Raleigh, N.C. – North Carolina Senate Republicans on Tuesday announced highlights of a budget that embraces the priorities they share with Gov. Pat McCrory and the House of cutting taxes on the middle class, controlling the growth of government spending, bolstering the state’s savings, and dramatically increasing teacher pay – while providing over $180 million to state employees in performance-based pay increases or bonuses. The proposal meets the $22.225 billion spending level agreed to by the House and Senate.

The plan includes a responsible 2.26 percent spending increase, invests hundreds of millions of additional dollars in public education and other core priorities and adds $583 million to the state’s rainy day fund, meeting the statutory requirement of an 8 percent funding reserve for the first time ever.

The budget lays the groundwork for a bold plan for teachers to see their see their average pay surge to nearly $55,000 within two years for the first time in state history. If the proposal becomes law, average teacher pay will be up almost $10,000 – more than 20 percent – since the 2013-14 school year.

It provides major tax relief to the middle class and small businesses by making the first $17,500 a family earns exempt from income tax, with a family making the N.C. median household income of $44,000 annually seeing an additional tax cut of $110 next year. This will bring the total amount of tax relief provided by state Republican leaders since 2011 to approximately $3 billion per year.

And it includes provisions to help make college far more affordable and accessible to students across the state, strengthen and stabilize public universities with lower enrollment and stimulate regional economies.

“Helping our public schools and teachers, letting families keep more of their hard-earned money, and controlling the spiraling cost of college are the issues we hear about the most from people all across North Carolina,” said Senate Leader Phil Berger (R-Rockingham.) “I am proud of my Senate colleagues for crafting a balanced and fiscally responsible budget that includes a plan to raise average teacher pay to $55,000, allows the typical North Carolina family to keep an additional $110 by making the first $17,500 of their income tax-free, and reduces tuition at five public universities to $1,000 per year while ensuring tuition does not increase at any UNC system school during a student’s four years in college. That my Senate colleagues tackled these challenging issues while keeping the growth of government spending below 2.5 percent and filling our Rainy Day fund for the first time in state history shows tremendous discipline and a firm commitment to conservative budgeting principles.”

Additional key provisions of the budget include:

In Salaries and Benefits –

• Lays the foundation to dramatically increase average teacher pay from $47,783 to $54,224 over the next two years, which will provide North Carolina public school teachers an average $4,700 permanent pay raise over the same period and propel the state to the top of regional rankings. This is in addition to the generous teacher pay raises legislators passed in 2014 and 2015.
• Earmarks $95 million for permanent merit-based pay raises for state employees and another $85 million for one-time performance-based bonuses. 

• Offers experienced-based step increases to teachers, assistant principals, principals, State Highway Patrol troopers, clerks and magistrates and appropriates $16 million to boost pay for correctional officers.
• Provides a one-time $2,000 bonus for school principals and a one-time $500 bonus for assistant principals. 

• Includes $10 million for a pilot program to provide performance-based bonuses of up to $6,800 for 3rd grade reading teachers. $5 million would be available for the top 25 percent of teachers in each school district based on EVAAS growth scores, and an additional $5 million would be available to the top 25 percent of teachers on a statewide basis.

In Education  –

• Increases funding for public education by more than $394 million.
• Funds K-12 enrollment growth, community college enrollment, and public university enrollment.
• Continues the Senate’s commitment to lower class sizes in the early grades – a step research has repeatedly shown is key to academic success – by hiring close to 1,000 additional first and second grade teachers.
• Protects the Read to Achieve, School Connectivity, Teach for America, and Communities in Schools programs from being cut by the Department of Public Instruction to fund bureaucracy.
• Establishes an opportunity scholarship grant fund reserve of $34.8 million to award more need-based scholarships to children from working families and provides forward funding to add 20,000 children to the program over the next ten years.
• Creates a teacher assistant tuition reimbursement pilot program in Anson, Franklin, Moore, Richmond, and Scotland Counties, which will provide tuition reimbursement of up to $4,500 annually for 25 local TAs to pursue a college degree leading to teacher licensure.
• Fully funds teacher assistant positions at the 2014-2015 level.
• Invests $50 million in the lottery reserve to fund future local school building needs.
• Authorizes an increase in the base budget for the UNC system of up to $70 million to fund the Access to Affordable College Education Act.
  • Guarantees no in-state tuition increases for a standard undergraduate college term (usually 4 years) at all North Carolina public universities, not only providing certainty to families who are budgeting for college costs and taxpayers who heavily subsidize tuition, but also additional incentive to students to complete their degrees on time. This tuition guarantee would also apply to active members of the military based in North Carolina.
  • Reduces student fees – often used to fund non-academic expenses – at all North Carolina public universities by 5 percent and limit future increases to no more than 3 percent per academic year.
  • Lowers tuition at select universities located in every geographic corner of the state to $1,000 per year for in-state students and $5,000 per year for out-of-state students, ensuring all North Carolinians have an affordable option close to home. This would also help attract new students to universities with lower enrollment, make those schools more stable and competitive and stimulate struggling regional economies that sometimes transcend the state’s borders. The reduced tuition would apply to the following schools beginning in the Fall of 2018:
    • Elizabeth City State University
    • Fayetteville State University
    • University of North Carolina at Pembroke
    • Winston-Salem State University
    • Western Carolina University
• Directs $300,000 on a recurring basis to administer the new Cheatham-White Merit Scholarship Program for students at North Carolina Central and N.C. A&T Universities.
• Provides a community college tuition and registration fee waiver to firefighters, EMS, and rescue and lifesaving personnel at military installations for courses that support their organization’s needs.
• Earmarks $183,000 to expand an internship program for students at the state’s historically black colleges and universities.
• Requires all public universities with educator preparation programs to open and operate a lab school for K-8^th grade students in a school district where 25 percent or more schools are identified as “low performing.”

In Taxes and Economic Development –

• Provides an immediate $145 million tax cut this year and an additional $205 million tax cut next year, mostly benefitting middle class families and small businesses.
• Increases the zero percent tax bracket over the next two years – ensuring all North Carolina taxpayers, regardless of income, pay no state income taxes on more of their earnings.

In Health and Human Services –

• Repurposes a more than $300 million surplus in the Medicaid budget, made possible by Republican-led reforms that have gotten the chronically troubled program back on track.
• Invests over $9 million to reform North Carolina’s child welfare program by requiring additional training, providing more positions and expanding in-home services to support children’s safety while keeping families together.
• Builds a stronger Controlled Substance Reporting System that will use advanced analytics to detect and fight prescription drug abuse.  
• Continues the commitment to improving education and retention of rural physicians by directing nearly $11 million to help establish new medical school programs in Fayetteville and Asheville.
• Funds nearly $500,000 for Zika prevention and detection.
• Directs proceeds from the sale of the Dorothea Dix property go toward services for the mentally ill, including $2 million to establish child facility-based crisis centers and $12 million to expand inpatient behavioral health beds targeting rural areas.
• Funds over 200 additional slots for Alzheimer’s patients and their families through the Community Alternative Program for Disabled Adults.

In Transportation –

• Increases funding for the Strategic Transportation Investment (STI) law by over $32 million, which will allow new highway projects to be added over a ten-year period.
• Allocates nearly $3 million to improve customer service and decrease wait times in high-volume DMV office locations.
• Increases state assistance for urban and rural transit systems by $4 million and state aid to general aviation airports by $15 million.
• Provides nearly $14 million in additional funding to improve freight rail tracks, crossing safety, and industrial, port, and military access. 
• Repeals the $500,000 cap on state funding for light rail projects effective for the next round of project prioritization (P5.0).

In Justice and Public Safety –

• Makes strategic investments in public safety by providing $1.3 million to get the Western Crime Lab up and running and $640,000 for equipment upgrades in the other two crime labs.
• Includes $2.1 million to help close out the longstanding backlog at the State Crime Lab once and for all.
• Provides $250,000 to digitize mental health records to help streamline background checks for gun purchases.
• Invests $500,000 for School Risk Management Plans to be developed in 835 public schools to help keep our children and teachers safe while they are at school.

In Agriculture and the Environment –

• Allocates over half a million dollars for international marketing of North Carolina agricultural products.
• Increases funding for the Clean Water Management Trust Fund by $5 million.

Elsewhere –

• Directs federal funds to a broadband initiative and water and sewer projects in public schools.
• Improves government transparency by helping the office of the State Auditor conduct more specialized audits of state agencies and by implementing a new filing system for Statements of Economic Interest.
• Provides recurring funding for the Human Relations Commission.
• Establishes a cyber-security program for disabled veterans to develop their skills while protecting the state against cyber-attacks.
• Adds $10 million to the Disaster Relief Fund.
• Pays off an outstanding $37 million loan from the federal government that Gov. Jim Hunt borrowed in 1999 and deferred payment on for over 15 years, saving the state $45 million in interest over the next 30 years.
• Invests $12 million to implement state of the art software to ease tax filing for North Carolinians.