2017 Fiscal Year State Budget, NC Budget and Tax Center

Missed Opportunities: Investments that are MIA in the preliminary House budget

Deep tax cuts, the pursuit of additional costly tax cuts, and an arbitrary spending limit are preventing House leadership from proposing a bold, visionary state budget for the upcoming 2017 fiscal year, as I explained yesterday.

Once accounting for these three limitations, there are few public dollars available for anything else after the House budget writers set money aside for basic—but again uneven—salary increases and bonuses for teachers and state employees. The 2013 and 2015 tax cuts alone are draining more than $1 billion in revenue annually, squeezing out much-needed reinvestment in the programs and services that help children, families, and communities thrive.

Without those tax cuts, much more could have been possible for North Carolina.  There has been plenty of coverage of what is in the House budget over the last few days; however, what’s not in their budget has gotten little coverage. Below is a short list of investments that are missing in action but still greatly needed to build a stronger, more inclusive economy for us all. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Follow the money: The House’s budget doubles down on tax cuts and leaves nearly $127.4 million on the table

The $22.225 billion budget proposal that the state House of Representatives released for the upcoming 2017 fiscal year reflects the limited aspirations for North Carolina that the House and Senate leadership have agreed on. Legislative leadership used a flawed formula to set a low budget target — even lower than the Governor’s $22.33 billion proposal — that has no basis in economic realities or community needs and leaves $127.4 million on the table unspent.

Overall, the House proposal represents a 2.26 percent — or $490.3 million — increase over the current 2016 fiscal year budget. This proposal reflects leadership’s loyalty to severe budget constraint and lopsided tax cuts, which primarily benefit profitable corporations and the wealthy. Lawmakers are allowing these tax cuts to phase in — which will cost more than $2 billion once fully implemented — regardless of the need to replace the worst cuts from the economic downturn and address long waiting lists. In fact, the proposal implements further costly tax changes that limit the ability to meet pressing needs (see details below).

The low target helps explain why House leadership is pressed to leave $127.4 million on the table unspent, even after putting money into the savings reserves accounts and despite unmet needs in communities across the state. That is funding that could address the NC pre-k waiting list and hire the additional school nurses needed to improve student health and meet national standards.

In fact, the House budget would keep state support for services below pre-recession levels, when adjusted for inflation. That would be fine if public needs had shrunk. But they have grown. The budget also caps off the only period as far back as 1971 in which state spending would decline as a share of the economy for eight years in a row while the economy itself grows. As such, many unmet needs will persist in programs that support vulnerable communities, despite a slight increase in investments and a modest compensation package for teachers and state employees. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of the House’s General Government budget

Budget subcommittees met yesterday to go over their respective proposals for the upcoming 2017 Fiscal year. House leadership is not expected to release their full budget, tax, and compensation package until next week.

General Government

This area of the state budget funds 17 state agencies and offices that are tasked with operating government efficiently and effectively. Some agencies focus on addressing inequities and improving quality of life so that all North Carolinians have a fair shot to get ahead.

Here are a few highlighted key items in the House’s proposed budget: Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of the state House leadership’s Health and Human Services Budget

Budget subcommittees are meeting today to go over their respective proposals for the upcoming 2017 Fiscal year. House leadership is not expected to release their full budget, tax, and compensation package until next week.

Health and Human Services

This area of funding aims to ensure that the state’s young citizens thrive early, older adults and vulnerable populations have access to quality and affordable health care and social services, and people with disabilities have the supports they need to fully engage as citizens and contribute to their communities.

The House’s proposed budget on health and human services is able to make investments in targeted programs and services in large part due to a $318 million reduction in Medicaid costs. These savings are resulting from lower enrollment and utilization. The proposal does the following key things:


  • Includes $318.5 million in savings due to lower enrollment and utilization costs in the program. An improving national economy and recent policy decisions like cutting reimbursements, raising copays, and eliminating optional services over the years are likely contributing to lower enrollment and utilization.
  • Provides $1.5 million to support Alzheimer’s patients and their families by creating additional slots for the Community Alternative Program for Disabled Adults.
  • Provides $3.7 million to increase RN rates for Community Alternatives Program for Children services to the rate that is in effect for private duty nurses.
  • Provides $4.1 million for the projected increase in the number of individuals receiving state-county special assistance due to the increase in the income eligibility level.
  • Provides a one-time $1.25 million appropriation to fund a Medicaid analytics project.

Early Education

  • Provides a $4 million appropriation to the NC pre-k program, restoring 800 slots for at-risk children. More than 6,000 children will remain on the waiting list.
  • Relies more on federal block grants to fund the NC pre-k program, which frees up 4.2 million state dollars.
  • Provides $3.45 million to increase the child care subsidy market rate for children ages 3 to 5 in Tier 1 and 2 counties, which are the most economically-distressed counties in the state.

Social Services

  • Provides a one-time $8.4 million appropriation and a recurring $167,083 appropriation to implement the Program Improvement Plan for child welfare. The goal of the plan is to enhance children’s safety while keeping families together and reducing the likelihood of children entering into foster care.
  • Provide $600,000 to promote food and nutrition service outreach to help ensure that older adults who are Medicaid/Medicare (dual eligibles) receive the benefits for which they’re eligible.
  • Provides $60,000 to fund 3 additional positions to ensure timely review of child fatalities.
  • Provides $1 million for the Children’s Angel Watch Program, which is a foster care program for children who are age 0-6 (with siblings up to age 10) who are not in the custody of the Department of Social Services and whose families are temporarily unable to care for them because of a crisis.
  • Provide $3.75 million to increase the State-County Special Assistance rate for Adult Care Homes.
  • Creates a one-time $300,000 grant to create jobs for people who are chronically unemployed and fund staff time to focus on business development leadership and technical support for advanced manufacturing.

Public Health

  • Takes $1.9 million in grant funding away from the Office of Minority Health and places it into a program that supports community-based diabetes awareness, per the recommendations of a continuation review.
  • Provides a one-time $3.4 million appropriation to the State Public Health Laboratory to partially offset increased newborn screening costs and decreased Medicaid receipts
  • Provides a one-time $1.25 million appropriation the Children’s Developmental Services Agencies to partially offset the anticipated decrease in FY 2016-17 Medicaid receipts.
  • Provides a one-time $8.5 million appropriation to support the local health departments as they adjust to new Medicaid reimbursement rates.
  • Provides a one-time $250,000 appropriation funds for You Quit Two Quit, a smoking prevention and cessation program for pregnant and postpartum women, and mothers.
  • Establishes 2 receipt-supported (i.e. non-General Fund) positions to support efforts to reduce infant mortality.

Mental Health

  • Provides a one-time $30 million appropriation to a reserve fund to implement the recommendations of the Governor’s Task Force on Mental Health and Substance Use.
  • Provides a one-time $30 million appropriation to partially restore single stream funding that was cut last year for Local Management Entities/Managed Care Organizations, which manage mental health, substance use or intellectual/developmental disability services for people enrolled in Medicaid and those who do not qualify for Medicaid or have other insurance.


  • Provides $7.7 million to support the establishment of a residency program at Cape Fear Valley Hospital that is affiliated with Campbell University Medical School.
  • Provides $550,000 to increase funding for Project CARE to support caregivers of people with Alzheimer’s disease.
  • Makes no changes to vocational rehabilitation programs.
  • Makes no changes to health service regulation programs.
  • Makes no changes to services for people who are blind and/or deaf and hard of hearing.
2017 Fiscal Year State Budget, NC Budget and Tax Center

House’s higher education budget proposal offers no relief for students

Budget subcommittees are meeting today to go over their respective proposals for the upcoming 2017 Fiscal year. House leadership is not expected to release their full budget, tax, and compensation package until next week.

Here are key highlights from the House’s proposed budget on higher education:

Community College System
Consists of 58 community colleges across the state serving all of North Carolina’s 100 counties.

The House budget proposal would reduce the Community College budget by 1.3 percent, or $13.9 million, compared to the current 2016 fiscal year budget. And it would do the following:

• Fail to reduce tuition rates to make college more affordable. Tuition has increased by over 80 percent since the 2009 fiscal year.

• Includes $26.2 million in savings to reflect a decline in enrollment but fails to fully reinvest those savings back into the system to help address longstanding unmet needs.

• Provide a $14.9 million increase to the system budget that can be used at the discretion of management. In budget terms, this increase lowers a “management flexibility cut” that is currently in place that would now total $44 million under this proposal.

• Provide a one-time $500,000 appropriation to support the development of competency-based education programs and a uniform system for granting credit for prior learning.

• Provide a one-time $25,000 appropriation to create a continuing education program for finance officers in local governments and public authorities.

UNC System
Consists of 16 four-year public universities across the state serving more than 220,000 students, as well as the NC School of Science and Mathematics.

The House budget proposal would increase the UNC System budget by 0.6 percent, or $16.8 million, compared to the current 2016 fiscal year budget. And it would do the following:

• Make no concerted effort to restore large and damaging funding cuts to the UNC System in recent years. Also fails to help make higher education more affordable, meaning students and families will likely continue to bear the burden of the rising cost of a college education.

• Provide $31 million to account for additional enrollment in the system.

• Provide a one-time $183,000 appropriation to fund internships and career-based opportunities for HBCU students. Total funding would be $500,500.

• Provide $3 million ($700,000 of which is one-time money) for technology and academic support strategies in order to recruit, retain, and graduate students who have not finished their baccalaureate degree.

• Eliminate funding for UNC’s School of Medicine’s Kenan Medical Scholars program, which supports students with a specialization in primary care, general surgery, and psychiatry who are interested in practicing medicine in a rural area.

• Provide $8.5 million for the Principal Preparation Program, which provides competitive grants for school leadership development.

• Provide $2 million to establish a new, merit-based scholarship loan program to recruit and prepare resident students to serve as teachers in hard-to-staff licensure areas and schools. There is no funding provided to restore the Teaching Fellows program.