GOP senators announce annual spending proposal, which could include raises for NC employees
Uh Good afternoon
Uh I wanna thank y'all for joining with us today
Uh We're here to outline the Senate's 23 to 25
bi annual budget
Uh And uh that proposal follows our promise to keep
spending in check
And in the first year of the biennium the budget
appropriates $29.8 billion
And in year two it appropriates $30.9 billion as we
continue down the road of what economists have dubbed a
slow session
The Senate budget proceeds with caution it infuses dollars into
key reserves like the rainy day fund the inflation reserve
our state disaster relief fund and the Medicaid contingency fund
At the same time the budget benefits North Carolinians by
further cutting the personal income tax rate to help ease
inflationary pains that are being felt by taxpayers
Uh The Senate budget also makes uh an effort to
target funds toward mitigating industry workforce shortages and improving state
employee recruitment and retention initiatives
Critical government operations are also modernized by increasing rates and
fees that haven't been raised in decades
Last year we created the stabilization and inflationary reserve to
prepare for the recession
This year we infused that reserve with an additional $900
million for a total of $1.9 billion in that reserve
Additionally by the end of the first year of the
biennium our state's rainy day fund will reach $5 billion
We look to the future by increasing reserves for water
and sewer projects economic development and establishing a transformative endowment
to facilitate homegrown innovation and research
In addition to targeted raises uh in certain hard to
fill positions and labor market adjustment reserves state employees will
receive a 5% pay raise over the biennium
Teachers will receive an average 4.5% raise over the biennium
This budget increases starting pay for teachers uh by almost
11% for a teacher who starts teaching this fall
They will see a nearly 15% increase in their pay
By the end of the biennium
Last year we were able to increase starting teacher pay
to $37,000
Uh uh That uh starting pay will move to $39,000
in 23 24 $41,000 in 24 25
And those numbers do not include the state funded local
supplement uh which in many counties uh increases uh teacher
pay by $5000 per year
By the end of the biennium average teacher pay will
be $59,121
Uh This keeps us uh on par with neighboring states
Uh The increase to starting teacher pay along with uh
the UN C system keeping tuition flat at our universities
uh should help encourage more adults to pursue teaching as
a profession
Last year we started an initiative to give state agencies
more flexibility to determine merit based raises to help retain
employees
We heard great feedback uh on that initiative
So we've doubled that amount for community colleges and state
agencies with our surplus
Uh We're able to speed up planned tax cuts and
further red reduce the tax burden on North Carolinians
The budget cuts taxes by $1.2 billion for all North
Carolina families and businesses over the next two years
This accelerates the scheduled reduction of the personal income tax
dropping it to 4.5% in 2024 ultimately to 2.49% by
2030
This results in $6.6 billion in tax savings for North
Carolinians over the next five years
Those are just some of the top level uh in
uh some some top level information about the budget
I'm gonna turn it over to Senator Brent Jackson for
additional details
Thank you Senator Berger
Good afternoon everyone
Last year the economic development Partnership of North Carolina was
tasked with one million steady $1 million study of potential
mega new mega sites
Based on the success of that initial study the study
has been broadened to include sites now with fewer than
1000 acres
This will help expand the availability of economic development opportunities
by large land swaths of land
Additionally this budget includes 10 million in reserves to support
local governments conduct conduct their due diligence on new mega
sites identified in the study funded last year and making
those sites shovel ready
We need to extend economic vitality into every corner of
this state to do so
We must take a visionary approach to creating jobs in
our rural communities
The Senate budget allocates $1.4 billion to improve applied research
outputs at the UN C system schools and to help
commercialize the result of that research simply put we are
leveraging our state surplus to help develop homegrown innovations
Importantly this initiative will partner with UN C school systems
outside of the triangle as well
The initiative is partly a bid to leverage the UN
C system for rural economic development and partly a bid
to improve North Carolina's competitive position relative to peer states
If approved in the final budget the funding will be
available for down draw draw down by the N C
innovation
A nonprofit organization chaired by retired financial corporation Ceo Kelly
King
For most much of the past year a leading national
economic research firm was in the field conducting extensive quantitate
qualitative and quantitative research on North Carolina's innovation ecosystem
The data reveal good news and bad news
The good news our population centers are landing major economic
development projects and North Carolina is an absolute powerhouse on
research and development funding
Our 13 billion in annual academic and industry research and
development ranks ahead of the national average of most of
our peer competitor competitor states
However the outputs of that R and D funding doesn't
measure up to the size of our research base
Despite top universities and human capital we significantly lag our
peers and national averages in commercializing our research especially in
areas outside of urban centers
Our rural North Carolina N C innovation will deploy a
data center model to target applied research towards actual market
needs then help commercialize that research
This will help generate home grown companies that will stay
in North Carolina and hire North Carolinians
While the major economic development announcements our state has had
over the last few years are critical and will create
thousands of jobs N C innovation will partner with our
world class universities to build an engine to create home
grown industries and jobs of all shapes and sizes in
our rural areas for decades to come
In our agriculture budget we pro provide almost 19 million
for a new agricultural manufacturing and processing initiative to incentivize
the development of food processing facilities across the state
The intent of the initiative is that with seed capital
funding more agricultural community manufacturing facilities will be loc located
closer to North Carolina farmers which in turn will increase
the value of the products they grow
We also increased funding for the Department of Agriculture and
Consumer Services
12 research stations in both years of the biennium for
new equipment and operational support
The budget also includes 20 million for the stream flow
rehabilitation assistance program for ongoing restoration and maintenance of streams
in support of flood mitigation efforts
There is also six million non recurring each year distributed
equally to six food banks in North Carolina and $100,000
for administrative costs split between those six
We also allocate additional state match dollars to bring down
enhanced federal receipts for water and waste water projects grid
resiliency and to address and other emerging compounds and lead
service lines in water systems
We establish policies that will benefit natural gas pipeline developers
by prohibiting the Department of Environmental Quality from refusing to
accept a permit application or issue a permit on the
condition that these developers must first receive another environmental permit
except when required by state or federal law
Additionally we cut red tape by reducing processing times for
air air permits issued by D E Q and expand
the scope of construction activities that may take place prior
to businesses obtaining an air permit in working with D
E Q to reduce bureaucracy for the regulated community
The Senate budget fulfills D E Q S request to
increase permitting application fees and other annual fees that haven't
been raised in decades
And now I ask Senator to come and talk come
up and talk about some of our health and human
services budget items
Thank you
Thank you Senator Jackson
With health care costs consistently rising faster than inflation
The Senate budget gives the state treasurer more cost control
levers to achieve savings for the state health plan such
as reimbursing lower priced premiums for state employees and their
dependents who opt to purchase health coverage outside of the
state health plan
This will be effective January 1st 2024
The budget also establishes a savings target for the state
health plan of 100 and $25 million in 2026
To achieve these savings
Urban hospital licenser is contingent upon meeting the requirement in
the future for the benefit of state
He state health plan policy holders after this budget becomes
law Medicaid expansion will go live the federal sign on
bonus for expanding Medicaid results in an additional $1.6 billion
of non recurring influx of general fund dollars based on
5% of Medicaid cost
The Senate budget prioritized these non recurring funds by focusing
on transformational behavioral health infrastructure needs and addressing the health
care workforce shortage
We also look forward to our UN C system schools
to address these shortages
We included $20 million for UN C Pembroke's new health
care oriented programs
16 million to support health care degree programs at E
C U including expanding the brody School of Medicine class
side size increasing the number of nursing degrees at the
college of nursing doubling the size of physician assistance program
and growing the service clinic under the health psychology doctoral
program additional nursing facilities at community colleges and the UN
C system will receive a minimum 10% for salary increases
As part of the Medicaid expansion bill we started slowly
chipping away at our certificate of needless laws
This budget unequivocally takes the sledge hammers to those archaic
and unnecessary certificate of need laws that remain on the
book
These common sense changes will build on the C O
N reforms we included in the Medicaid expansion package and
drive down costs and increase availability for patients in that
package
C O N was repealed for inventory surgical centers MRI
machines and counties population 125,000 to protect rural hospitals in
smaller counties
We take this a step further in the budget and
remove the unnecessary C O N barriers and allow inventory
surgical centers and facilities within our MRI machines to serve
in all counties that do not have a hospital
We also repealed the C O N requirements for mobile
MRI machines Linear Accelerators physician office based vascular access and
kidney disease treatment centers
Additionally the package allows single specialty A S CS to
change to multispecialty without having to go through the C
O N process
There is also a new C O N exemption for
relo relocating with um an existing health service or facility
within the same county
It's way past time to do away with certificate and
these laws in this budget take significant steps towards that
Beyond that we include $15 million in each year of
the biennium for free and charitable clinics to provide care
to low income families and individuals across the state to
open in 350 additional innovative waiter waiver slots
We allocate an additional 10 million each year of the
biennium for individuals with intellectual and developmental disabilities coupled with
that is $60 million in each year to increase the
wages of direct care workers who provide services to individuals
on the state's innovation waivers
There are 50 million in each year of the biennium
to permanently retain at least half of the COVID-19 add
on amount in the Medicaid reimbursement rate for skilled nursing
facilities
And we include 100 and $10 million to increase behavioral
health provider rates on a recurring basis
And Senator Lee it's now your turn
Thank you Senator he saving the the best for last
Um A as many of y'all know the education budget
makes up over 50% of our appropriations in nearly every
budget since Republicans have earned the majority
We've increased funding for education in in a very methodical
way
Um As many of you know school choice has been
a core priority for the Republican General Assembly
As many of you know from a a press conference
we had not too long ago with opportunity scholarships and
Senate Bill four oh six that creates this sliding scale
of availability for scholarships uh for students to attend uh
private schools
Um That's something you're gonna see in this budget as
well
The budget creates a new school health personnel allotment as
many as you know we had something called instructional support
We ended up pulling out the school psychologist in the
last uh biennium and now we're moving uh nurses counselors
uh and social workers
And then adding on top of that another $10 million
of occurring which hopefully will generate uh over 100 and
20 more nurses counselors and social workers
We didn't think they needed to be in the same
allotment as a media specialist
And so that's why we uh moved along that line
The budget continues our uh focus and commitment to increasing
security for our schools uh by including $35 million in
each year of the biennium $70 million in total for
school safety grants
And remember you know this isn't just um uh for
S R Os and what you traditionally think of school
safety it's to help students um in uh in crisis
and have some other programs that are incredibly important to
our school systems
The community colleges are on the forefront uh the leading
edge of training North Carolinians for high tech manufacturing jobs
uh that we're seeing here in North Carolina
And that's why the budget provides about $70 million to
develop and expand um programs and courses in high demand
career fields including nursing and other health related programs
It includes five and a quarter million dollars
Um in each year the buy and to provide aids
to students who are on track to graduate but are
the risk of dropping out and those funds are really
focused um and targeted to Elizabeth City State State North
Carolina A and T North Carolina Central Un C Asheville
Un C Pembroke and Winston Salem State
This budget increases funding for needs based scholarships for public
schools and universities to increase financial aid for community college
students as well
Uh Over $12.5 million recurring and 25 recurring in the
second year
Um as someone who's from the Cape Fear region Wilmington
North Carolina and someone uh who's worked on the Water
Safety Act
Uh since I think 2017 or 18 we've included uh
the Water Safety Act of 2023 which was in a
bill that I introduced to provide significant funding for research
discovering new mitigation tools
Um And to help the North Carolina collaborator continue its
partnership by issuing grants to some of our uh research
institutions uh to address p and other emerging compounds
So thank you very much and I'll turn this back
over to Senator Berger
and if I can find my place uh even if
I can't um I wanna I wanna thank our um
Appropriations chairs uh there's so much more included in the
budget that's very difficult for us to give you uh
uh every detail
Uh but uh uh it will be uh in committee
tomorrow
It will be online at four o'clock today
Uh and um uh votes are expected on this Wednesday
and Thursday uh another scheduling matter so that uh you
know uh we are giving notice uh maybe as uh
as I speak to uh to the Democrats that uh
we will have uh Senate Bill 20 on the calendar
tomorrow uh for uh the override vote
And with that uh we will be happy to take
your questions the acceleration of the first rate cut
Is there any other tax cuts Uh There are some
um some targeted things dealing with um uh I think
uh we extended the um uh the airline fuel uh
uh exemption for um uh for large uh airplanes
Uh We also uh have a uh reduction or an
elimination of the sales tax on certain parts that are
used in the uh repair of uh airplanes
Uh I think those are the highlights as far as
the tax reductions are concerned
Thank you
Uh I think our calendar uh will uh come out
and uh we are scheduled to start at four o'clock
on the uh that's correctly
1.4
I think it may be 1.425 billion
No no um in consultation with uh members
Uh and uh doing some checking
Uh I think what they were asking for was $250
million a year for um was it 10 years And
uh uh our our thinking was that it was better
to go ahead and end that as opposed to uh
an annual appropriation
Um
Also I'd like to make sure I heard it right
You said 4.5 and 5% first 37 very much
So
Uh we also have included uh the labor market adjustment
reserve
Uh And uh that will uh enable uh the uh
the agencies and the community colleges to uh look at
areas uh where they have particular shortages and provide uh
additional uh pay raises there
Uh The um uh there was uh one other piece
on uh
well also in the community colleges uh there's a significant
amount to uh provide raises for uh instructors in in
certain health fields
How much is what's sure how much 96 $96 million
Yeah
Uh in a targeted fashion it should address um some
of the issues that are out there what we had
last year
That that will not uh that is not uh on
the education side
No
Well um there's a significant raise overall for uh beginning
teachers
Uh We uh keep hearing that uh there's a real
problem as far as getting folks into the teaching profession
Uh So by raising the beginning pay uh from uh
37 to 39 then to 41 plus the additional uh
money that in uh many counties is uh a $5000
state sponsored supplement uh for teachers uh the effective beginning
pay raise for uh teachers in North Carolina is uh
more than uh $46,000 at uh in the second year
of the biennium teachers places for starting was a third
Yeah
So um they uh we have the step increases that
uh the teachers uh will receive
Uh We also have the uh the the the uh
uh raise that is uh across the board
Uh There's also uh a fund for the um advanced
teaching roles uh that uh there's that program is uh
is being expanded uh which will provide for lead teachers
uh $10,000 a year
Uh and for participating teachers I think it's $3000 a
year more about the changes
So you're talking about mhm Limitations is let you deal
with them
So currently uh with currently where the limitation was was
counties under 100 and 25,000
Um If you were over that you were not under
C O N this would change it so that the
county under 100 and 25,000 that do not have a
hospital located in that county could also expand those services
And then um the other question uh something about this
what came out as a state health plan savings uh
um this is um this would be a matter of
contracting
This is different uh and exclusive from the savings promised
for a change of provider who recently bid for that
This would be in addition to that and would allow
the state treasurer to uh enter into those contracts and
uh would tie the licensure of urban hospitals to make
sure uh that the treasurer achieves his uh savings of
100 and $25 million in those contracts
Compelling member
So I think that's a large part of the process
the treasurer is going through and asking for uh this
is a specific tie to the uh amount of cost
to the state and the state health plan
Uh that's
that if in the next round of state health we
don't save 100 and $25 million
Uh I am saying that they would have to meet
that amount of savings to the state in order to
uh continue for their license
This is separate from the round of negotiations with a
new provider
that is tied to the clear pricing project
The target is the savings overall for any of those
hospitals to be
It is limited to urban hospitals
Do not understand how this we'll follow up that that
I don't disagree
Uh This would come in if you have a different
question
Uh this was saying if there is not 100 and
25 savings it would bar the relicensing of urban hospitals
Yes
Uh over their licensing time and and and a hospital
in the state
No
So you you would shut down
the the the the put here is that the state
the state health plan would save 100 and $25 million
Or or the state health plan will save 100 and
$25 million
I think that's pretty clear compared to the alternative I
believe in a county over 2 25 if I'm not
mistaken is the number that's on there
But I'll get the specific number to where but that's
the number that sticks in my head is 200 population
of 220
There's currently obviously some things in the budget go can
have heartburn about about choices not having the types and
raises that he had hoped for
What what other provisions you you want to tell us
about where he like for instance the FBI will the
FBI being um I gave up a long time ago
trying to read the governor's mind
Uh I I he'll he'll see the budget
Um I'm sure we'll hear from him
What about the what about us I don't think it's
not in there
Is it significant greenhouse gas emissions provision in there as
well Cap and trade things that the house had in
its budget to prevent the governor from I believe that
I believe there are some uh some things in there
dealing with permitting but I don't think that specific uh
let let let's let's try to raise hands and uh
that sort of thing because uh some folks are waiting
and yeah
Ok
I'll go to you and back there
I haven't believed I get to the bottom
I don't think there's that sort of an earmark in
the Senate budget Senate version of the budget as far
as uh stabilizing the childcare industry or child care access
that is attracting
So I think the the rate increases that we have
for uh early childhood are in here uh that are
dealing with that
We we have directed the federal funds that we still
have that were previously used for salary enhancements to continue
to be used for that
Does the bill have anything to do with the the
sports gambling that pass in the house And there are
no gaming provisions in the bill that still you
So under this bill university
So uh y'all have heard me say multiple times that
uh there there are um there there's a labor shortage
across the economy not just in state government and uh
one of the uh levers that we can deal with
uh is uh is salary and uh we believe that
uh because of the labor market adjustment reserves and the
uh the raises that are in here uh we will
uh utilize that lever uh hopefully to great effect
Uh But time will tell um until we get to
the point where we have enough people who want to
work uh in the uh in the market
Uh I think we're gonna continue to see in state
government and in the private sector one of the last
things that we want to do is create a situation
where state government raises pay so much that uh it
exacerbates the uh the larger economy as far as uh
availability of workers C O N law reform was a
sticking point last year with Medicaid expansion that did happen
So it happened this year with some of that adjusted
but now that it's rolled into the budget it sounds
like could that be another point of controversy with the
House that um I I I suspect there'll be a
number of things in this version of the budget that
uh will create conflict with what the House did and
we'll work that out
Uh We're we we intend to pass uh our version
of the budget this week
Um That'll set up a conference uh because I'm pretty
sure that the House will will not concur in the
changes that we make
Uh So even if it takes us three weeks uh
in conference that's still the middle of June uh getting
it done
So I think we'll uh we'll we'll we're on track
to get the budget done before the end of the
fiscal year um last year
And
uh could the same thing happen or whatever is on
the Senate budget on I I don't anticipate us uh
reaching a stalemate with the house
Um We we you know we'll see what happens but
I don't anticipate that
Um last week the there is a fiscal note posted
showing that there is anticipated loss of state funding to
uh traditional public schools with opportunity scholarship vouchers as one
to just that what the particular impact is
So um if if I if I'm recalling the study
that uh you mentioned something about $200 million Just remember
for every child that opts for an opportunity scholarship uh
and goes to a private school that child is not
a child being educated in the public schools
And it makes no sense to me to uh provide
money to the traditional public schools for Children that they
are no longer educating
No you are Senator Lee can talk more about you
were saying about I mean allotments mean you can what
will that mean for So the way the alignment system
worked previously is you had uh a bucket where you
had the health care related fields counselors nurses school psychologists
along with media specialist and was called instructional support
We um moved the school psychologist out in the last
uh budget cycle and assigned designated funding
And so now we're moving um some of the other
uh counseling health care related uh folks into that allotment
as well and then we're adding funding to it and
that will enable us to make sure that we're having
the ability to fund more across the state
Mhm
It so it's gonna be based on the allotment system
Um I think we're gonna have over 100 and 20
additional spots within that particular allotment
The problem in the past is if it was an
instructional support allotment and you poured more money into it
there were things other than school nurses psychologists and things
like that
So we segregated it out
So as we made those investments we would know that
we would have um what we were shooting for with
those investments
Final question on the on the tax cuts
Uh you senator you and some other finance chairs had
a bill last month that had made the 2.49% effective
in 27
This is in 2030
What why why did the we uh we want to
smooth out the um uh the the revenue side of
things um as you know these things are always scored
on a static model
Uh It's our belief that uh in a dynamic economy
and a growing economy that uh the static uh projections
as far as revenue uh are concerned are are uh
are gonna run short as they have over the past
uh seven or eight years
So uh but to address some concerns there uh obviously
the goal was to get uh below 2.5
Uh And that's what we do and it matches up
with uh the uh the corporate income tax rate going
to zero
And thank y'all Travis
I'm happy to talk to you
Nobody else does but I mean I'm happy Jackson describes
some stuff on natural gas and air from the I
think what's in my mind right now is y'all accused
the governor a few years back of trying you know
forcing duke energy to put money into the slush funds
of the Atlanta
Because pipeline over that permit how is that different from
demanding savings from hospitals and the state health plan for
pulling their licenses How how are those two things uh
the intended vision and as it will work we yeah
we'll reduce the cost of uh to the state health
plan of 100 and $25 million
Uh from the information from the treasurer and his plans
were going uh those costs are growing out of control
uh for this state and far exceeding anything we're seeing
in inflation or others
Uh This says we will reduce those by 100 and
$25 million
Uh a small portion of the expenses of the state
health plan and it puts in uh provisions that guarantee
that that will occur
And and Travis remember we we recently passed uh the
provision which uh infuses how many billion dollars into the
hospital systems of the states for uh Sure man
Right
We we we've got it certainly not
We've got to do something to address the uh the
increase
Thank y'all