Senate approves budget

Yesterday the senate passed, by a party lines vote of 33-16, the state’s two-year spending plan after over an hour of debate.  The Senate will make their third and final vote on the budget today and the House is scheduled to take it’s final vote on Friday.  The $21.7 billion General Fund budget is a 3.1% increase from last year’s budget.  Here are some of the highlights:

  • K-12 early-career teachers salary increase from $33,000 to $35,000 per year.
  • Gives all teachers and state employees a $750 one-time bonus.
  • Fully funds all teacher assistant positions.
  • Sets aside $14 million for the opportunity scholarship program.
  • Sets aside $225 million for the beginning stages of Medicaid reform.
  • Lawmakers reinstated a transparency measure that will require the Department of Health and Human Services to post on its website the total charges and reimbursement data submitted by hospitals and ambulatory surgery centers for their most popular inpatient, surgical, and imaging services.
  • Creation of two new departments, one for Information Technology and one for Veteran’s Affairs.
  • The savings reserve fund received an additional $200 million while the Repairs and Renovations fund received $400 million.
  • Ended the $216 million transfer from the Highway Fund, allowing highway money to be spent where it was intended and not sent to other areas of state government.
  • State Highway Patrol salaries increased and the Division of Motor Vehicles had their fees adjusted in an effort to generate additional funds for maintaining roads and bridges across the state.
  • Changes to the tax code:
    • Reduce the personal income tax from 5.75 percent to 5.499 percent and gives North Carolina the lowest personal income tax rate amongst its neighboring states.
    • Increases the standard deduction by $500 for joint filers, $400 for heads of households, and $250 for single filers.
    • Corporate income tax was lowered from 5 percent to 4 percent and changed the way it is calculated to a single sales factor.
    • Expansion of the sales tax to include installation and repair services for companies that already collect sales tax.
    • Reinstatement of the tax deduction for medical expenses.
    • Allow the state’s renewable energy tax credit to sunset at the end of 2015.

Sarah Curry

Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation.

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