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Senate | June 15, 2015 | Press Room | Press Conference: Senate Budget

Full MP3 Audio File

I think we're ready to get started. Good afternoon and welcome to our presentation of recent outline of the budget. Give you an idea of what we're going to do, I'm just going to give a timeline kind of broad strokes and then we're going to turn it over to our appropriations, finance and our health and human services folks so they can give you a little more information then we'll all be available for questions and be more than happy to take your questions. We will today begin the role out of the Senate version of this years budget, it will start with the appropriations sub -committee meetings this afternoon at four o'clock the sub- committees will have their provisions and their money reports. Tomorrow morning we will have the appropriations committee meeting at that point amendment will be eligible folks who want to offer amendments can offer the amendments in the appropriations committee tomorrow. After appropriations the budget we'll then go to the finance committee to deal with the finance portions of it then pensions retirement for the provisions that deal with that subject matter. Then we expect to have a full day on Wednesday to have the budget on second reading again amendments would be eligible at that time and then we hope to have everything wrapped Thursday and have the budget on its way to the house where we expect a grand reception and substantial support so with that alternative to Senator Brown Thank you Senator Berger. Grand reception, that'd be fun I'd say the Senate is proposing a balanced budget that protects the state's long term fiscal health, smartly invest in public education and core priorities cuts taxes and supports job growth and economic development statewide. With the prudent overall increase of about 2% our $21.47 billion plan keeps state government spending in line with population growth and inflation and it comes withing a quarter percent of the Governor's proposal following responsible budgeting decisions, major tax reforms, historic tax cuts enacted by Republicans, North Carolina's expected to have a $400 million surplus in this years budget. Our proposal uses the additional dollars to help shore up rainy day and repair and renovation fund by 800 million and deliver broad tax relief to North Carolina families and businesses to help grow the state's economy. Reducing the personal income tax by more than $3 billion dollars over the next five years alone. It also makes good on repeated promises from state leaders of both parties to end the hundreds of millions of dollars from the highway fund to the general fund and ensure that money is finally spent on building and maintaining safe roads and bridges. Our plan also takes significant steps to ensure highly qualified teachers are the head of every class room in the state, a measure proven to have the greatest possible impact on student it offers an average 4% pay raise to public school teachers, and fulfils a commitment to increase starting teacher pay to $35, 000 making North Carolina regional leader and far more attractive to those considering the profession, and it increases funding for classroom teacher positions by more than $270 million over the biennium to reduce class sizes and kindergaten to 1:17 and in grades on through three to 1:15 teacher student ratio, a level research has repeatedly shown is key to academic success and early grades. You'll also find the Senate's comprehensive plan to make North Carolina more competitive for new jobs and laying the ground work for reforming the state broken Medicaid program. Voters expect us to keep our promises and maintaining the budgeting and spending discipline and commitment to pro-growth tax reform that help give us the $400 million surplus this year. Our structurally sound sustainable budget does just that are setting priorities, living within our means and taking steps so that North Carolinian's keep more of their own money. In education, it increases funding for K through 12 public schools by $453 million, for community colleges by 5 million and for the University of Carolina system by 160 million over 2 years. Fully funds enrollment, grows for [xx] twelve community college and university continues major education reforms, to insure local school districts are in compliance with the Leandro court rulings that affirmed every child in this state has a constitutional right that have the opportunity to receive the sound basic education it also requires local districts to implement a plan to improve

student performance at schools that are on school performance grade D or F provides an additional 58 million for text books and digital resources over two years, allocates an additional 12 million to fully fund the requirements of the Excellent Public Schools Act, including the rate to achieve program created to ensure students can read proficiently by 4th grade. Increases support for the opportunity scholarship program a close to 7 million each year, provides instate tuition for the veterans at the states community colleges and university and increases the spending for the National Guard Tuition Assistance Program, and Health and Human Services that creates a new Health Benefits Authority to administer North Carolina's chronically troubled and over budgeted Medicaid program, and lead the state toward a patient focused, cost minded vision for the program against the process of Medicaid reform through new system that will achieve budget predictability and sustainability, promote competition and ensure Medicaid recipients receive the best care at lowest cost for tax payers. Increase Medicaid payment rate to primary care positions at 22% into obustertritions at 26.5% to help expand the number of positions except premedicate patients, encourage greater use for preventive care and reduce necessary emergency room cost, build a stronger health information exchange to increase access to critical information that helps doctors and hospitals to develop better tools for improvement health outcomes, prevents monopolies and allows low cost per cost health care providers to compete in an open market are responsibly facing out outdated and needs system by 2019, expand the budget of the office of the chief medical examiner by 35% in the first year and by 63% in the second year to ensure county medical examiners are better trained and better paid, replace absolute equipment and make regional autopsy centers sustainable, extends the Forster care aid to better support fosters of children as they transition to independence, we also extend the state development investment grants program for foundation two for providing an additional 5 million in one term funding, it also meet current job maintenance and capital development obligations the health maintain jobs and rule North Carolina. Create a new economic development tool for trading in major manufacturing project like animal bills and neuro-space manufacturers. I commit to investing at least 750 million and creating at least 2000 newly hope North Carolina jobs. Reduces the tax burden on North Carolina families all businesses by cutting the postal income tax rate from 5.75 percent to 5.5 percent beginning in 2016 it keeps the promise of lower and corporate income taxes by allowing the rate to fall to 4 percent in 2016 and 3% in 2017 and moves to calculating corporate income tax on the basis of a single sales factor over three years. Streamlines and reduces the franschise tax at 43 percent carrying more respective various states while profit tax, although it's large with small businesses, in all areas of the state to receive a fair share of sales tax revenues are phasing in a new system where 80 percent of sale tax revenues were allocated based on where people lived for 20 percent allocated based on the county, for a sale takes place. Provide additional funds to support rural economic development grant programs, bring a total annual funding to $17.5 million. Provides 6 million on non-recurring funding for the one North Carolina Small Business Program urge grants to early stage technology companies. Directs that the role infrastructure authority grants to be allocated to local governments In Tier one and two Counties and in rural census tracts of Tier three counties. In Agriculture and the Environment it increases funding for the claim order management trust fund and the parks and restaurant trust fund improves efficiency by creating a new stream line department of natural call for resources and I would say the state zoo, aquariums, museum micro sciences, and part systems. Expand support for agriculture industry and provide additional funding for dredging to ensure viable economic activity at North Carolina coast then continues, and justice in public safety in increases planning for central courts system needs like interpreters, expert witnesses and juror fees and more than 30%, an allocation additional of 5 million to support operations at administrative office of the courts, provide more than one and half million over two years to increase the

capacity of the state efficient business forward, it takes step to address the long standing backlog at the the state crime lab, by creating six new technician positions, and providing funding for outside post pschycology and DNA analysis to ensure cases are processed more quickly, wants equipment and instructions to train law enforcement officers on appropriate use of force, increase the recurring for vehicle replacement for the state how I prefer over 60% and provides significant additional resources for vehicles for the state bill of investigation and alcohol law enforcemnet. In transportation it eliminates 260 million in transfers from the highway fund to the general funds regarding transportation revenue as spent on building and maintaining roads and bridges, continues implementation of the strategic transportation investment law past two years ago to remove politics from the transportation decision making process, increases STI funding by 334 million which will add seven in new hubway projects and allow numerous to be accelerated over a 10 year period without incurring any new debt, adjust envy fee to reflect inflation since the last adjust of death aid ago, increases and stabilizes A from this municipality for providing cross to 300 million over two years for maintenance of city roads, included 445 million to replace structurally depths and deficient wages across the states as 66 million to employ the condition and safety of secondary roads and increase the recurring funding for pavement preservation to $100 million. Extended life from an additional 8, 270 miles of roads. In salaries and benefits we followed Governor McCory's lead in providing targeted market-based pay raises to attract and retain highly effective state employs. We fulfill the general service commitment to increase starting teacher salaries to $35, 000 and we offer staff increase to assist press schools principals and ensure that all classroom teacher salaries are paid all through recurring dollars. We provide 21.3 million each year to raise pay for community college instructors all for staff increase for state highway, patrol troopers, clerks and magistrates and invest more than 38 million over two years to boost salary for correctional officers. We  also support for North Carolina military investments by doubling the governor recommendation to establish more efficient cost more efficient state department of military invade on suppliers and provide adding close to 1.7 million to support military installation, we provide funding to implement the achieving a better life experience act to help dissabled children under there parents, side aid to meet the cost of there disability and we adapt the governor proposal to create the department of information technology which is expected to serve 30 million dollars for the buying I would do same duplicate spending and increasing cosolodation and aye, any we're trying to answer any question?  Quick question, first time employee right we feel like, before you can do and cross the board [xx] the imbalance in pay taking care of her first.  Okay and real quickly you mention on new department on natural and cultural resources will that be combining dealer and [xx] to Dinar we thank Dinar signatory agencies, but I guess culture resource are Dinar and free aid and entertain alter resources that can manage all of our attractions across the state.  If one of you could fill backward on the teacher raises, so the 35, 000 I understand that and as the step increase that helps that means that when you hit the next step there's money available to may be up three or four thousand dollars. Are the base step amounts going up as well? Yes sir, each step amount is going up it's a little over 4% pay raise for teachers, on average. So each of the stepping increases are going up on average 4%? no the total average is 4%, the earlier teachers have a bigger increase than some of the experienced teachers question about the dear at schools that would need to institute improvement plans, first of all should those expecting what kind of resources from the state to implement those plans, and secondly is there anything in your budget that would change the way in which schools are graded? And I'm talking about proficiency over time versus this point in time? Nothing there to change how schools are graded, we don't think money is the answer,

I think, and Senator Burger may want to touch on this. But we feel that the money is adequate. In most cases it's the leadership in those particular LEA's that's created the problem, and we think we can identify some of those problems and try to address them. As far as money is concerned, I think if you look at the systems, that continue to have challenges as far as success is concerned, many of those systems are systems that are on per people basis, already received substantially more than average on state wide basis. So, our feeling is that additional not necessarily needed. The real need is additional tools on the part of State Board of Education and and on the part, in some respects of the local system, to work some of the things that we know can be successful. Is the new health benefits authority in DHHS, is that carving out Medicaid specifically and making that a separate department as has been discussed? It's I'll make it Senator Hise, maybe to touch on exactly how it's like that. It helps invest parties. The Health Benefits Party is not under the department it will be a separate entity. In State government we saw on the house proposal of the desire to move the legislative authority to the department, we agree with the sentiment but would have more confidence in an independent and appointed board and authority that will have those type of decision making over Medicaid as a whole, the legislature would set the budget amounts, they would be able to submit any spouse or changes to medicaid as a whole as we move to a free for services. Offer free for services. Fee for services include more networks, managed care? Fee for service, we would look it about two years. It would be the remaining time we would pay services and brief they would then move to fully capitulated payment the Senate plan for reform would have a hybrid model that would have three state wide entities which could be either manage care organizations or provider layered entities. It would furthermore already we didn't divide the the state into six regions and each of those regions could have two additional entities in the game that could only be provided identities so there is an allowance for main care organization to be on the statewide side of this coin but provider length entities could either be statewide entities or could be regional. Sir, you said that you were going to make a transfers 260 million transfers which I'm assuming is how we controlled it? That's right Is that going to be all in one year as it plays out? It's all in one year can anyone speak to the Film Grant Fund? How about we ask $10 million for each year for the Film Grant Fund? what period of time you've got to phase-out the top of the lead[sp?] process? That is a three-year phase-out, or three-phase to be the second place and I believe in 2017, the first place will be immediately second place in 2017 and then it would be about a year and a half after that we would completely eliminate CON[sp?] in the state. And I get to specific place, following on each one as we move forward but our first phase is basically those areas that we didn't feel were limited by the caps on by CONS[sp?] anyway that was coming here it was just an unnecessary regulatory version burden on those industries in the second phases and third phases, we're getting [xx] we may have been in control having more impact on controlling growth we have talked about the Governor's bond, one does the transfer in deed the transfer has any thing to do, any effect on governor's bond or you can also speak to ONO because the governance requires that long to. Well I think we feel in the Senate that this is a better plan than a bond for transportation, we generate about 350 million dollars moving forward every single year for transportation projects where you know spend the money and those dollars are gone. So, this is a better long term so this is far as the other bond package, we are still trying to see what kind of interest our members have moving forward, I think there is some interest there, and may be you will say something on capital before. We thank you all in all.  300 million dollars, you know you evenly explained between the university and general government, the

hard in transportation here is that rather than borrow, a billion or a billion and a half dollars. If we could put three hundred plus million dollars and additional dollars in the transportation, am feeling that we could to build projects that are not being built properly and do it without borrowing money. [xx] that's kind of big MedicAid, the government is trying to have a [xx] of about a 175 day per MedicAid, and Saturdays? we still have 180 something Medic Aid reserve. also wave me about 350 million to help with transition in Medic Aid as well in the hoods. I hear you talking about a lot of numbers am spending more in a lot of places and yet, overall there is still percentage increase. are there cuts in there to pay for some of this increases? Really not many cuts in in here, there is a few but very few, the small amounts cut, yes. Alright, do you have a bottom line for what your House Bill 117, your tax package is going to cost for us just to bring in for this? Again, I think you saw what our last tax package did and we feel confident that this will do the same. We think generating energy in the economy is important and it's a balanced approach.   So in these teacher pay rises are you moving towards the plan now of rewarding teachers like the STEM classes or in hard to fill school district schools? Have you moved that direction?   Again, we've addressed this especially with Leandro Ruling, we are really trying to narrow down with the DN[sp?] F school on where the real issues are at. You can have some LEAs or may be you got one or two schools that maybe are DNFs[sp?] or you can have a system where all the schools in a particular LEA have problems, and if you can identify those systems that truly have a problem and that is why we want and try and put most tapes. How much do they fund?  500 million [xx] 300 million and are enough this is 1.15 billion [xx].  You have mentioned regarding rules [xx] since your free counties, could you talk about that a little bit? Help me there, Wilson's distracting him. OK.  Basically what we've seen the Tiers one, two and three system is not working as adequately as we'd like for it to, as it did years ago. So what we're doing now is going by the census tracts because actually tracks within Tier three counties that are as bad a shape or worse than Tier one and two, and so they're taking those census tracks and putting their money through those areas as well. Why not do that for all tiers?  Well, Tier one and two is already covered under that, this sort of puts on that same footing for the pockets in two or three counties that are having the economic depressions Senator Brown, can you talk a little bit more about the incentives and economic portions of your budget. You mentioned Film Grant, what about there's a lot of stuff in the House budget when it comes to that. What else is in your budget? Is there preservation, Credit [xx]? That is not on our budget. We have always felt with tax reform that making as a level a playing field as possible is important and we also always felt like it needed to be a balance in any kind of reform to make sure we take care of existing businesses as well as try to attract new businesses, and I think we've taken that approach in the Senate for the last four years and I think thats the approach will continue today. How tough do you think those negotiations will be with the House, and is this going to be definitely handled inside the budget as a close to you the last hour of session probably get something? It is in the budget and I feel like we can sit down with our House counterparts and work through it. we knew exactly how it's going to work [xx] It's like any other conference. Anything happen with renewable tax credits? that's a safe harbor right? Nothing changed with renewables. So is that going to expire at the end of the year? It's not in the budget, nothing in the budget. could you re read what happened to the votes ask for some help, some financial help, have I address that? There is some additional money for the ports in the budget.

 How much? 35 million. Is that intended to go to any specific project or initiative or anything? Anyone want to address that? No that doesn't go to any particular the project is 35 million in each year and that would go to the ports authority and they would use it mainly for improvements and whatever they need. You mentioned increases NDMV fees, are there other fees? Or that we can expect to see increased in this budget? those are the large amount there're a few other fee increases, autopsy fees, those type of things, but those are the major fee increases they haven't been changed since 2005 the change we made was less than the house changed, and it's really I heard the number on the base is pretty much on inflation. How much was in your budget? It's about 20% increase, in rates about 100 million. Is that how you get, you mentioned you're going to have $300 million more for road buildings because of this, and it's because of the transfer, and because the DMVPs. Right it's a pact. Yes. The bulk is a transfer, elimination [xx] transfer the other [xx] Medical tax deduction, medical expense tax deduction, sorry the house wanted to restore that [xx] something [xx] as well. There's a there is a provision that modifies the deduction, if you'll take a look at the [xx] was a rolled out in [xx] its first I think that will address about 93% of those that have that issue. So, everything in the PCS of house bill 117 is in-cooperated in the senate budget? Yes. Any questions? There will be an extension of education position to offer assistance or full time teaching? These are full time teaching assistant position, I'm sorry and again we think lowering class size is the key to success in those early grades. And again these kids astound to 1 to 15 and 133, 1 to 17 in kindergarten and and our study shows that's a key number. But, as you go into negotiation with the house committee, let me see, we're going to be looking at a 5% budget increase versus the 2% budget increase, are you guys willing to go any higher? 2% or is that really a hard and firm number of us to sensitize implement. We think the budget representing is a solid budget for the state of North Carolina continues what we've been working on for the past four years, it represents an approach to, the dealingwith things on the revenue side and things on the spending side. We have to the house it that way through out. Thank you.