House Passes $18.9 Budget

Members of the State House approved our version of the state budget this week. The House gave initial approval of the budget on Wednesday afternoon by a vote of 92 to 26, after several hours of debate in committee and on the House floor, and final approval on Thursday morning, 91 to 23. The $18.9 billion spending plan was supported by all Democrats and a majority of Republicans. Members of the House and Senate are expected to begin meeting early next week to work out differences on the state budget for the next fiscal year, which begins July 1, 2006.

Improving and investing in education continues to be our number one priority, and this budget represents the greatest investment our state has ever made in education. The House budget provides more than $10.7 billion in resources to improve education. This total represents more than $860 million above last year’s budget and is in addition to more than $400 million in revenues from North Carolina’s Lottery.

The House budget also provides higher pay raises for teachers and state employees than proposed previously by Governor Easley and the Senate. Public school teachers, community college faculty, and professional staff would see a roughly 8 percent increase. State employees would receive a 5 percent pay raise, plus a $300 bonus. Like the Senate, the House eliminated $44.3 million in spending cuts levied on local school districts in recent years. We also allocated almost $41.9 million to low wealth school districts.

In addition to funding for education, the House budget provides resources to continue the state’s progress in economic development, health and human services, public safety programs, our environment, and our courts, while also providing tax relief to all North Carolinians.

Mental health reforms, which began in 2001, take an enormous step forward in this year’s budget due to $104.2 million dedicated to improving mental health, developmental disabilities, and substance abuse services. The House budget for the Health and Human Services also reduces a child care subsidy waiting list and expands the Smart Start early childhood initiative. It also raises the eligibility standards for the AIDS drug assistance program to 250% of federal poverty level, up from the 125% standard which was lowest in the nation. (I introduced a bill on this issue.)

Unlike the Senate and Governor, the House budget sets aside $53 million in funding to cap the counties’ share of Medicaid expenses at this year’s levels and provides additional relief to counties with the highest populations of Medicaid recipients. Under our plan, Guilford County would receive close to $1.8 million. This relief was a top priority for local elected officials and the North Carolina Association of County Commissioners and I am hopeful the Senate will go along with this proposal.

The House budget provides more than $1.8 billion for justice and public safety programs to reduce crime and keep our neighborhoods safe. We dedicated close to $10 million to hire more than 200 prosecutors, judges, and court officials across the state.

The budget expands the One North Carolina Fund by $11 million and provides $5 million for Small Business Innovation Research grants for entrepreneurs to match federal monies to create new businesses. It continues the Job Development Investment Grant (JDIG) program and provides additional support for growing industries through biotechnology programs and other incentives. Since 2001, JDIG and One North Carolina programs combined have helped created close to 30,000 new jobs across the state.

On the environmental front, the Clean Water Management Trust Fund is fully funded at $100 million. There is additional money for restoration of shellfish waters, and other fishery habitat in conjunction with our ongoing coastal habitat protection planning process. There is money to help impoverished black farmers. I was unsuccessful in my several attempts to seek funding for the Farmland Preservation Trust Fund. We are losing farmland at the 4^th highest rate in the US and are losing access to millions of dollars of federal matching grant money because this program has been drastically under-funded for years. I was successful in gaining funding to establish an emergency drinking water fund to help the 2 million North Carolinians who currently get their water from private drinking wells, whose water might be contaminated. This provision added to the budget is consistent with HB 2186, mentioned in previous newsletters, although the funding ($500,000) is half of that proposed in my bill. Well water has been the subject of a lot of media attention in the past several months, and I am hopeful that we will get some good legislation on this issue this session.

For Guilford County-based projects, less funding is provided for the Furniture Market, but the difference will be resolved in conference with the Senate. Repair money is included for the Charlotte Hawkins Brown site in eastern Guilford County and there is planning money for major projects at UNCG and NC A&T.

In addition to these important investments, the House budget also provides $163.9 million in tax relief to all North Carolinians. The House budget, like the Senate proposal, would cut the sales tax by a quarter-penny, but only reduces the income tax for high earners from 8.25 percent to 8.125 percent; the Senate decreased it to 8 percent. Unlike the Governor and Senate, the House provides a new tax credit for small businesses that provide health insurance to employees.

As promised by Speaker Black and other House leaders, the 122 page House budget was strictly budget items as opposed to the previously passed Senate budget, which was 167 pages and included several proposed policy changes such as a moratorium on new landfills. The landfill issue, which is quite contentious in some of the more rural counties in this state, may be dealt with in separate legislation, and I have a bill on this issue.