The Appropriations Act of 2014

On Wednesday night, the Senate rolled out its $21 billion budget proposal S744 the Appropriations Act of 2014.  The bill then got its first hearing at 8:30AM on Thursday in the Senate Appropriations committee, bypassing the standard subcommittee process.   It was debated, amended and throughout the day the bill moved through the Finance, and the Pensions and Retirement committees.

Finished with the committee process, the bill was placed on the calendar for second reading for Friday afternoon at 4:00.  Under the state constitution, the budget cannot be heard for second and third readings on the same day.  Often this leads to a third reading vote which occurs after 12:00AM.  Although there is no official notification, we anticipate that third reading will be in the early morning hours of Saturday.

The Governor was openly critical Thursday of the Senate proposal.  House Appropriations chairman, Rep. Dollar indicated that the House will go through the subcommittee process, beginning next week with a floor vote the following week.  The House has also been working on its own budget proposal over the last several weeks which will likely differ greatly from the Senate proposal.

The budget for the short session traditionally only modifies the second year of the state’s two year budget.  However, this budget also contains a number of major issues.  Listed below are some highlight provisions from the Senate proposal which is a 2% increase in overall spending from the previous fiscal year:

Education

  • Provides funds for the new 21-step Professional Status Teacher Salary Schedule with an average of 11% pay increase for teachers who agree to give up their tenure.  This would bring the average teacher salary in NC to $51000, taking the state from 47th to 27th in the national average.
  • Provides additional funding necessary to restore education-based salary supplements for master’s, advanced or doctoral degrees for certain personnel
  • Funds 1000 additional pre-k slots
  • Eliminates funding for teaching assistants in the 2nd and 3rd grades
  • Does not cut UNC system
  • Directs UNC system to develop a plan to dissolve campuses with a more than 20% decline in enrollment, namely Elizabeth City State University
  • Makes cuts to the community college system but further funds programs within the system for which there is a market demand and a skills gap such as healthcare

Health and Human Services

  • Fills the gap in the Medicaid budget shortfall from the previous fiscal year
  • Takes an additional $15 million a year from hospitals as an assessment
  • Creates a statewide base-rate for all hospitals regardless of the level of care provided
  • Reduces eligibility for a number of current recipients
  • Sets aside funding to reorganize and house the Division of Medical Assistance as an independent entity, making it separate from DHHS
  • Reduces Medicaid reimbursement rates to providers by 2%
  • Fully funds the state’s Health Information Exchange

Natural and Economic Resources

  • Provides funding for coal ash management and cleanup
  • Provides funding for drilling, analysis and testing of shale gas wells and funds to market and promote the state’s shale gas resources
  • Increases funding for farmland preservation
  • Provides funding in the Department of Commerce for the Public/Private Partnership
  • Provides nonrecurring funding to the College of Agriculture and Life Sciences at NC State University to support the development of the Department's food processing initiative.

Justice and Public Safety

  • Transfers the State Bureau of Investigation, including the State Crime Lab, from the Department of Justice under the Attorney General to the Department of Public Safety which resides under the Governor.  The director would be appointed by the Governor but serve an eight year term in an effort to depoliticize the move.
  • Requires any lawsuit that alleges a law is unconstitutional on its face be heard by a three judge panel in Wake County

Transportation

  • Allows for online driver’s license renewals
  • Reduces operating and grant funding for the Divisions of Aviation, Rail, Public Transportation, Ferry, and Bicycle and Pedestrian Transportation and transfers it to road building and maintenance.
  • Establishes funding for the Pavement Preservation Program

New/Increased Fees

  • Increases commercial fishing licenses
  • Increases ABC permit fees bars and restaurants
  • New fee charged for forestry management plans from the Forestry Service
  • New fees for companies handling hazardous waste materials
  • Increases highway use fee