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Press Release: Senate Approves Final Budget that Invests Hundreds of Millions of Dollars in Public Education, Provides Major Tax Relief


FOR IMMEDIATE RELEASE                                    September 16, 2015                         Contact: Jordan Hennessy, (919) 715-8293      jordan.hennessy@ncleg.net

Senate Approves Final Budget that Invests Hundreds of Millions of Dollars in Public Education, Provides Major Tax Relief

Raleigh, N.C. – The North Carolina Senate passed a balanced $21.735 billion state budget on Wednesday, September 16, 2015. Next, the House of Representatives will vote on the budget and then it will be sent to the Governor to be signed into law. The compromise plan includes a responsible 3.1 percent spending increase to keep pace with inflation, core priorities and additional appropriations for public education by more than $530 million in the first year alone – all while shoring up the state’s rainy day and repair and renovation funds by $600 million.

The budget increases early-career teacher pay to from $33,000 to $35,000 per year, fulfilling a promise made by state leaders last year. Along with preserving funding over the next two years 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.

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 budget also extends Historic Preservation Tax Credits.

Key highlights of the final state budget on coastal issues include:

  • Provides additional appropriations to the Shallow Draft Inlet Dredging Fund, total estimated recurring funding is at $19.7 million. It reserves $3 million of that fund for Oregon Inlet dredging needs - but not capped at $3 million. Additionally, it reduces the local match of non-state dollars from a one to one match to a $1 to $3 match for tier 1 counties and $1 to $2 match for all other counties. Appropriates $650,000 to the Department of Administration so they can begin the work required for a long term solution at Oregon Inlet – a reflection to what Senators Cook, Brown and Lee introduced in Senate Bill 160 (Enhance Safety & Commerce for Ports/Inlets). Provisions included in the 2014 North Carolina State Budget as well as Senate Bill 791 sponsored by Senator Cook directed the N.C. Department of Administration (DOA) to negotiate with the U.S. Department of the Interior to reclaim the land around Oregon Inlet. And tasked DOA with condemnation proceedings on all federally owned property that is necessary to manage existing and future transportation corridors on the Outer Banks.
  • Hatteras Inlet has been specifically designated for eligibility of the Shallow Draft Inlet Dredging Fund.
  • The Department of Environment and Natural Resources is provided with $250,000 to update the Beach and Inlet Management Plan. The updated Plan shall include a recommended schedule for ongoing inlet maintenance. No later than December 1, 2016, the Department shall report to the Environmental Review Commission on the updated Plan, including a four-year cycle of regularly scheduled maintenance projects for beaches and inlets that currently undergo (or are expected to undergo) beach fill or dredging work.
  • Establishes a Deep Draft Navigation Channel Dredging and Maintenance Fund. The Department of Administration is requested to negotiate with the federal government to acquire the federally owned property needed to manage deep draft navigation channels at the Morehead City State Port facilities in trade for state-owned real property.
  • Allows all coastal municipalities and county governments to remove abandoned vessels from their navigable waters.
  • Directs the Division of Coastal Management to study and develop a proposed strategy for preventing, mitigating, and remediating the effects of beach erosion. The study shall consider efforts by other states and countries to prevent beach erosion, ocean overwash and incorporate best practices into the strategy.
  • Directs the Coastal Resource Commission to amend its rules for the use of temporary erosion control structures in certain situations. It would allow the placement of temporary erosion control structures on a property that is experiencing coastal erosion. This provision will allow more flexibility regarding the placement timing and specifications of sandbags as well.

“The State of North Carolina has 320 miles of coastline and 19 inlets that are avenues of commerce for our state. The shifting of inlets have resulted in enormous losses of public beach access, property, business, and infrastructure, costing counties and cities all along North Carolina's coast tens of millions of dollars in reconstruction cost and lost tax revenue. About 2.4 million visitors travel from all around the world each year to see the outstanding beautiful beaches and also to go charter fishing in the Outer Banks. Additionally, it has been outlined in multiple reports/studies that when given a choice, the public overwhelmingly prefer local seafood versus imports. Having open, dependable and navigable waterways are needed to protect and allow economic growth in the region and for the entire State of North Carolina. This budget will protect and enhance that commerce.”

  • Creates an enterprise fund for the North Carolina Marine Industrial Park. The enterprise fund shall be used for the operations, maintenance, repair, and capital improvements of the Wanchese Marine Industrial Park.
  • Supports three initiatives related to Oyster development (cultch planting, oyster sanctuaries, and oyster research to develop North Carolina oyster brood stock to provide seed for aquaculture) totaling just over $2 million over the biennium.
  • Requires the Division of Marine Fisheries to create a proposal to open certain areas of the Core Sound to shellfish cultivation leasing. There are some very lucrative lease sites in the Core Sound but cannot be used due to a lease moratorium law.
  • Amends the Senator Jean Preston Marine Shellfish Sanctuary. It requires the Division to develop a plan to construct and manage additional oyster habitat and requires that the new sanctuaries along with existing oyster sanctuaries be included in the Senator Jean Preston Oyster Sanctuary Network. Amends current statute to allow a shellfish cultivation lease survey to be produced by using global positioning system data.
  • Reforms the shellfish cultivation leasing process to which renewal leases would be issued for a period of 10 years, instead of 5 years.

“The shellfish cultivation industry in North Carolina could be a much larger part of our economy. We import 75% of the oysters consumed in North Carolina, yet we have the second largest estuary system in the United States and the largest contained in one state,” Cook said. “Last year, Virginia’s cultured shellfish was valued at $64 million. Our state produced only $330,000 worth of cultured shellfish. This budget puts our state on the path to growing this industry and taking advantage of our abundant natural water resources.”

  • Provides additional funds to Elizabeth City State University to stabilize enrollment. The funds will be used to enhance technology related to enrollment and recruitment of students, campus access and safety, and human resource management.
  • Provides additional funding to the Northeast Regional School of Biotechnology and Agriscience in Jamesville, NC.

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.

“My goal for education is every educator’s goal - I want our students in North Carolina to have the best education possible. That’s why we are funding our top priorities like boosting starting teacher pay and increasing funding for classroom teacher positions so we can reduce class sizes,” Cook said.

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.

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