McCrory Unveils His Spending Plan, House Members Approve Economic Development and Gas Tax Measures

Governor's Budget

Governor Pat McCrory shared his two-year budget with the public last Thursday during a press conference at the North Carolina State Emergency Operations Center.  The Governor's $21.5 billion spending plan for the upcoming fiscal year is $440 million higher than the current year's state budget, representing a 2% increase.  You can review the full proposal here.

Although the Governor has finalized and unveiled his proposal, the appropriations process is far from over.  The House will issue its own budget, probably after the April 15th tax deadline, after which the Senate will reveal a third funding plan.  Differences between the three budgets will then need to be ironed out in a conference committee, which is likely to be appointed early this summer.

McCrory's proposal makes good on a previous commitment to raise starting salaries for teachers to $35,000 annually.  His budget also would expand the state's pre-kindergarten program to 26,800 slots at a recurring cost of $2.3 million.  Although the budget proposed a 10% funding cut for the Department of Public Instruction, it included funding to hire 1,400 new teachers statewide in anticipation of increases in public school enrollment.

The budget also includes a $16 million appropriation over two years to restore funding to the courts for expert witnesses, interpreters, equipment, and jurors.  If enacted, it also would develop an electronic death records system for the state and would create two new cabinet level positions, one for Information Technology and the other for Veterans Affairs.

The Governor also reiterated his intent to propose state bond projects for transportation infrastructure and the repair of government owned buildings.  Both bond proposals independently exceed $1 billion and would approach the limits of the state's bonding capacity.

Economic Development

The proposed spending plan also includes an additional $33.5 million appropriation to the state's principal economic development programs, reinstatement of the state Historic Preservation Tax Credit that expired last December and an additional $10 million appropriation to the state's television and film production grant program.  The plan also would extend current refund programs and state tax credits for renewable energy, jet fuel and research and development spending.

Simultaneous to the Governor's press conference, the North Carolina House was making its own efforts to attract and retain businesses during the final hours of a multi-day debate over incentives and gas tax rates.  Both measures were passed by the House last Thursday, causing members from both parties to break with their party's leadership in casting their votes.

House Bill 117, which we wrote about the week of February 23 here, would double the current Job Development Investment Grant cap to $45 million and continue various tax credits if approved by both chambers and signed into law by the Governor.  In his comments during the bill's floor debate, Representative Bob Steinburg said that three automobile manufacturers currently are considering relocating to North Carolina and that the tools contained within House Bill 117 are critical to luring them here.

Senate Bill 20 would lower the state gas tax to 36 cents per gallon from April through December of this year, representing a temporary decrease but a long term increase in the rate.  A broad coalition of business and government interest groups has rallied behind the proposal in hopes of raising additional revenue for the maintenance and construction of North Carolina's roads.

Senate President Pro Tempore Phil Berger has said publicly that he intends for his chamber to pass its own plan of economic development tools, but that his colleagues might have their own set of ideas.  The Senate could review House Bill 117 as early as this week, as Senate Finance Co-Chairman Bob Rucho already has arranged for incentives presentations during the committee's next meeting.

For more information on the legislative session, please call:

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