Governor McCrory Proposes $21.5 Billion Budget

North Carolina Governor Pat McCrory (R-NC) unveiled his 2015-2017 budget proposal on Thursday, focusing heavily on job creation, education and infrastructure. Speaking at the Old State Capitol Building in downtown Raleigh prior to releasing his plan for the state, the governor said, “We have had to make tough choices to arrive at this comprehensive, thoughtful proposal, and I’m proud of what we will accomplish through it. The issues our state faces each and every day are thoroughly addressed in this budget, with the priorities of our citizens accurately reflected.”

Education

North Carolina taxpayers have historically made a tremendous financial commitment to education, and this budget continues to build on that legacy. More than $12 billion of General Fund monies will be spent on K-12 education in each year of the biennium. Additionally, Governor McCrory proposes spending $111.4 million in each year of the biennium to increase teacher base pay to $35,000 per year and to increase funds for teachers eligible to move to the next tier on the salary schedule. To support enrollment growth, the budget sets forth an ambitious plan for hiring 1,400 new teachers over the biennium, as well as allocating $128 million to maintain teaching assistant positions over the same time period.

Governor McCrory plans to reward high-performing teachers in this budget by appropriating $15 million over the biennium to implement teacher pay for performance plans. Additionally, North Carolina’s Pre-K program will expand to accommodate 26,800 at-risk four-year-olds. The proposed budget also invests $5 million for community colleges to purchase current, up-to-date equipment and technology used to prepare students for STEM careers.

Health and Human Services

The budget recommends allocating $5.3 billion for the Department of Health and Human Services in 2015-16, and $5.5 billion in 2016-17. That is up from $5.1 billion in the current fiscal year. The $10.8 billion two-year appropriation represents nearly one-quarter of the entire budget. Of that amount, $7.8 billion, or 18 percent of the General Fund budget, is dedicated to Medicaid. The federal insurance program for the poor and disabled is projected to grow $287 million in the first year of the biennium, and $460.6 million in year two due to higher enrollment, higher utilization of services, and anticipated costs per participant.

Despite pleas from some state and national advocacy groups, McCrory chose not to include funding to expand the government insurance program for the poor and disabled, saying at a news conference “we recognize the Supreme Court case could have major ramifications on everything related to health care, including Medicaid.” The budget does earmark $175 million in a Medicaid Risk Reserve to help offset any budget overruns and includes nearly $82 million over the biennium in new funding for mental health and substance abuse services.

Infrastructure

The budget commits nearly $4.8 billion to lay the foundation for Governor McCrory’s 25-year transportation vision, which focuses on connecting small towns and economic centers to simplify citizens’ commutes for work, school and recreation. This includes an increase of $135 million for critical infrastructure investments; $51 million for road preservation and improvements; $36 million for capital repairs and renovations and $10 million to ease congestion in rural and small urban areas.

Following through on a promise made in his State of the State address last month, the governor requests a transportation bond of $1.2 to $1.4 billion for quicker construction of projects. Governor McCrory is asking for a $1.4 billion general obligation bond to revitalize blighted state buildings and to build new, workable and efficient facilities for the National Guard, community colleges and other agencies.

Job Creation

The 2015-2017 budget restores and reforms the Historic Preservation Tax Credit, designed to revitalize main streets across North Carolina. In addition, Governor McCrory provides funds for his Innovation to Jobs Initiative, which was created to convert more university research dollars into products and services that are patented and introduced into the marketplace. To support this initiative, the governor plans to invest $15 million in each year of the biennium in the Venture Multiplier Fund. This capital will be invested alongside private sector dollars in early stage commercial ventures. The budget also provides $2.5 million in recurring money for the Rallying Investors and Skilled Entrepreneurs Program, an initiative of the McCrory Administration whose charge is to develop and leverage existing entrepreneurial management talent and recruit world-class investors to the state.

In addition, Governor McCrory’s budget creates the University Innovation Commercialization Investment program, funded at $7.5 million during the next two budget years and recommends $5 million for the One North Carolina Small Business Program to provide early-stage funding for small, high-growth businesses. Additionally, it appropriates $10 million in each year of the biennium to encourage the production of long-term, sustainable film projects and to further develop the film-making industry.

Military and Police

Governor McCrory proposes to fund in-state tuition for nonresident military veterans at institutions within the UNC system and the state’s 58 community colleges. Moreover, he plans to coordinate and centralize services for military communities, active duty personnel and veterans by creating the Department of Military and Veterans Affairs at no additional cost. The department will be charged with reorganizing programs that protect and advocate on behalf of military bases, promoting the health and safety of North Carolina’s veterans and connecting the veteran population to jobs.

Notably, the budget funds the full five percent step increase for eligible State Troopers in each year of the biennium and provides additional funding to improve crime lab operations and reduce criminal case backlogs. It also allocates $21 million in funding to help compensate and retain the state’s corrections officers and their supervisors.

Streamlining Government Operations

In order to continue customer service improvements at the Division of Motor Vehicles, $30 million is budgeted for technology and equipment modernization. 

Future workers’ compensation costs will be reduced through consolidated reporting and an overall improvement in case management to protect against fraud and abuse. 

Popular statewide attractions such as the North Carolina Zoo, state aquariums, museums and state parks will be transferred from the Department of Environment and Natural Resources to the Department of Cultural Resources, which manages attractions as part of its mission.

Advocacy groups will be moved from the Department of Administration to the Governor’s Office. To strengthen the Veteran Affairs and the Office of the Military Advisor, the budget proposes the creation of the Department of Military and Veterans Affairs

VIEW THE PROPOSED BUDGET

Click here to view the Governor’s proposed 2015-17 Budget