Conferenced Budget passes NCGA, Governor Vetoed in less than 24 Hours

The state House of Representatives approved the compromised budget with the Senate by a final vote of 64-49. The budget was vetoed by Governor Cooper the following morning. The budget includes pay raises for state employees and teachers.

There is over 32 million dollars of funding for the 94th district. Items range from school construction dollars to economic projects.

The veto from Gov. Cooper means  the state will go into CR on July 1st. The state will operate on last year budget amounts.

Effects of this include; pay freezes and nonrecurring grants are stopped. This can create chaos for employees and programing across the state. 

FINAL CONFERENCE COMMITTEE REPORT ON HOUSE BILL 966

JUNE 25, 2019 

FY 2019-21 BIENNIAL Budget Highlights 

The FY 2019-20 proposed budget of $24.0 Billion represents a 3.5% increase over the comparable enacted FY 2018-19 budget (adjusted for the move of debt service to the State Capital and Infrastructure Fund). The FY 2020-21 proposed budget of $24.8 Billion represents a 3.3% increase over the proposed FY 2019-20 budget. 

Selected Statewide Highlights include

• Transfers an additional $710 million into the Savings Reserve Account, replenishing all but $46 million of the $756 million transferred out to support Hurricane Florence Recovery; brings the total anticipated balance to $1.96 billion in 2021; 

• Provides Compensation increases and bonuses for Teachers, State Highway Patrol, Magistrates, Clerks and other State employees totaling $208 million in FY 2019-20 and $354 million in FY 2020-21. 

• Provides 5 non-expiring Bonus Leave days for eligible State employees and Community College employees; 

Fully funds State Health Plan requirements and Retirement System requirements over the biennium; 

• Provides funding for a one-time 0.5% Retiree Supplement for each year of the biennium; 

Reduces the Franchise Tax rate to $0.96 over two years and raises the Standard Deduction for all filing statuses by 5% effective 2021; 

Provides $325 million for repairs and renovations for State agencies and the UNC System

Authorizes $448 million in capital projects for State agencies, $632 million in capital projects for the UNC System and $90.8 million in capital for Community Colleges

Provides an additional $15 million to the State’s GREAT broadband initiative. 

Highlights of the Education Budget 

The Conference Budget for Education in FY 2019-20 includes net appropriations of $14.2 million, which is $486 million above the amount enacted for FY 2018-19. This is a 3.5% increase. FY 2020-21 includes net appropriations of $14.7 million, which is $461 million above the amount in the Conference budget for FY 2019-20. This is a 3.2% increase. The highlights of the Education adjustments follow below. 

North Carolina Community College System (NCCCS) 

Committee Report Items 

(Page B7, Item 10) Provides funds for Community Colleges’ participation in the centralized residency determination service ($2.4 million, recurring). 

(Page B7, Item 12) Provides funds for NCCCS to implement a system-wide ERP ($10.5 million NR in FY 19-20 and $8.5 million NR in FY 20-21). 

(Page B9, Item 18) Provides funds to fully eliminate the funding disparity between workforce course and curriculum courses ($12 million, recurring). 

(Page B10, Item 20) Provides additional funding for NC Career Coaches, allowing for changes to the matching requirement to participate in the program as well as funds to hire additional coaches ($1.7 million in FY 19-20 and $2.3 million in FY 20-21). 

(Page B11, Item 33) Provides funds for an additional four multi-campus centers (Forsyth Tech Transportation Campus, Wake Tech RTP Campus, Richmond CC Scotland County Campus, and Guilford Tech Aviation Campus; $2.2 million recurring). 

Special Provisions 

(Page 25, Sec. 6.3) Changes the matching requirements for participation in the Career Coaches program (no match for campuses partnering with Tier 1 LEAs; a 2-to-1 match for campuses partnering with Tier 2 LEAs; and a 1-to-1 match for campuses partnering with Tier 3 LEAs). 

(Page 26, Sec. 6.4) Allows community colleges to earn enrollment funding for courses taught in local jails. 

Public Education 

Committee Report Items 

(Page B22, Item 52) Provides recurring funding to fund the increase in the average salary of various public school positions ($47.5 million, recurring). 

(Page B22, Item 53) Provides recurring funding beginning in FY 2019-20 to fund average daily membership (ADM) adjustments ($3 million, recurring). 

(Page B26, Item 77) Provides funds for the School Business System Modernization project, which includes an ERP for increased efficiency in payroll, human resources, licensure, and financial information ($12 million in FY 2019-20 and $35.1 million in FY 2020-21). 

(Pages B24, Items 62-65) Provides additional funds for four School Safety Grants: School Resource Officers, Safety Equipment, Students in Crisis, and Safety Training ($3 million and $15.1 million NR in FY 2019-20 and $6 million in FY 2020-21). 

(Page B23, Item 57) Increases funding to the Instructional Support Allotment, with the intent to be used by LEAs to hire additional school mental health support personnel: school psychologists, school counselors, school nurses, school social workers ($20 million in FY 2019-20 and $23 million in FY 2020-21). 

(Page B23, Item 59) Increases funding to the Classroom Supplies allotment in each year of the biennium, and allocates $150 per eligible classroom teacher in FY 2019- 20 and $200 per teacher in FY 2020-21 to purchase supplies through an online vendor ($15 million NR in each year). 

(Page B23, Item 61) Provides additional funding for the Textbooks and Digital Resources Allotment ($12 million in each year). 

(Page B24, Item 66) Provides funds to establish the new Transportation Reserve Fund for Homeless and Foster Children, to help cover the extraordinary costs associated with transporting these students to/from their schools of origin ($3 million NR in FY 2019-20). 

(Page B24, Item 67) Provides funds to offset the copays for students eligible for reduced-price lunches in schools participating in the National School Lunch Program ($3 million NR in FY 2019-20). 

(Page B24, Item 68) Provides supplemental funding for five Cooperative Innovative High Schools (CIHS’s) which opened in FY 2018-19 and two CIHS’s approved to open in FY 2019-20 ($1.5 million, recurring). 

(Page B27, Item 86) Provides funds to NC Council on Economic Education to provide professional development to teachers for a new Economics and Personal Finance high school graduation requirement ($1 million NR in FY 2019-20). 

Special Provisions 

(Page 36, Sec. 7.9) Codifies the Advanced Teaching Roles program to enable additional local school administrative units to develop new models of job responsibility and compensation for participating teachers. 

(Page 43, Sec. 7.18) Adds Economics and Personal Finance as a high school graduation requirement and mandates related professional development for the teachers of those courses. 

(Page 48, Sec. 7.27) Caps the number of CIHSs that the State Board of Education (SBE) may approve each year to operate with supplemental funding at four. 

(Page 51, Sec. 7.31) Establishes the North Carolina Classroom Supply Program, which allocates $150 per eligible classroom teacher in FY 2019-20 and $200 per teacher in FY 2020-21 from the Classroom Supplies Allotment. 

(Page 60, Sec. 7.41) Establishes the Transportation Reserve Fund for Homeless and Foster Children, a grant program to help cover extraordinary transportation costs associated with transporting homeless and foster children to their school of origin, and allows LEAs to apply to the Special State Reserve Fund for grants to help cover the costs of transporting high-needs children with disabilities. 

(Page 61, Sec. 7.43) Directs DPI to use funds provided to pay the reduced-priced lunch copays for students qualifying in all schools participating in the National School Lunch Program, and directs the State Board of Education (SBE) to recommend policy options for on the uniform administration of unpaid meal charges in LEAs. 

(Page 66, Sec. 7A.2) Excellent Public Schools Act 2019: directs the Superintendent of Public Instruction to convene a task force with members of UNC Board of Governors, the State Board of Community Colleges, the NC Independent Colleges and Universities, and the Professional Educator Preparation and Standards Commission (PEPSC) to develop a Comprehensive Plan to Improve Literacy Instruction. 

University of North Carolina (UNC) 

Committee Report Items 

(Page B41, Item 118) Provides additional funding for the increase in financial obligations for NC Promise institutions ($15.0 million recurring in FY 2020-21). 

(Page B41, Item 119) Provides additional funding for Faculty Recruitment and Retention ($6.0 million recurring in FY 2019-20 and $11.4 million recurring in FY 2020-21). 

(Page B43, Item 129) Provides funding for a one-year scholarship for students graduating from the North Carolina School of Science and Math in 2019-20 school year and subsequently enroll in a UNC institution the following academic year ($1.0 million, recurring). 

(Page B44, Item 134) Provides matching funds to the College Advising Corps (CAC) to expand the placement of college advisors in NC public schools. Funds made available to the CAC are matched on the basis of $2 non-State funds for every $1 in State funds ($1.9 recurring in FY 2019-20 and $2.5 million recurring in FY 2020-21). 

(Page B47, Item 140) Provides additional funding to the Western School of Medicine – Asheville campus ($4.0 million, recurring). 

(Page B48, Item 141) Provides funds to the Southern Regional Area Health Education Center ($4.0 million, recurring). 

(Page B58, Item 153) Provides additional funds for NC A&T’s doctoral programs ($3.5 million recurring and $4.0 million NR in FY 2019-20, and $7.5 million recurring in FY 2020-21). 

(Page B58, Item 154) Provides additional matching funds for NC A&T’s federal grants ($1.6 million, recurring). 

(Page B65, Item 161) Provides funds to North Carolina Central University for laboratory equipment and instruments ($3.0 million NR in FY 2019-20). 

(Page B67, Item 163) Provides additional funding for the North Carolina School of Science and Math – Morganton campus. ($1.4 million recurring and $5,150 NR in FY 2019-20, and $3.4 million recurring and $792,369 NR in FY 2020-21). 

Special Provisions 

(Page 90, Sec. 8.2) Allows the carryforward of unexpended FY 2018-19 enrollment growth funds for NC Promise requirements and for rapid growth at any of the 3 constituent institutions, through FY 2019-20. 

(Page 91, Sec. 8.3) Provides a matching grant to the College Advising Corps to expand the placement of college advisers in North Carolina public schools. 

(Page 95, Section 8.7) Increases the carryforward percentage for UNC institutions from 2.5% to 5.0% for one-time expenditures that do not impose additional financial obligations on the State through FY 2022-23. Effective July 1, 2023, the carryforward percentage is reduced to 2.5%. 

(Page 104, Section 8A.2) Provides funding for a one-year tuition grant program for students graduating from the North Carolina School of Science and Math beginning with the graduating class of the 2019-20 school year, who subsequently enroll in a UNC constituent institution the following academic year. 

(Page 110, Section 8A.9) Combines the Children with Disabilities Grant and the Personal Education Savings Account programs in FY 2020-21 into the North Carolina Personal Education Student Accounts for Children with Disabilities Program to provide the option for a parent to better meet the individual educational needs of the parent’s child. For FY 2020-21, funds for the Children with Disabilities Grant and the Personal Education Savings account will be eliminated and instead appropriated to the new combined program. 

Highlights of Conference Department of Health and Human Services Budget 

The Conference Budget for Health and Human Services in FY 2019-20 includes net appropriations of $5.6 billion, which is $218 million above the amount enacted for FY 2018-19. This is a 4.1% increase. FY 2020-21 includes net appropriations of $5.8 billion, which is $207.6 million above the amount in the Conference budget for FY 2019-20. This is a 3.7% increase. The highlights of the Health and Human Services adjustments follow below: 

Division of Aging and Adult Services 

Committee Report Items 

(Page C-8, Item 16) Expands the Home and Community Care Block Grant (HCCBG). The HCCBG provides funding for in-home and community based services for older adults, allowing them to continue residing at home. Funding includes $2.3 million R and $1.3 million NR net General Fund appropriation in FY 2019-20 and $4.8 million R and $1 million NR net General Fund appropriation in FY 2020-21. The funding increase will allows an estimated 1,500 additional seniors to access services in FY 2019-2020 and 2,725 seniors to access services in FY 2020-21. 

Special Provisions 

(Page 118, Section 9A.2) Increases the State-County Special Assistance Personal Needs Allowance from $46.00 per month per recipient to $70.00 per month per recipient effective October 1, 2019. Funds to support this change are located in the Division of Social Services Budget (total requirements of $ 4.5 million R in FY 2019-20 and $6 million R in FY 2020-21). 

Division of Central Management and Support 

Committee Report Items 

(Page C-19, Item 36, and page C-23, items 64-68) Provides funding for NC FAST including funding for the Child Welfare case management system and changes due to State and federal laws; 24 hours a day, 7 days a week access, hardware and software purchases and the development and implementation of a document management component of NC FAST. Funding includes $5.7 million R and $18 million NR net General Fund appropriation in FY 2019-20 and $7.9 million R and $11.2 million NR net General Fund appropriation in FY 2020-21. The nonrecurring funding comes from the Medicaid Transformation Reserve. 

(Page C-19, Item 37) Provides $3.5 million NR in Year 1 and $1.0 million NR in Year 2 for loan repayment incentives to recruit doctors, physician assistants, dentists, nurse practitioners, and certified nurse midwives to practice in rural areas of the State. 

(Page C-19, Item 38) Provides approximately $1 million in Year 1 and $1.2 million in Year 2 for additional prescription assistance services for indigent and uninsured persons. 

(Page C-21, Item 56) Provides $450,000 NR and $950,000 NR expansion to the DHHS competitive grants for NC food banks, NC Senior Games, and Special Olympics NC 

Special Provisions 

(Page 121, Sec. 9B.5) Authorizes DHHS to work with the Department of Military and Veterans Affairs, Community Care of NC, and Maxim Healthcare to develop and implement a two-year pilot program in Cumberland County to 1) provide care coordination services to veterans to increase their access to healthcare and 2) to recruit and train un/underemployed veterans as community healthcare workers 

Division of Child Development and Early Education 

Committee Report Items 

(Page C-32, Items 77 to 80) Provides 2 million NR and $400,000 R in each year of the biennium for Smart Start. 

(Page C-32, Item 82) Increases the NC Pre-K rates for child care centers by 2% in FY 2019-20 and by an additional 2% in FY 2020-21 with the intent that the funds be used to increase the salaries of teachers working in child care centers to address the disparities in teacher salaries among those working in child care centers compared to those working in public schools or Head Start centers. Funding of $1.7 million R FY 2019-20 and $3.5 million R in FY 2020-21 is provided for this purpose. 

(Page C-33, Items 84-88) Increases funding for the Child Care Subsidy Program by $3.7 million NR each year of the biennium. The additional funding will serve an estimated 500 children each year. 

Division of Health Benefits 

Committee Report Items 

(Page C-42, Item 103) Provides an additional $5.4 million in FY 2019-20 and $16.3 million in FY 2020-21 to add 1,000 Innovations Waiver slots, 500 effective January 1, 2020, and 500 effective January 1, 2021. The slots allow individuals with intellectual and developmental disabilities to access home- and community-based Medicaid support services. The fully annualized recurring net appropriation for the additional 1,000 slots is $21.7 million. 

(Page C-42, Item 105) Provides funds to increase the wages paid to direct support personnel working in group homes that care for individuals with intellectual and developmental disabilities. The increased payments will be implemented no sooner than January 1, 2020. 

(Page C-42, Item 107) Increases Medicaid recipient copayments to $4 from the current $2 or $3 level, effective November 1, 2019. Providers collect the beneficiary copayments, and the amount paid to providers for Medicaid claims is reduced, saving the State an estimated $3.5 million R in FY 2019-20 and $5.0 million R in FY 2020-21. 

(Pages C-44 and C-45, Items 114-121) Budget a total of $232.9 million in FY 2019-20 and $198.4 million in FY 2020-21 to support Medicaid Transformation projects, including net appropriations totaling $28.6 million R in FY 2019-20 and $40.2 million R in FY 2020-21. The items receiving funds include a contract for managed care program design, enrollment broker services, ombudsman programs, upgrades to NC FAST needed for managed care, provider data management systems, new positions, and other Medicaid Transformation needs. The State’s share of nonrecurring project costs – $27.3 million in FY 2019-20 and $11.0 million in FY 2020-21 – is funded by transfers from the Medicaid Transformation Fund to the Division of Health Benefits. 

(Page C-45, Item 122) Requires DHHS to reduce administrative costs across the Department by $30.7 million R in net General Fund appropriations in FY 2019-20 and by $42.7 million R in net General Fund appropriations in FY 2020-21 as the State transitions some of its administrative functions to prepaid health plans in managed care. 

(Page C-45, Item 123) Provides $30.7 million NR and $21.3 million NR in FY 2019- 20 and FY 2020-21, respectively, for additional administrative needs at DHHS while the State transitions most Medicaid beneficiaries from the current fee-for-service system to managed care. The funding will be transferred from the Medicaid Transformation Fund. 

(Page C-46, Item 124) Rebases Medicaid with additional net General Fund appropriations of $33.8 million in FY 2019-20 and $199.8 million in FY 2020-21. The rebase includes $105.5 million R in FY 2019-20 and $214.9 million R in FY 2020- 21, as well as nonrecurring reductions of $71.7 million and $15.1 million, respectively, due to the temporary enhanced federal match for the Children’s Health Insurance Program. The enhanced match will phase out by October 1, 2020. 

(Page C-47, Item 127) Budgets $150.2 million NR in FY 2019-20 and $11.4 million NR in FY 2020-21 from the Medicaid Transformation Fund to pay the runout of claims for individuals transitioning to Medicaid managed care. 

Special Provisions 

(Page 145, Section 9D.18) Revises the existing hospital assessments for the transition to Medicaid managed care. DHHS will calculate the hospital assessment rates annually, the Governor will propose the rates, and the General Assembly will set the assessment rates. Because FY 2019-20 will be the first year that the revised hospital assessments are used, the provision defines contingency plans for under- or over- collections resulting from revisions to the assessments. The provision also revises the existing supplemental payment program for eligible physicians to continue the program in Medicaid managed care. 

(Page 149, Section 9D.19) Imposes the State’s existing 1.9% insurance premiums tax on prepaid health plans. 

Division of Mental Health, Developmental Disabilities and Substance Abuse Services 

Committee Report Items 

(Page C-66, Item 152) Reduces Single Stream funding by $7.5 million R in FY 2019- 20 and FY 2020-21. 

(Page C-70, Item 166) Provides $4.9 million R for staffing and other operating costs at the new Broughton Hospital beginning in FY 2020-21. 

(Page C-75, Item 192) Provides $5 million NR for Substance Abuse Services in FY 2019-20 and FY 2020-21. 

(Page C-76, Item 195) Provides $1.8 million NR for Group Homes bridge funding in FY 2019-20 and FY 2020-21

Special Provisions 

(Page 155, Sec. 9F.1 ) Single Stream Funding for MH/DD/SAS Community Services redistributes recurring single stream reductions included in FY 2018-19 budget based on base allocation of single stream funds for FY 2019-20 and FY 2020-21, redistributes the $7.5 million increase in the biennium budget based on an inverse relationship of the reinvestment plans per covered life for FY 2019-20 and FY 2020-21, and requires LME/MCOs to continue spending at 90% of FY 2014-15 levels, and allows for a restoration of funding of up to $30 million from Medicaid surplus. 

(Page 157, Sec. 9F.2) Requires the Department to prepare a report on the use of three-way bed funding by December 1st of FY 2019-20 and FY 2020-21 that includes the system for beds or bed days purchased, the process used to ensure that funds are used exclusively for those medically indigent, the amount of funds paid by the inpatient and non-hospital detoxification facility, and other initiatives to reduce State psychiatric hospital use. 

(Page 159, Sec. 9F.4) Extends the date for spending or encumbering Dix Hospital Property Funds for the construction or conversion of beds to June 30, 2020. 

(Page 161, Section 9F.10) Extends the date for spending or encumbering funds for a Wilkes county facility to December 31, 2019. 

Division of Public Health 

Committee Report Items 

(Page C-86, Item 207) Provides $1 million R in Year 1 and $1.5 million R in Year 2 for the Nurse-Family Partnership Program, to support first-time parents. 

(Page C-86, Item 208) $500,000 NR in Year 1 and $1 million NR in Year 2 for tobacco prevention activities targeted to youth and people of childbearing age. 

(Page C-86, Item 214) Provides funding ($150,000 in Year 1 and $300,000 in Year 2) and establishes a new State office to serve as the lead agency for child fatality prevention in North Carolina. 

(Page C-87, Item 217) $2.7 million in Year 1 and $4 million in Year 2 for local health departments’ communicable disease control, surveillance, detection, and prevention activities 

(Page C-88, Items 222 & 223) Provides over $700,000 in Year 1 and $870,000 in Year 2 for the Office of the Chief Medical Examiner to maintain current positions and add 4 new positions to address the State’s increased death investigation caseload 

(Page C-90, Item 229) Provides $1.2 million NR in both years of the biennium to the Continuum of Care Pilot Project, which provides care coordination and medical support to women experiencing crisis pregnancies. 

Division of Social Services 

Committee Report Items 

(Page C-117, Item 291) Increases the rates paid for foster care effective July 1, 2020. Total requirements are $20.7 million in FY 2020-21. 

(Page C-117, Item 293) Provides $11.6 million NR in FY 2019-20 and $14 million in FY 2020-21 in total requirements to continue the Temporary Assistance to Facilities who serve Special Assistance recipients. Facilities are provided $34 per month for each Special Assistance recipient. This is increased to $70 per month effective October 1, 2019. Counties pay 50% of the cost. 

(Page C-120, Item 318) Establishes 11 new FTEs in the Child Welfare program to increase the State’s capacity to provide technical assistance and monitoring of local county departments of social services. Total requirements are $$1.1 million R in each year of the biennium.

Highlights of the Conference 

Agriculture, Natural, and Economic Resources Budget 

The Conference Budget for Agriculture, Natural, and Economic Resources in FY 2019-20 includes net appropriations of $639.2 million, which is $36.4 million above the amount enacted for FY 2018-19. This is a 6.0% increase. FY 2020-21 includes net appropriations of $652 million, which is $12.8 million above the amount in the Conference budget for FY 2019-20. This is a 2.0% increase. The highlights of the Agriculture, Natural, and Economic Resources adjustments follow below: 

Department of Agriculture and Consumer Services (DACS) 

Committee Report Items 

(Page D 9, Items 8-13) Provides $787,815 recurring and $170,085 nonrecurring in the first year to create 10 new positions in Agronomic Services, Emergency Programs, Plant Industry, and Soil and Water. 

(Page D 9, Item 14) Provides $115,220 recurring and $5 million nonrecurring in the both years of the biennium for operating reserves to open the new Ag Sciences Center

(Page D 11, Item 22) Provides $1 million nonrecurring in the first year and $1.5 million nonrecurring in the second year for the Eastern NC Food Commercialization Center

Special Provisions 

(Page 212, Sec. 10.9 and 10.10) Swine Biogas and Innovative Lagoon Sludge Treatment transfer $450,000 each from the Ag Gas fund or cost share assistance to swine farmers. 

Department of Commerce (Commerce) 

Committee Report Items 

(Page D 20, Item 43) Provides $150,000 recurring for a Certified Sites Program Director

(Page D 27, Item 100) Provides $2.5 million nonrecurring for affordable housing matching grants. 

(Page D 33, Item 103) Increases the appropriation to the NC Biotechnology Center by $500,000 recurring, and by $500,000 nonrecurring in the second year. 

(Page D 40, Items 118 and 119) Provide $1.5 million nonrecurring for tourism advertising and $1 million recurring for business marketing for the EDPNC. 

(Page D 42, Item 128) Transfers $23.5 million in the first year and $9 million in the second year from the Film Grant cash balance to the Department of Natural and Cultural Resources for Clean Water Management Trust Fund and Parks and Recreation Trust Fund. 

Special Provisions 

(Page 220, Sec. 11.6) Reduces the minimum spend requirement and increases the maximum grant award for film projects. 

Department of Environmental Quality (DEQ) 

Committee Report Items 

(Page D 52, Item 140) Provides $1.5 million nonrecurring to replace the West Bay cultch planting vessel. 

(Page D 52, Item 141) Provides $1.5 million nonrecurring in each year for the Jean Preston Oyster Sanctuary Network

(Page D 53, Items 146 and 147) Provides $3.5 million recurring for the State match for federal Clean Water and Drinking Water State Revolving Funds

(Page D 53, Item 148) Provides $9 million recurring for the Viable Utility Reserve to provide grants to water and sewer authorities identified as distressed. 

Special Provision 

(Page 235, Section 12.15) Creates the Viable Utility Reserve to meet the needs of distressed water and wastewater systems. 

Department of Natural and Cultural Resources (DNCR) 

Committee Report Items 

(Page D 82, Item 211) Provides $500,000 recurring for historic site maintenance

(Page D 88, Item 272) Provides $930,517 recurring and $750,000 nonrecurring in the first year, and $1.8 million recurring in the second year for operating reserves for nine State parks expanded or improved through Connect NC bonds. 

(Page D 89, Item 274) Provides $8 million nonrecurring in additional funding for the Parks and Recreation Trust Fund for a total of $24.2 million in the first year of the biennium. Also provides $1.4 million recurring and $2 million nonrecurring in the second year for a total of $19.6 million. 

(Page D 92, Item 305) Provides Clean Water Management Trust Fund $7 million nonrecurring in the first year of the biennium for a total of $20.2 million. Provides $4.5 million recurring and $2 million nonrecurring in the second year for a total of $19.7 million. 

Highlights of the Conference Justice and Public Safety Budget 

The Conference Budget for Justice and Public Safety in FY 2019-20 includes net appropriations of $3.0 billion, which is $186 million above the amount enacted for FY 2018-19. This is a 6.6% increase. FY 2020-21 includes net appropriations of $3.1 billion, which is $61 million above the amount in the Conference budget for FY 2019-20. This is a 2.0% increase. The highlights of the Justice and Public Safety adjustments follow below: 

Administrative Office of the Courts (AOC): Adjustments to Appropriations 

(Pages E 8 and E 9, Items 16 and 18) Raise the Age: Provides funding for 7 deputy clerks, 9 assistant district attorneys (ADAs), 3 DA legal assistants, and 7 district court judges to support implementation of the Juvenile Justice Reinvestment Act, or “Raise The Age:” $1.8 million in FY 2019-20, $2.8 million in FY 2020-21, and 26 FTE. 

(Page E 9, Items 19, 20, 21, and 22) District Attorney Offices: Provides funding for 7 ADAs in FY 2020-21, 3 ADAs in both years of the biennium to act as Special Assistant US Attorneys, 5 DA Investigators in both years of the biennium, and an Election Crimes Investigative Consultant pilot project with the Conference of DAs: $780,855 in FY 2019-20, $1.9 million in FY 2020-21, and 15 FTE. 

(Page E 10, Items 24, 25, and 26) Support for Commissions: Provides funding for the Human Trafficking Commission, Innocence Inquiry Commission, and the Sentencing and Policy Advisory Commission for positions and operating costs: $520,394 in FY 2019-20, $542,525 in FY 2020-21, and 3.5 FTE. 

(Page E 9, Item 17) Guardian ad Litem: Provides funding for 9 Guardian ad Litem positions across the biennium: $277,981 in FY 2019-20, $952,611 in FY 2020-21, and 9 FTE. 

(Page E 7, Item 10) Courthouse Renovation and Repair: Provides directed grants to 13 counties to assist with courthouse renovations and repairs: $26.1 million in FY 2019-20. 

(Page E 8, Item 14) e-Courts: Provides funds to AOC to begin implementation of the e- Courts project: $3.8 million in FY 2019-20 and $2.6 million in FY 2020-21. 

(Page E 7, Item 13) Innovative Court Pilot Projects: Provides directed grants to 5 counties for innovative court pilot programs: $725,614 in FY 2019-20 and $439,136 in FY 2020-21. 

AOC Special Provisions 

(Page 253, Section 15.2) Continues a funding mechanism to allow AOC to build a fund balance over time to support the e-Courts technology project. 

(Page 254, Section 15.5) Directs School of Government to study the feasibility and cost of creating an Office of Prosecutorial Services as an independent entity. 

Office of Indigent Defense Services (IDS): Adjustments to Appropriations 

(Page E 18, Items 36 and 37) Private Assigned Counsel Rates: Provides funding to increase Private Assigned Counsel rates: $3 million in FY 2019-20 and $4 million in FY 2020-21. 

(Page E 18, Item 33) Raise the Age: Provides funding for a juvenile resource defender position to support implementation of Raise the Age: $87,681 in FY 2019-20, $109,131 in FY 2020-21, and 1 FTE. 

IDS Special Provisions 

(Page 270, Section 16.2) Creates a new Public Defender District in Cleveland and Lincoln Counties. Also modifies the appointment process for chief public defenders to give a senior resident superior court judge 60 days to appoint. 

(Page 270, Section 16.3) Increases court costs to increase support for the Private Assigned Counsel fund and to provide additional funding for the Criminal Justice Education and Standards Commission at DOJ. 

Department of Justice (DOJ): Adjustments to Appropriations 

(Page E 26, Item 46) Sexual Assault Evidence Collection Kits: Provides funding to analyze and outsource untested sexual assault evidence collection kits: $3 million in each year of the biennium. 

(Page E 26, Item 43) Base Budget Technical Adjustment: Makes a technical adjustment to the Legal Services base budget in accordance with the State Budget Act: Reduction of $3.1 million annually. 

(Page E 26, Item 44) Legal Services: Provides funding to the Criminal Division of DOJ Legal Services: $508,759 in each year of the biennium. 

(Page E 26, Item 45) State Crime Lab Positions: Provides funding for 3 Forensic Scientists and 2 Drug Chemists: $258,464 in FY 2019-20, $516,928 in FY 2020-21, and 5 FTE. 

(Page E 26, Item 47) Criminal Justice Fellows: Provides funding for the Criminal Justice Fellows program: $332,000 in FY 2019-20 and $664,000 in FY 2020-21. 

(Page E 26, Item 48) Justice Academy Shoot House: Provides funding to repair and renovate the shoot house at the North Carolina Justice Academy in Salemburg: $1 million in FY 2019-20. 

DOJ Special Provisions 

(Page 272, Section 17.2) Establishes a process for testing Sexual Assault Evidence Collection Kits. 

(Page 275, Section 17.3) Increases eligibility for the Criminal Justice Fellows Program. 

Department of Public Safety (DPS): Adjustments to Appropriations 

(Pages E 42, Items 84 through 86) State Bureau of Investigation (SBI): Provides funding for lease expenses and 16 additional SBI agents, including support for human trafficking investigations and the new Behavioral Threat Assessment (BETA) program: $1.28 million in FY 2019-20, $1.8 million in FY 2020-21, 16 FTE. 

(Page E 43, Items 89 through 92) Prison Security Equipment: Provides funding for equipment to improve prison security and reduce contraband: $2 million in FY 2019-20. 

(Page E 43, Item 94) Inmate Pharmacy: Provides funding for inmate pharmacy drugs to address structural budget issues: $2.5 million in both years of the biennium. 

(Page E 43, Item 95) Long-Term Care Facility. Provides funds to create a 16-bed long- term care facility at Central Prison: $3.5 million in FY 2020-21 and 35 FTE. 

(Page E 43, Item 96) Inmate Substance Abuse Treatment: Provides funding to create a new 32-bed, in-prison intermediate substance abuse treatment beds: $351,657 in FY 2019- 20, $388,873 in FY 2020-21 and 5 FTE. 

(Pages E 43 and E 45, Items 99 through 108) Raise the Age: Provides funding to the Division of Juvenile Justice to support implementation of Raise the Age. This includes new court counselors, new administrative and management positions, support for additional detention beds, support for community-based and residential programs, and expanded funding for the county-based Juvenile Crime Prevention Councils: $22.9 million in FY 2019-20, $39.6 million in FY 2020-21, and 179 FTE. 

(Pages E 42, Items 87 and 87) VIPER Tower Upgrades: Provides funding for equipment and software upgrades for the Voice Interoperability Plan for Emergency Responders (VIPER), the statewide radio system used by the State Highway Patrol and other first responders: $9 million nonrecurring in FY 2019-20 and $1.5 million recurring in both years of the biennium. 

(Pages E 46, Items 116 and 117) National Guard Equipment: Provides funding for the National Guard to purchase high-frequency radios, live-tracking devices, and personal protective equipment: $2 million nonrecurring in FY 2019-20. 

DPS Special Provisions 

(Page 278, Section 18.7A) Reallocates $500,000 from the NC Sheriffs’ Association to the SBI for upgrading the State’s sex offender registry. 

(Page 280, Section 18.15) Requires the Department of Public Safety to report quarterly on progress implementing its prison reform efforts related to rules, policies, procedures, staffing, infrastructure and security improvements, and modifications to housing capacity. 

(Page 281, Section 18.16) Requires the Department of Public Safety to develop a long-term plan to meet Standard Operating Capacity requirements to staff and operate prisons. 

Highlights of the Conference General Government Budget 

The Conference Budget for General Government in FY 2019-20 includes net appropriations of $453.6 million, which is $20.2 million above the amount enacted for FY 2018-19. This is a 4.7% increase. FY 2020-21 includes net appropriations of $429.8 million, which is $23.9 million less than the amount in the Conference budget for FY 2019-20. This is a 5.3% decrease. The highlights of the General Government adjustments follow below: 

Department of Administration Committee Report Items 

(Page F-7, Item 9) Provides $1 million recurring to the State Construction Office for capital projects implementation 

(Pages F-7-8, Items 11-13) Provides funding and positions for the continued implementation of a new Real Estate Information System 

(Page F-11, Item 26) Provides $7.5 million in for development and implementation of a new e-procurement system for State agencies 

State Budget and Management - Special Committee Report Items 

(Page F-38, Item 47) Provides $4.5 million nonrecurring in each year of the biennium to eastern triad counties for workforce development efforts 

(Page F-39, Items 52-79) Provides directed grants to a number of entities 

Board of Elections Committee Report Items 

(Page F-58, Item 98) Provides $1.2 million nonrecurring in for implementing voter ID requirements 

General Assembly Committee Report Items 

(Page F-67, Item 113) Provides $1 million nonrecurring in for IT upgrades in the legislative complex, including the expanded use of video conferencing for committee meetings 

Housing Finance Agency Committee Report Items 

(Page F-81, Item 121) Funds the Workforce Housing Loan Program at $20 million in FY 2019-20 for the development of multi-family affordable housing 

Insurance Committee Report Items 

(Page F-88, Item 127) Provides funding to allow the Department to build an investigative management system to track insurance fraud 

Lt. Governor Committee Report Items 

(Page F-105, Item 146) Provides $1.5 million to study State investments into drone technologies and convene a related summit 

Military and Veterans Affairs (DMVA) Committee Report Items 

(Page F-113, Item 154) Provides $2 million for the Military Presence Stabilization Fund to sustain North Carolina military installments 

(Page F-114, Items 155-157) Consolidates the funding for State Veterans Cemeteries in the DMVA Special and provides an additional $246,520 recurring for cemetery operations 

Treasurer Committee Report Items 

(Page F-145, Item 213) Provides funding to update the State’s ORBIT retirement system to allow online identity authentication 

Special Provisions 

(Page 292, Sec. 35.1) Expands the line of duty death benefit coverage paid to firefighters to include oral cavity and pharynx cancers 

Highlights of the Conference Department of Transportation Budget 

The Conference Budget for Department of Transportation in FY 2019-20 includes net appropriations of $3.9 billion, which is $138 million above the amount enacted for FY 2018-19. This is a 3.7% increase. FY 2020-21 includes net appropriations of $4.0 billion, which is $156.9 million above the amount in the Conference budget for FY 2019-20. This is a 4% increase. The highlights of the Department of Transportation adjustments follow below: 

Revenue Forecast 

▪ Combined Highway Fund and Highway Trust Fund revenues are projected to increase by approximately 3.7% in FY 2019-20 and by another 4% in FY 2020-21. 

▪ The increased revenue is due to: 

o Increased consumption and higher tax rate for diesel and gasoline (partially due to 

the auto-indexing based upon the population and CPI). o Increased highway use tax revenues associated with new and used car sales. o Indexing of DMV fees in FY 2020-21, beginning in July 2020 that the General 

Assembly put in place in 2015. 

Committee Report Items 

(Page J-26, Item 2) General Maintenance Reserve. This budget provides an additional $164 million for GMR to address critical maintenance needs. 

(Page J-28, Item 14) Commercial Airport Grant This budget provides additional funding for the commercial airports. The total available for each year of the biennium and ongoing is $75M. 

(Pages J-29, Items 19 through 22) Rail Infrastructure Efforts Approximately $23 million is appropriated over the biennium for North Carolina’s rail infrastructure, including overhauling locomotives for the Piedmont and Carolinian trains, local train station repairs, and commuter rail improvements. 

(Page J-30, Item 25) DMV Move Assistance The Division of Motor Vehicles is receiving nearly $8 million over the biennium to support its headquarters move to Rocky Mount and pay for the new lease. 

(Page J-30, Item 26) Raleigh LPA Provides funds for the State License Plate Agency relocation. A Special Provision requires the DMV to consider a lease or purchase for their new location in the City of Raleigh. 

(Pages J-30, Items 27 and 28) LPA Compensation The budget for License Plate Agencies’ compensation is being increased in this budget to pay for services provided for the State. The transaction rates paid to LPAs are also increased by 28% over the biennium. 

(Page J-30, Item 31) NC Ports Authority Provides $11 million over the biennium to raise power lines across the Cape Fear River near the Port of Wilmington. 

(Page J-32, Item 42) Public Transportation Provides an additional $8.5 million annually for the State Maintenance Assistance Program (SMAP), an operating assistance program for fixed-route transit systems. 

(Page J-34, Item 48) Powell Bill Provides an additional $7.4 million in FY 2020-21 for municipalities with populations of 200,000 or less to maintain road infrastructure. 

(Page J-40, Item 51) Strategic Transportation Initiatives Provides an additional $130 million over the biennium for highway and transportation construction projects out of Highway Trust Fund. 

Special Provisions 

(Page 353, Section 40.3) Capital, Repairs, and Renovations – Provides approximately $15.9 million for needed repairs to DOT division offices and DOT office space. Included are Polk Maintenance Shop, Ocracoke Ferry quarters, Currituck Maintenance & Storage and Northampton County - Jackson shops. 

(Page 357, Section 40.8) Names a Bridge in memory of Lance Corporal Nicholas S. O’Brien and Corporal J. Ralph Holder. The O’Brien Bridge is located over Stanley Creed on Black Snack Road in Gaston County and the Holder Bridge is in Moore County. 

(Page 359, Section 40.14) Antique Plates – The age of a vehicle is reduced from 35 years to 30 years in order to get an “antique” license plate. 

Highlights of the Conference Information Technology Budget 

The Conference Budget proposal for the Department of Information Technology (DIT) totals $67.8 million in FY 2019-20 or 26.8% above the FY 2019-20 base budget and is $69.9 million in FY 2020-21 or 3.0% above the FY 2019-20 Conference budget proposal. The highlights of the Information Technology adjustments follow below: 

Committee Report Items 

Provides $11.1 million over the biennium for NC HealthConnex, Criminal Justice Information Network (CJIN), Cybersecurity Upgrades, 3 Data Analytic positions, 1 Office of Administration technology support position, and NC Outcomes Longitudinal Data System. 

(Page G 10, Item 17) Provides a directed grant to Montreat College for the Cybersecurity Regional Training Center. The grant in total is $20 million over the biennium ($10 million in FY 2019-20 and $10 million in FY 2020-21 on a nonrecurring basis in both years) 

Highlights of the Conference Capital Budget 

Provides $325 million for repairs and renovations for State agencies and the UNC System; $200 million in FY 2019-20 and $125 million in FY 2020-21. 

Authorizes $448 million in capital projects for State agencies; $97.8 million of which is appropriated in FY 2019-20 and $93.1 million of which is appropriated in FY 2020-21. 

Authorizes $632 million in capital projects for the UNC System; $96.5 million of which is appropriated in FY 2019-20 and $94.5 million of which is appropriated in FY 2020-21. 

(Page H 5, Item 47) Provides $453.8 million in capital for Local Education Agency (LEA) projects; $281.3 million is appropriated in FY 2019-20 and $172.5 million is appropriated in FY 2020-21. The aggregate amount authorized over 10 years is $1.5 billion, with amounts for each LEA specified in the provision (Sec. 39.2). 

(Page H 5, Item 48) Provides $90.8 million in capital for Community Colleges; $56.3 million is appropriated in FY 2019-20 and $34.5 million is appropriated in FY 2020-21. The aggregate amount authorized over 10 years is $400 million, with amounts for each college specified in the provision (Sec. 39.2) 

(Page H 6, Item 51) Funds Water Resources Development Projects at $11 million in FY 2019-20. 

(Page H 6, Item 57) Provides $15 million recurring to the GREAT grant program for broadband providers and co-ops to expand broadband infrastructure in rural areas.

Highlights of the Conference Budget for Salaries and Benefits 

Salaries Summary 

State Employees 

The Conference budget appropriates $111 million in FY 2019-20 and $205 million in FY 2020- 21 to provide salary increases for State employees. Specifically: 

• A 2.5% across-the-board increase in each year of the biennium to most State employees in State agencies. 

• $15 million in targeted salary supplements to improve recruitment and retention at high- need prisons. 

• $2 million to tie SBI/ALE law enforcement pay to the revised salary schedule established by the General Assembly for the State Highway Patrol. 

• $15 million in FY 2019-20 and $30 million in FY 2020-21 to increase salaries of UNC system employees based on the priorities of the Board of Governors. 

• $6 million in FY 2019-20 and $11.4 million in FY 2020-21 to improve UNC faculty recruitment and retention. 

• $1 million to restructure pay for Clerks of Superior Court based on number of supervised employees instead of county population. 

• $800,000 to increase pay for Assistant District Attorneys. 

State-Funded Local Employees (excluding Teachers/Instructional Support and Principals) 

The Conference budget appropriates $27.8 million in FY 2019-20 and $55.6 million in FY 2020- 21 for the following: 

• $12.4 million in FY 2019-20 and $24.8 million in FY 2020-21 to provide salary increases to Community College personnel based on the priorities of the Community College System and local community colleges. 

• A 1% across-the-board increase in each year of the biennium for noncertified public school employees. 

Teachers and Instructional Support Personnel 

The Conference budget appropriates $57 million in FY 2019-20 and $85.4 million in FY 2020- 21 to increase teacher and instructional support compensation. Specifically, the Conference budget: 

• Increases the base teacher salary schedule for steps 16-20 by 1% in each year of the biennium. 

• Increases the base teacher salary schedule for steps 21-24 by 3% in FY 2019-20, and an additional 1% in FY 2020-21. 

• Increases the base teacher salary schedule for steps 25+ by 1.2% in FY 2019-20 and an additional 0.9% in FY 2020-21. 

• Provides teachers with 25+ years of experience a $500 bonus in each year of the biennium. 

• Provides funding for recruitment bonuses to school districts receiving funding from the small county allotment. 

• Provides licensed school counselors with an additional $80 monthly supplement in addition to their pay provided under the teacher salary schedule. 

The estimated average State-funded salary increase for teachers and instructional support personnel who are employed in FY 2018-19 and remain employed through the upcoming biennium is 2% ($1,000) in FY 2019-20 and 3.9% ($1,875) in FY 2020-21 compared to their FY 2018-19 salary. The FY 2019-20 individual increases range from 1% to 5.2% (individual base salary increases range from $500 to $2,600). The average State-funded salary base for teachers and instructional support is projected to grow by approximately 0.73% in FY 2019-20 and 1.2% in FY 2020-21 relative to FY 2018-19. The estimated annualized average teacher pay, including local supplements and recurring bonuses, is approximately $54,350 in FY 2019-20 and $54,600 in FY 2020-21. The average nonrecurring bonus amounts not included in these averages total approximately $70 in each year of the biennium. 

Principals and Assistant Principals 

The Conference budget provides $18.1 million in FY 2019-20 and $19.2 million in FY 2020-21 to increase principal and assistant principal compensation. Specifically: 

• Implements a revised principal schedule that increases all levels of the current principal salary schedule and includes a new ADM tier of 201-400 (previously ADM range from 0- 400 paid the same). 

• Adjusts the ADM level for the top tier of the schedule from 1,301+ to 1,601+. 

• Modifies the existing principal bonus program by increasing the bonus amounts for principals in the top-5% and top-10% in growth from $10,000 and $7,500 to $15,000 and $10,000 respectively, and eliminates the doubling of the bonus for principals in “D” or “F” schools. 

• Creates a new principal recruitment program that provides up to 40 principals currently paid on the “exceeded” growth column of the schedule a $30,000 annual salary supplement for 3 years if they accept employment at a school in the bottom 5% in school performance. 

• Provides AP salary increases in-line with the revised teacher salary schedule. 

The annualized average State-funded salary base for principals is projected to grow by approximately 6.2%, or $4,650. 

The estimated average State-funded AP salary increase for APs employed in FY 2018-19 and who remain employed through the upcoming biennium is 1.9% in FY 2019-20 and 3.5% in FY 2020-21 compared to their FY 2018-19 salary. 

Benefits Summary 

The Conference budget provides additional net appropriations of $206.6 million in FY 2019-20 and $491.6 million in FY 2020-21 to support increasing costs associated with benefits provided to State-funded employees. In summary, the Conference budget provides the following: 

• $17.4 million in FY 2019-20 and $17.4 million in FY 2020-21 to provide a one-time 0.5% retirement supplement for retirees in each year of the biennium. 

• $51.0 million in FY 2019-20 and $137.1 million in FY 2020-21 to increase employer premiums to the State Health Plan for active employees. 

• $132.0 million in FY 2019-20 and $331.0 million in FY 2020-21 to increase contributions to State retirement systems and the Retiree Health Benefit Fund for retiree medical benefits. 

• $6.1 million in both FY 2019-20 and FY 2020-21 to provide funds to State employers to pay short-term disability benefits under Session Law 2018-52. There is a corresponding reduction of the same amount reflected in the contributions to State retirement systems above. 

• Provides 5 non-expiring bonus leave days for eligible State employees and Community College employees. The days cannot be cashed out or converted to sick leave and therefore have no impact on the retirement systems. 

Highlights of the Conference Budget Finance Provisions 

The Finance Provisions in the Conference Budget reduce net revenue by $14.0 million in FY 2019-20 and by $180.5 million in FY 2020-21. The highlights of Finance section follow below: 

Special Provisions 

(Page 363, Sec. 41.1) Increase Standard Deduction – Raises the Standard Deduction for all filing statuses by 5%, effective for taxable years beginning on or after January 1, 2021. 

(Page 363, Sec. 41.2) Income Exclusion for IRA Distributions to Charities by Taxpayers Age 70 1⁄2 or Older – Allows an income exclusion for IRA distributions to charities by taxpayers age 70 1⁄2 or older, effective for taxable years beginning on or after January 1, 2019. 

(Page 364, Sec. 41.3) Franchise Tax Changes – Reduces franchise tax rate from $1.50 to $0.96 over two years, 2020 and 2021. Eliminates one of the three methods used to determine a corporation's franchise tax base. Creates a new definition of holding company, effectively capping the franchise tax on that holding company to $150,000. 

(Page 366, Sec. 41.4) Use Market-Based Sourcing for Multistate Income Tax Apportionment – Enacts market-based sourcing, effective for taxable years beginning on or after January 1, 2020. Uses commercial domicile method for broadcasters, with a floor of 2%. 

(Page 373, Sec. 41.5) Marketplace Facilitators to Collect Sales Tax – Obligates a marketplace facilitator that meets the same threshold applicable to remote retailers to calculate, collect, and remit sales tax on a third party seller's behalf. 

(Page 385, Sec. 41.6) Deduction for Amounts Received as Economic Incentives – Allows a tax deduction for amounts received by a taxpayer as an economic incentive under the Job Maintenance and Capital Development Fund, the Jobs Development Investment Grant Program, and the One North Carolina Fund. 

(Page 385, Sec. 41.7-41.9) Extend Various Sunsets and Reenact Mill Rehabilitation Credit – Reinstates Mill Rehabilitation Tax Credit for projects that meet certain conditions. Extends the sunset by four years (from 2020 to 2024) for the following: 

o Historic rehabilitation tax credit o Sales tax exemption for sales of aviation gasoline and jet fuel to an interstate air 

business for use in a commercial aircraft o Sales tax exemptions and refunds for professional motorsports racing teams 

(Page 388, Sec. 41.10) Facilitate Response to Disasters – Excludes certain nonresident businesses and employees from income and franchise tax, business registration, and NC's unemployment tax requirements. Allows the Secretary of Revenue to issue a temporary license to an importer, exporter, distributor, or transporter of motor fuel during times of declared disasters.