McCrory pitches $21.5 billion budget

Posted March 5, 2015

— Gov. Pat McCrory's $21.5 billion budget for the 2015-16 fiscal year would follow through on promises to raise the state's minimum starting salary for teachers to $35,000 per year and plow more into efforts to recruit big companies to the state.

The governor rolled out his spending plan Thursday during a news conference at North Carolina's State Emergency Operations Center, flanked by his budget director and other staff.

Gov. Pat McCrory introduces his state budget for 2015-16 Gov. McCrory's 2015-17 Budget Proposal Although the governor proposes a budget, for the next few months, it will be up to legislative leaders to build the state's spending plan. McCrory will then have a final say later this year. The budget will take effect for the fiscal year that begins July 1 and includes a forecast of 2016-17 spending as well.

While the budget is depicted by hard numbers, the governor's spending plan represents something of a guess based on best estimates of how much taxes and fees will bring into government coffers this year.

"You never really know where you are from a revenue perspective until you get into March and April, when individuals file their tax returns," said Lee Roberts, McCrory's budget director.

Lawmakers will have to contend with any so-called "April surprise."

McCrory's budget represents a slightly less than $1 billion increase over the current year's state spending. When federal grants and other spending are lumped in, North Carolina's total spending for the coming year would be $50.9 billion under the governor's proposal. Much of that federal money goes toward health care.

"Of our new spending of approximately $970 million in the first year of the biennium, fully 76 percent, or $741 million, will be spent on investments in education and on aiding those in poverty through Medicaid and Health Choice," McCrory said in a letter to lawmakers accompanying the budget.

Medicaid has long been a thorn in the side of budget writers, often producing unexpected cost overruns and partially controlled by bureaucrats at the federal level. McCrory has been pushing for a remake of the health insurance program for the poor and disabled.

Although the budget doesn't bank on this wholesale transformation, it does put $1.1 million in expansion funds into developing what is often called an "accountable care organization" model of Medicaid that would lean on in-state doctors, hospitals and other health care providers. That plan has competed with a rival vision put forward by state senators, who would be more aggressive in both their cost cutting and the use of out-of-state managed care companies.

McCrory would also put $4 million into improving mental health care for all inmates and another $2.2 million to bolster health care staffing at Central Prison. This includes opening 72 existing mental health beds at Central Prison that have been unavailable due to staffing constraints.

In education, the bulk of new funding in K-12 is taken up by providing salary boosts for state-funded teachers and administrators. However, the budget does envision paying more for teachers with master's degrees "in a high need field," such as science and math. The governor says he also provides for enrollment growth, which accounts for new students coming into the system. For 2015-16, this means the state will be paying for 678 new teachers.

There is not an across-the-board teacher pay raise. However, teachers will move along the salary scale, meaning they will gain salary as they gain experience. Roberts said the budget does provide money to reward high-performing teachers and to "hold harmless" senior teachers at the top of the new salary scale who would have received a $1000-a-year bonus under the old teacher pay scale.

With regard to economic development, the governor proposes putting $99 million over the next year into his N.C. Competes plan, largely an expansion of incentives used to lure big manufacturers to the state. He would also put $10 million into North Carolina's film grant program and would restore the historic preservation tax credit. That credit has been backed by city leaders across the state who say it helps them turn run-down mill buildings into viable business and housing locations.

The budget also does not provide an across-the-board pay raise for state employees. Rather, it focuses on particular jobs that Roberts describes as "hard-to-fill and hard-to-retain" positions.

Most of the increased spending is offset by agency spending cuts. Most were asked to implement a 2 percent spending cut for next year, including the UNC system. Other agencies were hit harder. The Department of Public Instruction would face a 10% cut.

The plan also includes fee hikes in a variety of areas. Community college tuition would increase by $4 a credit hour for both in-state and out-of-state students. And admission fees at state parks, attractions and museums would go up. Many state museums are currently free to the public, but that could change.

"We’re not jacking up admission prices to state attractions as a way of desperately trying to close a budget gap," said McCrory budget director Lee Roberts. "We’re just trying to make sure we’re charging a fair rate and in line with comparable attractions in neighboring states."

In other areas, the budget:

  • Despite a call from Supreme Court Chief Justice Mark Martin for $30 million in new spending on courts next year, McCrory's budget boosts court spending by only $6 million, with $10 million more in 2016-17.
  • Privatizes the state motor fleet.
  • Creates a Department of Military and Veterans Affairs.
  • Shifts state parks, state aquariums, the North Carolina Museum of Natural Sciences and the North Carolina Zoo from the Department of Environment and Natural Resources to the Department of Cultural Resources.
  • Institutes a performance-management system for state employees.
  • Calls for a $1.2 to $1.4 billion transportation bond, as well as a $1.2 billion to $1.4 billion general obligation bond for repairs and renovation of state buildings.
  • Limits the amount of state money the University of North Carolina system schools can spend on fundraising to $1 million.
  • Spends $21 million on raises for correctional officers over the next three years.
  • Moves the Division of Animal Welfare from the Department of Agriculture to the Department of Public Safety, a move animal advocates have been seeking.

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  • Matt Wood Mar 6, 2015
    user avatar

    So he first cut money to teachers and job recruitment efforts, then whines about it, then asks to increase them to above what they were in the first place, all so he can claim credit for "fixing" problems he caused in the first place. Good grief!

  • Ronnie Reams Mar 6, 2015
    user avatar

    Retiree money is under control of the State Treasurer, not the Guv. She recommended to the GA 1% for State retirees and a fraction of a percent for local retirees. Of course, no matter what she says or he says the GA will give COLAs as it see fit.

  • Roy Hinkley Mar 6, 2015
    user avatar

    View quoted thread

    Well said.

    More realistic budget projections would help state agencies plan better. Even if the budgets are lower than what the agencies want, it's better to plan that up front, then to have to find somewhere to cut on short notice. Year-end cuts only encourage folks to inflate their true needs, so that they have something expendable at the end of the year.

  • Mike Berthold Mar 6, 2015
    user avatar

    So they had a budget shortfall last year by $200 million, again, but by faking the numbers they can have a "balanced" budget again this year that spends $500 million more than last year? They continue to increase the budget and then have to scramble at the end of the year making cuts to meet the actual revenue taken in. Why not be responsible and quit using the overly optimistic numbers and use actual historical data to create a budget? This years budget shouldn't exceed last years revenue. Any excess can be put to use paying down outstanding bonds or create a fund for when revenue is less than the previous year so that cuts don't have to be chosen hastily at the end of the year. Guess that makes too much sense

  • Shay Vaughn Mar 5, 2015
    user avatar

    What is this man's problem with experienced teachers? He is painting a group of a certain age with one "Brush Stroke." It sounds like age discrimination.

  • Jeff Pridgen Mar 5, 2015
    user avatar

    there was not even a consideration for state retirees to receive a pay raise. They are retired!! Welcome to the real world!!

  • Judy Fergerson Mar 5, 2015
    user avatar

    The article reflects the budget also does not provide an across-the-board pay raise for state employees. Yet it shows as an incentive for state employees to Institute a performance-management system for state employees. So with no monies set aside weather an employee does an excellent job or a poor job there is no pay raise coming. AND again there was not even a consideration for state retirees to receive a pay raise. Need I say anything more than this budget has all the characteristics of a Bev Perdue style budget.