On Friday, June 29th the North Carolina General Assembly wrapped up the short session of the 2017-18 legislative term. Like all sessions, this one was a combination of good and bad. There were conservative victories (e.g. reductions in the personal and corporate income taxes) and violations of conservative principles (e.g. $30 million in pork to local legislators and allowing the legislature to float bonds for road construction without requiring a vote of the people).
The single biggest accomplishment of the session was passage of a $23.9 billion state budget. In addition, the session brought passage of other key legislation as well as the placement of 6 constitutional amendments on the November ballot, when voters will have the opportunity to decide whether or not to enshrine these particular provisions in the state constitution.
Here’s a quick review of the just-completed legislative session.
The Budget
- Overriding a veto from Governor Roy Cooper, North Carolina Republicans approved a $23.9 billion state budget for 2018-19
- The new budget represents an increase of less than 4 percent over the previous budget and about half a billion less in spending when compared to Gov. Cooper’s spending plan
The Budget: The Good
- Personal Income Tax Rate would fall to 5.25 percent in 2019 from the current 5.499 percent, as previously scheduled. Cooper’s plan would have preserved the higher rate for filers earning $200,000 or more
- The Corporate Income Tax Rate would fall from 3 percent to 2.5 percent, beginning in 2019. Under the new rates, North Carolina will have the lowest rate of any state imposing a corporate income tax rate. Under Gov. Cooper’s plan, corporate income taxes would have remained at 3 percent
- Standard Deduction. The budget lets stand a planned increase in the standard deduction. Under the new rates the deduction for married filers increases from $17,500 to $20,000. Single filers would see an increase the standard deduction, moving from $8,750 to $10,00
Education Budget Highlights
- New budget adds $700 million in new funding for public education, compared to last year’s funding
- Provides $35 million for school safety initiatives, safety training, equipment and youth mental health personnel
- Adds an additional $11.9 million for textbooks and digital resources
- Provides $3 million in additional funding to expand Children with Disabilities Scholarship Program to reduce a waitlist
- Allows cities to use tax money for public and charter schools
- Provides $18.5 million in additional funding to expand More at Four by 3,500 students and to reduce waitlists by 2021
Pay Raises
Education Employees
- Under the new budget, teachers receive an average 6.5 percent pay increase, which brings the average increase in teacher’s base pay to nearly 20 percent since 2013-14 school year
- Provides $12 million for bonuses for teachers with 25 or more years of experience
- Principals receive 6.9 percent pay increase and may qualify for bonuses of up to $20K based on whether schools meet academic growth goals
- Allocates $22 million in additional funding for performance-based bonuses for reading and math teachers
- Other school employees receive an average 2 percent salary increase
Other State Employees
- Average 2 percent raise for state employees
- Raises minimum salary for state employees to $31,200
The Budget: The Bad
Corporate Welfare
- Budget lowers the threshold for transformative grants for Job Development Investment Grants (JDIG) from $4 billion to $1 billion and the minimum requirement of promised jobs from 5,000 to 3,000. Transformative grants are the largest JDIG grants available and this move is presumably aimed at luring large projects such as Apple and Amazon to North Carolina
- Budget also creates Growing Rural Economies for Access to Technology Program (GREAT); GREAT grants taxpayer dollars to broadband providers to set up broadband in underserved areas
Budget Pork
- The State budget contains 170 line-items totaling $30 million for legislators’ pet local projects. The projects range from $15,000 for security cameras for a running trail in Jackson to $125,000 for a community art center in Cornelius
- Many of these “earmarks” represent money to non-profit organizations and are a result of a closed door and non-transparent process. Since such a process is usually done in secrecy and gives an advantage to some non-profits over others, Civitas cannot support the process or the outcome
Key Legislation
HB 90 – Provides greater flexibility for school districts to meet K-3 class size reduction requirements. The legislation delays class size reduction changes one year and phases in new requirements with new ratios fully phased-in for 2021-2022 school year. The bill also takes $58 million in funding Gov. Cooper negotiated with pipeline contractors and transfers it to school districts in the eight counties served by the school district. In addition, lawmakers included a provision in the legislation that changes the composition of the State Elections Board, adding one member not affiliated with a political party. Passed House and Senate and became law on March 16th without the signature of Gov. Cooper.
SB 758 – Build NC Bond Act. Legislation authorizes the state to issue up to $3 billion in “special indebtedness” borrowing without requiring a vote of the people. Most of the money would be used for road building projects. Passed by House and Senate and approved by Governor Cooper on June 20, 2018.
HB -986 – Legislation calls on State Superintendent to study ways to reduce testing for K-12 public school students. The bill also changes how grade 3 students who achieve a superior score on EOG math exam enroll in advanced math class the following year. The new law automatically enrolls all students who achieve a “superior” score in advanced math classes. The new law is intended to prevent thousands of low income students who previously scored superior marks from being excluded from advanced math classes. Passed by House and Senate and signed by Gov. Cooper on June 22, 2018.
SB 655 – Changes the date of primary elections from May to March, starting with the 2020 elections. Passed by the House and Senate and signed by Gov. Cooper June 22, 2018.
SB 616 -Heroin and Opioid Prevention and Enforcement Act. Legislation expands law enforcement access to the Controlled Substance Reporting System and increases penalties for health workers that steal or dilute a patient’s controlled substance. Legislation also provides future funding for treatment and overdose-treating medications. Passed House and Senate and signed by Gov. Cooper on June 22, 2018.
HB -969 – Legislation incorporates recommendations of the Joint Legislative Oversight Committee on Justice and Public Safety. Protects prison workers by strengthening rules and enforcement provisions. Passed by House and the Senate and signed by Gov. Cooper on June 25, 2018.
SB 486– Elections Security and Transparency Act. Makes changes to state’s election laws. Most notably it prohibits a candidate that lost in a primary from running for the same position in the general election as a third-party candidate. Approved by the House and Senate. SB 486 was vetoed by Gov. Cooper, but became law on June 20th after the House and Senate overrode the Governor’s veto.
SB 162 -Human Trafficking Restorative Justice. Legislation develops definition of human trafficking victim and also provides a defense for victims who are forced to help their captors in enslaving others. Passed by the House and Senate and signed by Gov. Cooper on June 25, 2018.
SB 711-NC Farm Act of 2018. The bill made various changes to farming regulations in the state. Most notably, the legislation limited the circumstances under which property owners would be allowed to sue neighboring farms for nuisance complaints. Passed by House and Senate and became law over the Governor’s veto on June 27, 2018.
HB 717– The legislation changes the composition of judicial election districts, clarifies the listing of judicial seats on the ballot and limits the rotation of superior court judges to six months. Vetoed by Governor Cooper. Became law when veto overridden by House and Senate on June 28, 2018.
Constitutional Amendments on November Ballot
HB 913 – Bipartisan Ethics and Election Enforcement. This constitutional amendment would create a bi-partisan commission, appointed by House and Senate leadership, to select members of the Ethics and Election Board. The amendment transfers appointment powers from the Governor to the General Assembly for Ethics and Elections Enforcement as well as for many boards and commissions.
SB 814 – Judicial Vacancy Sunshine Amendment. Current law allows the governor to appoint judges to seats vacated in the middle of a term. The amendment instead require that the Governor choose from a list of nominees proposed by a new commission and approved by the General Assembly.
SB 75 – Maximum Income Tax Rate. North Carolina State Constitution caps the maximum income tax rate on individuals at 10 percent. The proposed amendment would lower the state’s constitutional income tax rate cap to 7 percent.
HB 1092 – Photo ID Requirement. Constitutional amendment would require voters to provide photo identification before voting in person.
SB 677 – Right to Hunt and Fish. Legislation is intended to provide stronger protection for hunting and fishing rights against organizations who are working to limit those rights. Similar amendments have been adopted in 21 states.
HB 551– Crime Victim’s Rights. Legislation strengthens the crime victim’s rights amendment that was approved by voters in 1996. The new provisions are based largely on what is known as Marsy’s Law. Six states have already approved Marsy’s Law amendments and another half dozen states are considering similar legislation.
