democrats who voted for the initial budget language and remained involved on the conference committee.
The budget will spend $25.9 billion in FY2021-22, and $27 billion in FY2022-23. Coming in at nearly $1.1 billion more than the current operating budget, the final spending plan is nearly 4.5% larger than the budget enacted in 2017.
The proposed budget also issues significant tax relief. The personal income tax rate would be reduced to 3.99% over six years, down from 5.25%. The franchise tax would be reduced, and the corporate income tax rate would be phased to zero by 2030. Additionally, the standard deduction would be raised from $10,750 to $12,750, and from $21,500 to $25,500 for married couples. The bill will also eliminate state income tax for retired military personnel and will increase the child tax deduction by $500 per child.
While the budget does not expand Medicaid, it will extend Medicaid eligibility for 12 months postpartum for pregnant women with incomes less than 196% of the federal poverty guidelines. The budget does keep the door open for expansion by creating a joint legislative study committee on health care access and Medicaid expansion.
Most workers in the state will feel immediate relief from the budget’s retroactive bonuses and raises for teachers and state employees. Public school teachers and state employees will receive a 5% average raise over the biennium, an immediate $1,000 bonus for all state employees, and an additional $1,000 bonus for teachers. Those state employees earning less than $75,000 annually will receive an extra $500 bonus. State retirees will receive a 5% cost-of-living bonus over the next two years.
To assist rural and poor counties who often struggle to recruit aspiring teachers against urban counties with larger county supplements, the budget allocates $100 million to low wealth school districts, including charter schools, which will allow these 95 counties to provide supplements as high as $4,250 per teacher. Local school employees who are not teachers will see their wages climb to $15 per hour beginning in 2022.
Realizing the importance of the one-time stimulus from the federal American Rescue Plan and the CARES Act passed by Congress this year and last, Rep. Dean Arp (R-Union), a Senior Appropriations Chair said on the floor Wednesday that this budget smartly appropriates one-time funds to one-time, desperately needed projects. $5.9 billion will go towards paying down debt and building, repairing, and renovating public school buildings, including in the UNC System and community colleges.
Additionally, $84 million will go to Elizabeth City State University for a residence hall and new facilities, and $528 million will be transferred to the Needs-Based Public School Capital Building Fund, amounting to a total of $2.6 billion to be spent on school capital projects.
The budget invests heavily in broadband expansion to bring high-speed internet to rural counties. In addition to incoming federal funds from the federal infrastructure bill, the state budget appropriates $1 billion to broadband infrastructure projects and grants. This includes over $600 million for GREAT grants for service providers, $15 million for broadband at 25 rural community colleges, $4.6 million in recurring funds to bringing broadband to all public school buildings, and new initiatives to bring high-speed internet to charter schools.
Charter schools will receive additional opportunities from this budget. A grant program will be established to award funds to charter schools to assist them with providing transportation for their students. The bill also requires municipalities to provide water and sewer services to charter schools.
The budget would give an average of 1.5% raises to teachers and most state employees in each of the next two years, and a $1,500 bonus to state employees with an annual salary less than $75,000. It would also provide a $13/hour minimum wage for noncertified employees in schools, community colleges and universities. It also allocates $5.4 billion of federal American Rescue Plan Act funds to various grants and programs to respond to the pandemic.
After Governor Cooper signed the budget on Thursday, House Speaker Tim Moore (R-Cleveland) issued a statement, saying “we have finally given our state a budget they can truly be proud of and one that meets the most critical needs of North Carolinians.”
There will be no legislative meetings next week.