SENATE BUDGET EDITION

NC Senate leaders have released their version of a state spending plan for the 2019-21 biennium.  The Senate budget proposal was presented in “area” appropriations subcommittees earlier this week, before passing favorably through full Senate Appropriations and Finance.  HB966, “Appropriations Act of 2019” (a.k.a. the budget bill), was debated during a lengthy Senate session on Thursday, during which, 22 amendments were introduced from the floor.  The bill passed along party lines, 29-18, giving tentative approval for the two-year budget proposal.  A final Senate vote is scheduled for Friday morning.  With passage expected, the bill will return to the House for a concurrence vote next week.  Significant differences between the House and Senate budget proposals guarantee non-concurrence, meaning the bill will be sent to “conference,” where designees from both chambers will work together to find areas of compromise. 

Highlights from the Senate budget proposal include:

• 3.5% average raise for teachers over two years (excluding bonuses)
• $15 million for more principal pay
• 5% raise over two years for most state employees
• 5% raise over two years for correctional officers
• $1.3 billion in additional spending for education over the next two years
• Appropriates more than $32 million over two years to fund 1,000 slots on the Intellectual/Developmental Disability Medicaid Program waitlist
• $15 million for substance abuse treatment programs
• Funding for 100 new school psychologists, as well as other funding related to school safety
• $4.8 billion across three accounts for school construction and maintenance over the next ten years starting immediately
• Funding to implement “Raise the Age” legislation, which increases from 16 to 18 the age at which teenagers are treated as adults for nonviolent crimes
• Funding to eliminate the backlog of processing rape kits within two years
• Increases standard tax deduction - Raises the standard deduction from $20,000 to $21,000 for married couples filing jointly
• Decreases the franchise tax that applies to businesses and extends tax cuts for NASCAR teams and airlines, from 2020 to 2024
• $1.1 billion for the state’s rainy day fund over the next two years
• $15 million each year for GREAT Program rural broadband grants
• Funding to “fight the opioid epidemic”
• Annual fees for hybrid and electric vehicles
• $8.2 million in funding to move state DMV headquarters from Raleigh to Rocky Mount

Absent from the Senate proposal – Medicaid expansion.  The proposal provides for more Medicaid spending, but does not fully expand the program as NC Gov. Roy Cooper wants.  The Governor has said publicly that without Medicaid expansion, he will veto any budget proposal sent to him by the legislature. 

Also missing from the Senate proposed budget, a cost of living increase for state retirees.  Senate leader, Phil Berger, defended this decision by saying it would have placed too much pressure on the state’s retirement system.

Other items that will certainly be of contention when the two chambers come together in conference:

• CON – Senate provision that would reduce the number of state Certificate of Need laws that decide when and where medical facilities may be built, and whether providers can purchase expensive equipment.
• DHHS Relocation – Senate proposal for $250 million construct of new administrative facility in Granville County for DHHS employees currently working at the Dix location in Raleigh.
• Vidant Health Cuts – Senate budget inclusion would cut the Greenville hospital’s Medicaid reimbursement by an estimated $35 million; the provision calls for the state to “no longer reimburse the primary affiliated teaching hospital for the ECU Brody School of Medicine for the allowable costs for inpatient and outpatient services;”  rather, under the Senate budget, Vidant would be treated the same as any other private hospital under the state Medicaid plan.