N.C. Senate Republicans on Tuesday announced highlights of a $22.9 billion balanced budget that continues their philosophy of improving outcomes in public education, providing generous tax cuts for the middle class and job-creators, and saving for the future – maintaining a successful approach that has resulted in consecutive years of revenue surpluses, including a $580 million surplus this year.

The plan increases spending by 2.5 percent over last year’s budget and 3.75 percent over actual spending and focuses that increase in key areas, like providing about $600 million more for public education. It continues implementing a plan announced last year to dramatically increase teacher pay – providing teachers an average 3.7 percent raise this year and 9.5 percent raise over two years, while also ensuring they earn far more over the course of their careers. Along with substantially increasing school principal pay, it also directs roughly $200 million in the first year alone toward compensation increases to state employees.

It provides $150 million in disaster relief assistance to victims of Hurricane Matthew and adds $363 million to the state’s rainy day fund – bringing the savings reserve to its highest total ever. And it includes provisions to fund public school construction in economically struggling, rural counties, add thousands of slots to the pre-K program, and create new economic development funds to help attract major manufacturing employers to the state.

As a result of responsible budgeting decisions over multiple years, millions of middle-class families and job-creating small businesses will also keep more of their own earnings under the Senate plan. It delivers nearly $1 billion in tax relief, with 99 percent of taxpayers either paying less or paying no state personal income taxes at all.

“I commend my Senate colleagues for crafting a balanced budget that delivers nearly $1 billion in tax relief to the middle class and our state’s job creators, ensures 99 percent of taxpayers pay less or no state income tax, increases teacher pay, generously funds our public schools and helps rebuild communities devastated by Hurricane Matthew – all while saving for a future rainy day,” said Senate Leader Phil Berger (R-Rockingham).

Additional key provisions of the budget include:

In Salaries and Benefits –

• Keeps the plan to dramatically increase average teacher pay from last year’s budget, investing $131 million in the first year alone. This is in addition to the substantial teacher pay raises legislators passed in 2014, 2015 and 2016.
• Includes a new plan to let highly-qualified new teachers begin at a higher pay grade on the salary schedule, providing financial incentive to those who accept positions in low-performing schools, are licensed in special education or STEM classes or meet other criteria.
• Provides $28.5 million to substantially increase principal and assistant principal pay, including funds for performance bonuses for principals. 
• ·         Includes $10 million in additional compensation for community college employees. 
• Provides a $750 or 1.5 percent salary increase – whichever is greater – to most state employees.
• Offers experienced-based step increases to teachers, State Highway Patrol troopers, clerks and magistrates.
• Provides $10 million in the biennium toward hard-to-hire positions across state government, such as health care technicians and nurses.
• Designates roughly $4 million to allow Gov. Cooper to increase the base salary ranges for many state workers.

In Education –

• Increases funding for public education by more than $600 million over two years.
• Fully funds K-12, community college and public university enrollment growth.
• Allocates $75 million for grants to economically struggling, rural counties to assist with critical public school building needs. 
• Invests an additional $10 million in recurring dollars in textbooks and digital resources.
• Codifies the legislature’s intent to use data it is currently gathering from local school systems in accordance with state law to fund a new salary allotment for kindergarten through fifth grade program enhancement (music, arts, physical education) teachers beginning in the 2018-2019 school year.
• Expands the teacher assistant tuition reimbursement program to 14 additional counties, which provides tuition reimbursement for up to 5 TAs per district to pursue a college degree leading to teacher licensure.
• Supports the new N.C. Teaching Fellows Program through the N.C. Education Endowment Fund.
• Protects the Read to Achieve, Teach for America, and Communities in Schools programs from being cut by the Department of Public Instruction to fund bureaucracy.
• Provides additional assistance to community colleges for workforce training programs.
• Honors the commitment to fully fund the N.C. Promise Program, which guarantees in-state undergraduate students at three schools across the state pay just $500 per semester for tuition.
• Includes over $20 million in new funding for medical education, including funding increases to the UNC School of Medicine for approximately 30 new slots for medical students and to the school’s Asheville campus.
• Provides additional stabilization funds to Elizabeth City State University to help get the school on solid financial ground.
• Directs $1.5 million to the Cheatham-White Scholarship Program, which will provide state matching funds for up to 20 scholarships at both North Carolina Central University and North Carolina A&T University, beginning in the 2018 fall semester.

In Health and Human Services –

• Provides more than $18 million over two years to add 2,350 new pre-K slots – cutting the waitlist in half for at-risk children.
• Upgrades the Controlled Substance Reporting System that will use advanced analytics to detect and fight prescription drug abuse. 
• Allocates $15 million over two years to community health centers, rural health centers, free clinics and other health services providers in rural and underserved areas that assist the uninsured.
• Invests $18 million to improve North Carolina’s child welfare program, including new training and prevention programs, and nearly $4 million to improve accountability and oversight of the system.
• Earmarks close to $3 million to provide support for additional foster children in the system.
• Continues preparing for the transition to Medicaid reform by allocating $150 million over two years to grow the Medicaid Transformation Reserve.

In Justice and Public Safety –

• Begins the process to “raise the age” in North Carolina, ensuring 16- and 17-year olds suspected of misdemeanor offenses would be tried as juveniles instead of adults by December 1, 2020, and establishes a Juvenile Jurisdiction Advisory Committee to develop specific plans for implementation.
• Funds an opioid prevention pilot project in Wilmington, putting in place a quick response team to address the needs of opiate and heroin overdose victims.
• Strengthens laws against human trafficking and funds signage to increase awareness of the warning signs of trafficking.
• Creates a new Department of Adult Correction and Juvenile Justice to more effectively manage inmate custody and supervision statewide.
• Funds needed additional positions in the state court system, including 56 new deputy clerks of court and 37 new assistant district attorneys.
• Provides more than $4 million for law enforcement training for North Carolina officers.

In Taxes and Economic Development –

• Reduces the tax burden on North Carolina families and small businesses by cutting the personal income tax rate from 5.499 to 5.35 percent in 2018, and by increasing the amount of income that is exempt from state income tax.
• Lowers the corporate income tax rate from 3 percent to 2.75 percent in 2018 and to 2.5 percent in 2019, continuing the business tax reforms that have helped create more than half a million new jobs since Republicans took control of the state legislature in 2011.
• Simplifies and reduces the franchise tax on small businesses by cutting what is effectively a statewide property tax on small businesses and creating a flat $200 tax on the first $1 million of a business’s net worth.
• Creates a new economic development fund to help attract major manufacturing projects – like automobile and aerospace manufacturers – to the state.
• Provides additional funds to support tourism advertising as well as domestic and international advertising to promote economic development.
• Allocates close to $4 million for revitalization grants in towns and cities across the state.

In Agriculture and the Environment –

• Increases funding for the Clean Water Management Trust Fund, the Tobacco Trust Fund and the Agricultural Development and Farmland Preservation Trust Fund.
• Expands support for the aquaculture industry and provides additional funding for dredging to ensure valuable economic activity at the North Carolina coast can continue.
• Allocates half a million dollars to expand international marketing of North Carolina agricultural products.
• Provides recurring funding for engineers to improve dam safety and review emergency action plans to help prevent catastrophic flooding.
• Sets aside $2 million to purchase a new firefighting aircraft in the wake of devastating wildfires in Western North Carolina.

In Transportation –

• Increases funding for the Strategic Transportation Investments Program (STIP) by $320 million over two years, which will allow 100 new highway projects to be added over a ten-year period.
• Includes $246 million to improve structurally deficient bridges across the state, adds $130 million to improve the condition and safety of existing roads and increases funding for pavement preservation by $70 million, extending the life of thousands of miles of roads. 
• Invests $40 million to fund immediate need construction projects across the state that improve mobility and safety, reduce congestion and spur economic development.
• Includes $208 million over two years for a Roadside Environmental Fund dedicated to ensuring the safety and beautification of the state’s highways.
• Modernizes the state’s transportation network by providing additional funding to airports across the state for infrastructure improvements, and to the State Ports Authority for infrastructure and dredging needs.

Elsewhere –

• Brings the rainy day fund to $1.838 billion, or 8.2 percent of last year’s budget – the largest dollar amount and percentage in state history.
• Adds $120 million to make needed repairs and renovations to state and university facilities.
• Helps preserve North Carolina’s military operations by allocating $2 million for the next Base Realignment and Closure (BRAC).
• Continues the commitment to improving government transparency by funding a website that makes every state agency, county, and local school district budget available for citizens to view online.
• Aims to make government operations more efficient by investing in a fully-consolidated statewide Enterprise Resource Planning system.
• Helps the office of the State Auditor conduct more specialized audits and allocates funding to assist the state Department of Revenue in identifying and preventing tax fraud.

The full budget proposal will be posted to the North Carolina General Assembly website at www.ncleg.net on Tuesday night.