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Joint | September 14, 2015 | Press Room | Press Conference: Sen. McInnis

Full MP3 Audio File

Well thank you for being here, I'm sorry we're a little bit late getting beginning started. We are here to announce details of a 21.735 billion dollar budget agreement reached by members of the House and Senate this past weekend.compromise plan includes a responsible 3.1% increase in spending, invests hundreds of millions of additional dollars in public education, and other core priorities of the state, shows up the states rainy day in repair, rainy day fund, and  repair and renovation fund by a total of $ 600 million. This plan also increases early career teacher pay from $33000 to $35000 per year. That fulfills the promise that was made by state leaders last year and over two years it preserves funding for drivers education and for all teachers assistant position supported in last years budget requiring school systems to use the funds to uphold those jobs. Budget also invest an addition $705 million dollars over two years for transportation needs in port by ending 216 million dollar annual transfer from the highway fund to the general fund and ensuring that money is finally spent on building and maintaining safe roads and bridges finally it contains a comprehensive tax reform package that reduces the tax burden on North Carolina's families and small businesses by close to $400 million over the biannual and fully restores the state tax deduction for medical expenses. The plan also extends historic preservation tax credits. I am grateful to the members of the Senate and the House for their hard work in reaching this agreement. It is fiscally smart, sustainable and saves for North Carolina's future. There are some key provisions that I'll go over then Speaker Moore will also go over some provisions and will be happy to take your questions. First it allocates $313 million in the first year alone for compensation increases to state employees including a $750 bonus for all teachers and state employees. Offers experience based increases the teacher, assistant principles, principles, state highway patrol troopers, clerks and magistrates. It sets aside funding for pay raises for community college employees. It allocates funds for a 3% market based salary increase for sworn members of the state highway patrol. It funds Governor McCrory's recommendation to invest more than $38 million over two years to boost salaries for correctional officers and it funds Governor McCrory's plan to provide additional targeted market-based pay raises to attract and retain highly effective workers. With that I'll turn it over to speaker Moore. Good afternoon. The budget that we have reached an agreement on does a lot of great things that senator Brooks have spoke about already, but I want to touch base on the education formula. First of all, it protected all of the funding for teaching assistance in North Carolina. It increased which is the Punic K12 public schools by $410 million the community colleges by $20 million and for the UNC System Alarm by 99 million in first years. It reduces class size in the first grade to a 1:16 teacher student ratio in the second year a step research has repeatedly shown as a key to academic success. It enhances text book and digital learning resource funding to ensure that students across the state receive the tools that they need to succeed. Expands ready to achieve some reading camps in the first and second grades. It increases the fault for the Opportunity scholarship program, by $14 million every two years. It provides for comprehensive data collection and steady, or driver education, and maintains the funding drivers education it also allocates expanding to the school connectivity initiative to build better ball burn and WiFi access to all North Carolina schools. We've to a very, very comfortable and very proud of the process lather the progress we made in education funding in this budget I think senator Burger wanted to talk about faxes and economic development. As I had indicated earlier the bill we'll cut the personal income tax rate to 5.499% beginning in 2017. It will increase the zero tax bracket in 2016 and during tax payers may follow jointly pay no state personal income tax on the first $15, 500 of income. It encourages job creation and private investment in North Carolina by moving to calculate cost of income taxes based on the single sales factor over the course of three years. Provides new local tax revenue to support education and economic development in the counties with insufficient local tax dollar, the additional local revenue must be used to support public schools, community colleges or economic development in those counties.

It maintains the existing system for allocation of local sales tax revenue for 75% is allocated based on county where the sale takes place in 25% based on population ensuring that no local government will lose revenue, under those terms.  Into matters provisions the budget provides $225 million every two years, to begin the process of restructuring the states medicate program. We've also reached an agreement, that's not in the budget but also medicate reform and other legislation that has been agreed to as well the budget increases the funding for central core system personnel. The JPS side of the budget has for years, not been able to get caught up the growing needs. Unfortunately, this year we've been able to see more funding for our ports, the prosecutor is to make our streets and our town safer. Very importantly, this raise the ground work to give the voters the opportunity to vote on a $2 billion comprehensive bond package that will also be voted upon separately but that will fund some very really needed per capita project around the state that will benefit education and other services. It adjusts the fees at the Division of Motor Vehicle the first time in more than a decade to support the additional transportation needs. As you're also aware that we had the gas tax cuts earlier. This is the second part of that and when you take in the end there are combined pact relief that's been proposed in the budget itself as well as the other adjustments it is nearly Santa Barbara said nearly $400 million in tax of the citizens of this State will get through this budget. It also adopts the governor's proposal to create the department of information technology, this is expected to save over $30 million  in the biennium, it implements the governor the recommendation to establish a more efficient department of military inventory and affairs to cost the $1.7 million to support the millitary installations, this full budget compromise will be posted later on today right now staff are still in the process of the final drafting we've had an opportunity to present it to our respective Caucasus on the House side as well, we had a meeting of caffreys [sp] which would vote Republicans and Democrats. and laid out the budget and laid out many of the provisions that went through and reviewed it and we are feeling very comfortable about the level of support that we have in the house for the passage. And as in anything this budget represents a compromise between the house budget and the senate budget and we are glad that we are here to do it, we recognize that we've been here a lot because we have dealt with a lot of chronic problems that have been kicked down the cans, the cans have been kicked down the road for decades and we've dealt with a lot of those staff issues in this budget, so it's taken a lot but I believe we've got a very good work product at the end, that our colleagues will support and that will benefit the citizens of this state. And will be happy to take the questions. I heard there was a are there possible expansion in tax payer and terming of some services can you address that? There is in finance portion and budget expansion of the such Bills is to include some services and basically to the same expansion that passed the house in house bill 998 a couple of years ago.  So is that money going to this all counties. Well, as you know when sales taxes are collected there's a portion that stays, so some will  come to the stay  and there's a portion that goes to or to the counties the expansion actually goes far the existing form 7525 and one thing that when we were negotiating this on our side that I passed David Russ was here with wants to try to find a way to address the issue with rural counties, but not in any way to hurt the urban counties. And we've actually found a way to do that this will cost no county any money, there are no, truly no losers in this plan. There is no money being taken away from the urban areas the way its instructions seems like the timing to put pressure on the governor to sign it right away. What if he wants more timer or he doesn't want to sign it for considerations are the [xx] Well, we'll hope will that the governor after having an opportunity to review this budget will very quickly embrace it and sign it into law, but we believe there's adequate time of course under our rules in the House. We can't vote on it until the budget has been out there for three legislative days. It will be online today. Some of the details have certainly been shared with the governor, and we believe and hope that he's had time to see it and certainly to have your support. Opportunity scholarships you mentioned, can you go into detail and help me.

You said 14, 000, 000 every three year and how many new scholarships will that fund?  I don't have that exact number with me, I'll give that information to you. 6.8, the first year and 14 the second year. What's the message to veteran teachers who again might feel overworked. Veteran teachers are going to receive the same $750 bonus that all the teachers are being ready to sign, with the exception of the beginning teachers are going to receive that bump to get North Carolina to above original average and beginning pay and also for years we had a salary schedule that was not funded and the folks will get to a point where they got through a step increased and wouldn't get raised, we fully fund the staff increase. Quick follow-up, if 20 of your teachers think that's a slap on the face, what would you say to that. I would say that the amount of money that we are putting in to education this year, also taking into account the amount of money we put into education particularly salary education schedule is something that represents a significant investment by the state in each occasion. Can you talk about the flexibility that's going around in The TA funding, did it have flexibility in the local school systems to use that money? The TA funding we have heard from the superintendents around the state that they did not want TAs cut. The TA funding is fully implemented but all the money will be used for TAs.  In both years? In both years. The House Budget of course maintained the flexibility but after looking at it and seeing how the money's used we felt comfortable that the TA money there could take care of the issue with the TAs and if there were any other issues, there's plenty of extra money to deal with that. The Governor seems to think this sales expansion is a tax increase and NFIB seems to think so as well. What would you say to him to try to assuage his concerns that this would hurt low and middle income people? What you've got to do is look at the overall package with reference to taxes and the overall package represents a net tax cut for the people of North Carolina. We have, for a long time had a problem with our budget that was overly dependent on income taxes and so when had problems with the overall economy that's when you saw those wild swings and we've been trying to move to an expanded base on the sales tax which is a more stable source of revenue for the state. So what I would say is that the overall it is a substantial tax cut or I propose the increase of the standard deduction to 15 $15, 500 is particularly beneficial for those in the low end of the income scale. I think [xx] I'm sorry Credit and deduction did you say "medical deductions fully restored", is that for everyone or just seniors? Everyone. That's for medical deductions is fully restored and not cap. Not cap, great, and the other question I'm the tax credit that came back at 20% or is that going to be like a house version of the bill gives houses? It was on the house version I believe it cost roughly a million dollars. Okay, thank you. In the second here. For those of us who don't know the hospital 998 from a couple of years ago, what's the sort of Basically if you had a service that was associated with the purchase of a good that is presently taxed then the service for installation of that [xx], so things like the warranties on refrigerators but you're not going to think like you expanded this area here, like you got taxes on advertising in this area. No advertising, no benefit. None of that, this is where the sale of the good is also involved in the service. The benefit of that is where market you don't create additional retailers for the purposes of tax collection Is there a [xx] or [xx]? What if you have a service company that doesn't  sell unde retail will they fall under the new tax when you expand tax pay? If their current goods sales are not taxable, the service associated with that good should not be taxed. So you have money for Medicaid reform. When are we going to see some of the details on how there are three other bills that are tied to the budget bill. One is the Economic Development Bill 117. I think we'll see that moving pretty quickly. Another is the Medicaid Reform Bill. We will see that moving pretty

quickly and the third is the bond bill and we'll see movement on the bond. All of these things will move with a certain schedule going along with actual language. We have, with respect to the Economic Development Bill and the Medicaid Reform, the actual language of the bill as agreed to this point so those will be ready to roll in short orders as far as the bond amount. We've agreed on the $2 billion amount we're going to still work for particular projects. So does this mean that we'll all be done by the end of the new resolution? I think we'll all be, well the budget will be done before the end of resolution the other bills maybe in the next week. Senator Brown mentioned last week that he thought it was the difference in and spend in between the house and senate they are causing the delay and speaker more just said we don't like how issue so we took so long determine on that. But one of the complicated issues was that we had extra money this year that we hadn't had in the past but is reality we've talked about Medicaid before the year, we've talked about ending the transfer from highway funds funds for years, we've talked about some of the issues having to do with tax reform. Remember we're talking about putting into the bill something that was in a house bill a couple of years ago. So these are issues that have been around for a while and what I would say is yes, it has taken us longer than we would have arrived, but if you look at the big issues that we've dealt with, if you look at how we've resolved some things that have been nagging for a fairly substantial period of time and I think you've heard me say and I'm sure that the speaker has said the same thing we're concerned about the length of time but the more important thing is that we get it right, and so I think that's what we've done with this. And one part of the time is it has been getting public into it, we've tried to air a lot of these positions out there, and make sure there has been ample opportunity for public discussion, to make sure members have been informed and so a necessary part of that and it takes longer to get that information out there. So that's one thing we've really tried to highlight in this budget transfer and see in there and open his [xx].   You said 117 was part of the budget bill your has somewhat difference version to that bill can you give us a Ideal whats in there and how its going to get back on budget. So the version of 117 will be very similar to what the house passed. The changes the senate made that would be incorporated were they what's called the super Jedic[sp?] fund, if you have a project has a very high number of employees, very large investment, it's eligible for additional incentive. The I believe the way the money is appropriated that only half can be spent during part of the year, can't remember the other change right off The match for local governments to yneou o county would have to match $1 for every $3 of state dollars and one North Carolina 202 $1 for every $2 in state money 203 1:1 which is those are those are [xx] Exactly. What about the attractions, are they going over to cultural resources or what will happen to the employees? We did follow the government recommendation for the transfer and others before this will be moved and administrative to prove emergency. Are non-profits going to keep the taxes up? Yes, we did maintain the tax exemption for the non-profits there's no changes there. You might [xx] a little bit on the how, the additional sales tax flexibility for [xx] work out for [xx] is interested in having some additional taxing authority will be using this process. I don't believe there's anything that expands the authority of local government to impose our sales taxes. There's a formula for distribution of certain funds that that will go to some of the wealthy counties. So how will that work out without impacting the bottom line for urban counties that [xx] [xx] [xx] lower revenue? Well this way its structured its a fairly complicated mechanism probably a little more complicated than I can explain over the next 15 minutes will be fine [xx]. Anything on renewable energy in this [xx]. No. Do smaller items [xx] stands [xx] provision plenty of that and are going to read the instincts with regard to [xx]? Nothing will do [xx].

I don't' [xx] [xx] what about [xx]. There's no change so the lottery advertised. Are we going to see any changes to the certificate of [xx] version in the budget or in the Medicaid bill? Nothing in the budget. There's still some discussions going on about that. We got 750 [xx] one time bonus was that recurring [xx] [xx] can you quickly go back to renewable energy when you said nothing in the budget you need to have changes text, text credits [xx]. There are no changes with references. I believe there is renewable energy [xx] that's the sunset [xx] that's not extended in the budget, and there is no plan to extend it. That's correct we passed orders this session the [xx] that would apply for something that's the next two years left on it but that was an aggressive budget. Senator, this is always about negotiations about give and take. What would you say the senate gave up in order to get this plan? We were willing to work with the House on a number of things, the House has already worked with us on a number of things, I think all you have to do is look at the house budget, look at the senate budget, look at this budget and you will see where the comprises were the inventory system is one they probably say there's another, tax packages and other, the medicaid reform is still another so I think its fit now we tell you that this is something that is not perfect as far as senate is concerned its not perfect as far as the House is concerned, but I think both the House and the Senate recognize it as an appropriate compromise that moves North Carolina in the right direct. I agree with senator Berger, this is a fair compromise. We started off with two very different positions on the number of things but the process worked the way it should. We had a lot of involvement, the folks who are standing here, behind the two of us have spent many hours, many day days and weeks being here, working through sometimes very monotonous details and sometimes the only pretty significant issues, to come up with a budget we believe takes care of the priorities that the senators have, takes care of the priorities that house members have and at the end of the day it moves the state forward, so it's a long process but it's been said an open process that's trying to get public input and we want to make sure all the members can participate and I in the end I think it's something that folks can be proud. What I would add to that is the folks that here have spent countless hours working on various parts of this budget. Now Kim and I can stand up here and talk about it, and get our names in the paper and get our pictures taken, but reality is this is not something that he and I put together, it is something that required the input of substantial numbers of members of both the House and Senate, taking feedback from other members of the House and Senate, and feedback of members of the public. It's a process that many of you have seen played out over the years and it sometimes is difficult to follow sometimes that can be difficult to work in but I would tell you. I don't think anybody ended up in black eyes or anything like that Somebody said. But this is something that I think you will see strong votes come out of both the house and the senate about this. Along those lines, Speaker Moore, do you feel any Democrats will support this budget and or do you think members of your caucus are upset with it or wherever you think? It's like anything. We probably find something in the budget that we don't like, I mean we are talking about nearly $22 billion there so at the end of the day you have to take a measured approach and see what it thus in [xx] overwhelmingly passed, though we may have a couple of folks that vote no, but I would expect this from Democrats don't know account, I haven't put anybody on the spot to ask him but we do feel comfortable we are having the first part of the budget. Be quick on the project as far as numbers were like JDEG and other economic [xx] I believe there was a line item there I believe 30 million is the actual number. I would refer to whatever the chart shows. The actual meet of the JDEG proposal that will be in House Bill 117, but it was the tax credits were accounted for in the finance package, off the top of my head I believe it was$30 million, but I actually wrong, I would prefer to one in the feature. Said 30 million tax printers or

30 million [xx] I don't think it's either I think what you'll see is a line of argument in the budget is something that actually [xx] up some of the previous change in [xx] The changing provisions that are in development they really have no immediate tax consequences as far as planning goes. That's right. Yeah that's 30 I knew there was a wrinkle 30 references the money already in the. Senate budget had changed for state employee retiree health insurance benefits for future employees. Is that provision in the final budget in any form? No. John? Timing wise, forgive me if you mentioned this, you expect to vote in this tomorrow, and then for critics who would say that's not a lot of time, one or two billion dollar document, that's hundreds of pages long, how would you respond to that? I would say that plan is that if all the printing and the proof reading gets cared forward and the budget is available to the be released today this afternoon, this evening. We wouldn't intend to have it send forward tomorrow and our rules that's perfectly within the rules and I think that the provisions that are in there have done much debate, much discuss, much talked about and I don't think there's anything in there that anybody would be surprised by, they may be surprised in some respects that we went this way on something as opposed to that way but I think all of the provisions are in there correctly. You made a comprehensive [xx] tactic the voters will get to weigh in on, when will they get weighing on?   We haven't decided the page yet, we're pretty much down to the match primal of the general election We haven't decided yet. Beyond the terminal going as you'd assume is still in there, is there anything else in this budget that was neither personal or senate seeing there's something that [xx] even known had talked about. Nothing's in there. There's a lot of incidentally let's take two more questions. The Service Head of Provisional and Municipal Service Districts did inform us that in the final product. I think there's a compromise provisional map that everybody agreed to. [xx] just say what that involves in the final product. what the original line was. I don't know specifically other than the folks we were talking about agreed on it, but we can get you that. Okay, that'll be great. Okay One more question. Jonah. I have one the same order management, house fund that goes off towards the [xx] yes Okay? Thank you. Thank you all very much.