New N.C. budget includes surplus, reserve, raises

Editor’s Note: Both chambers of the legislature voted in favor of the budget Thursday afternoon. The House voted 84-28 and the Senate voted 38-9. Final votes are set for Friday.

The North Carolina Legislature released its latest proposed budget Tuesday night which includes raises for teachers and state employees, a school safety fund, and money for capital and infrastructure projects. The Fiscal Year 2022-23 budget of $27.9 billion is a 7.2% increase from the FY 2021-22 budget.

“The good news, North Carolina is well prepared to weather a recession,” said Senate Leader Phil Berger, R-Rockingham.

He added that the state has a current surplus of $6 billion of which $2 billion is expected to be recurring and the Rainy Day Fund balance is projected to be $4.75 billion at the end of the biennium. That is an increase from the $4.25 billion that was projected in the last budget. A $1 billion State Inflationary Reserve was also created in anticipation of a recession. 

Legislative leaders said they were not going to make the same mistakes state Democrats did in the run-up to the last recession with a $3.5 billion shortfall. In 2009, then-Gov. Bev Purdue, a Democrat with a Democrat-run legislature, temporarily cut teacher pay, instituted state employee furloughs, and tapped heavily into state reserves for emergency spending.

“This is a reminder of where we were in 2010,” House Speaker Tim Moore told reporters in a press conference Tuesday evening. “Some of our predecessors really did not prepare for economic downturns. It seems clear to anyone who has filled up their car recently that a lot of policy that is happening out of D.C. is absolutely in shambles.”

Among the highlights are salary increases for teachers and state employees. The new starting salary for teachers is increased to $37,000 with additional supplements. An additional $70 million goes to the state-funded teacher salary supplement, bringing the total amount to $170 million. The budget increases the state-funded teacher supplement cap to $5,000.

Teachers will see an average raise of 4.2%, bringing the average teacher pay raise to 6.7% over the biennium. Over the biennium, including bonuses, teachers will receive an average 14.2% additional compensation. Non-certified public school employees, like bus drivers, will receive either a 4% pay raise or an increase to $15/hour, whichever is greater.

Most state employees will see a 3.5% pay raise for most state employees, for a 6% raise over the biennium. State retirees will also receive an additional 1% COLA bonus, bringing it up to 4% over the biennium.

Education funding grows to an additional $1 billion over the FY 2021-22 amount for a total of $16.5 billion. That includes $3.9 million to cover the copays for students that qualify for reduced-price lunches. Income level requirements for the Opportunity Scholarship Program will be expanded with the new income eligibility level being equal to or less than 200% of the amount required for free or reduced-price lunch.

The budget also allocates an additional $56 million in recurring funds to the Opportunity Scholarship Grant reserve, for a total of $150.8 million that can be awarded to families that qualify for the scholarship.

When asked if there was a comparable amount to what Democrats wanted for Leandro funding, Berger said they looked at what the requirements are for funding public education in North Carolina and appropriated the dollars.

“This is a North Carolina budget adopted by North Carolina representatives and senators elected by the people the people of North Carolina,” Berger said.

An additional recurring $16.3 million to the Personal Education Student Accounts for Children with Disabilities Program will be added to clear the program’s waitlist. The program’s total funding in FY 2022-23 is $47.9 million.

School safety also topped the list in the budget, with an additional recurring $15 million for the School Resource Officer Grant program, specifically for elementary and middle schools.  It also increases the state match for the School Resource Officer Grant program for low-wealth school districts to $4 per every $1 in non-state funds. All other school districts will be eligible for a state match of $2 per every $1 in non-state funds.

The budget also provides an additional $32 million for School Safety Grants to support students in crisis, school safety training, and safety equipment in schools. It also allocates $26 million more to the at-risk allotment to provide one school resource officer for each high school. In addition, it requires the Center for Safer Schools to gather data on existing school safety systems, policies, and procedures, and to report information and recommendations for improving school safety to the General Assembly.

The budget also calls for transferring 2% of sales tax revenue — approximately $193.1 million — to the Highway Fund due to declining revenue to support a variety of transportation purposes, increasing to 6% in 2024-25 and thereafter.

$14.8 million has also been allocated for mental health resources across the state.

Additional items include $883 million for water and wastewater infrastructure projects, bringing the total amount available for water and wastewater infrastructure for the biennium to $2.5 billion.  $300 million has been allocated to build a new Education Complex and Governor’s Office in downtown Raleigh and to renovate and demolish other downtown government buildings.

An additional $5 million for the GREAT Grants to expand broadband access in underserved areas.

It also increases the NC Pre-K provider reimbursement rates by 5%. Private childcare facilities, which were slated to receive a 4% rate increase with funds from the 2021 Appropriations Act, will now receive a 9% reimbursement rate increase in FY 2022-23.

It appropriates $1.8 million from the federal Help America Vote Act (HAVA) grant to update and maintain voter lists and to continue enhancing election technology and security improvements.

What’s not included in the budget is Medicaid expansion. Berger said the Senate is going to see what the Houses passes and go from there.

As for what Democratic Gov. Roy Cooper thinks of the budget, Berger said they haven’t received a commitment from the governor one way or the other. He said it is their hope that he will either sign it or let it become law.

“This is a solid budget for North Carolina,” he said.

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