@NCCapitol

@NCCapitol

McCrory rolls out first spending plan

Posted March 20, 2013

— Gov. Pat McCrory unveiled a $20.6 billion annual budget Wednesday that he says would hire more teachers, plow more money into early childhood education, give raises to state employees and tackle a number of items he has talked about for the past year.

The 324-page document does not lay out a much anticipated plan for tax reform, but it does anticipate ending the estate tax, which is paid when someone dies.

However, McCrory expects to spend about $400 million more during the next fiscal year, which starts July 1, than the state spent this year. Some of that increase is fueled by a bump in tax revenue.

The governor does pick up some addition revenue for state spending from a number of places, including capturing $65 million that had been slated to go from master settlement agreement with tobacco companies to the Golden LEAF fund, which gives grants for economic development.

He also makes some big cuts to state programs, including cutting more than $135 million from the University of North Carolina system over the next year. Community colleges would see a much smaller cut.

McCrory does not propose any new debt and would have a $139 million surplus at the end of the year.

Gov. McCrory unveils budget McCrory unveils budget proposal

"We've had to make some tough decisions on this budget," he during a news conference in the Capitol Building.

Referring to the repairs needed in any aging structure, he said the state has "a strong foundation, but the foundation has some cracks in it." He said his priority in the budget was to fill in and fix the cracks so that the state can thrive in the future.

"Right now, we're focusing on fixing a broken government, building an economy in North Carolina and transforming education," he said.

Lawmakers will begin reviewing the document Thursday morning, but McCrory said his budget advisers have already gathered input from top House and Senate budget-writers, as well as members of the Council of State, while drafting the spending plan.

"This budget hasn't been put together in a vacuum in the Governor's Office," he said.

Senate President Pro Tem Phil Berger and House Speaker Thom Tillis were quick to compliment McCrory's proposal.

"Gov. McCrory’s refreshing new leadership and hard work has produced a balanced budget proposal that exercises fiscal discipline and keeps state government spending within its means," Berger, R-Rockingham, said in a statement. "His emphasis on paying off our debts and repairing our critical infrastructure reflects a vision and commitment to the long-term fiscal health of our state."

"Many aspects of Gov. McCrory’s budget are much-needed and long overdue, and I am especially glad to see the inclusion of the Eugenics Compensation Program," said Tillis, R-Mecklenburg.

The House included money for victims of the state's former forced sterilization program in last year's budget, but it was eliminated in negotiations with the Senate on a final spending package. McCrory calls for $10 million for eugenics compensation.

Democrats weren't as receptive to the budget, however, saying it would adversely affect rural communities and working-class residents.

In addition to the loss of Golden LEAF funds, the budget calls for closing prisons in Wayne, Duplin, Bladen, Robeson and Burke counties, costing hundreds of jobs while saving the state $54 million.

"The cuts are just much deeper than they appear on the surface," Senate Minority Leader Martin Nesbitt said.

Education accounts for the majority of McCrory's spending plan, and he called it the "building block" for North Carolina's future. Some of the major points include the following:

  • Adds 5,000 pre-kindergarten slots. The cost is $52.4 million over two years
  • Provides 1,800 more state-funded teachers over the next two years
  • $28 million over two years to improve third-grade reading scores
  • $43 million over two years for digital learning
  • $625,000 to establish the Center for Safer Schools, which the governor announced Tuesday
  • $28 million over two years for increasing technical education programs at community colleges
  • $32 million over two years to develop high-cost college programs for in-demand jobs, including mechanics and electronics
  • $63 million over two years for the UNC system's strategic plan

McCrory also said he would like to freeze tuition for in-state students at UNC campuses. Tuition will go up on out-of-state students by as much as 12.6 percent, which state budget director Art Pope said would help offset the cut in appropriations for the university system.

"We do not want to put addition debt on these (in-state) students," McCrory said. "They have a very difficult time getting out of that debt once, and even if, they get a job."

Teachers and other state employees would receive a 1 percent raise in the budget, and retirees would be in line for a 1 percent cost-of-living increase.

Aside from education, McCrory said North Carolina needs to invest in its operations and buildings, so he wants $77 million set aside for information technology repairs and upgrades.

"We have some serious concerns about our information systems throughout North Carolina government," he said. "They're not efficient, they're too costly, they don't talk to each other and we're concerned some of the new programs flat out won't work. This impacts our efficiency and customer service."

Another $300 million would go to overall maintenance and repairs over two years, including $50 million a year for the UNC system.

The budget proposal assumes a 3.6 percent increase in state tax revenue next year and 4.1 percent in 2014-15, but the governor said he doesn't include any tax increases, saying "we have many, many challenges" with the economy.

"We want (families) to have as much disposable income in their hands to help build the economy and pay for their child's education and pay for their mortgages, rents and groceries," he said.

McCrory also included an extra $600 million in the budget reserve to prepare for the impact of federal spending cuts and another economic downturn.

"We need to start replenishing our rainy day fund and also make sure we pay down our unfunded liabilities," he said.

The latter category includes Medicaid cost overruns, so he wants an extra $575 million over two years to fund the system. That amount is roughly equivalent to what the administration of former Gov. Beverly Perdue said Medicaid was under-funded by during the past two years.

"We are no longer going to play budget tricks, which have been played in the past," McCrory said. "We're going to do honest accounting of exactly how much some of these services are costing."

His budget does make small cuts throughout the rest of the Department of Health and Human Services to help offset the Medicaid increases, trimming funding for items such as the AIDS drug assistance program.

Other budget highlights include the following:

  • $7.2 million to re-establish the state's drug court system
  • Reduces state aid to public libraries by $345,000
  • Expands funding for the state crime lab, providing $500,000 for more equipment and $3.1 million over the next year for to enhance DNA analysis
  • Saves roughly $280,000 by requiring state historic sites to close two days a week. McCrory would save another $498,712 by closing four historic sites – the Aycock Birthplace, the Polk Memorial, the Vance Birthplace and House in the Horseshoe – and the Museum of History's Old Fort / Mountain Gateway site.
  • Money for Division of Motor Vehicles offices to open on Saturdays and some extended weekday hours
  • $5.8 million over two years to develop an economic development branding strategy and help the state Department of Commerce draw new and expanding businesses to North Carolina
  • $1.8 million over two years for the Main Street Solutions fund, which provides help to small communities
  • $76.2 million over two years for JDIG, which will provide assistance to companies that previously qualified for economic development grants
  • $14 million for the JMAC fund, which encourages businesses to retain high paying jobs and large capital investments in the state
  • $642,000 for an ocelot habitat at the North Carolina Zoo
241 Comments

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  • srmcleod122 Mar 23, 12:32 a.m.

    FYI folks I don't know where some people think that State Employees don't work or have a trade. The 1% raise will only help in the drop of pay state employees received by higher taxes, like everyone else and higher costs to insurance coverage and co-pays. Before anyone bad mouths anyone who works for the state, remember who these people are. Your teachers, police officers and first responders employed by the state. Also social service workers and those working to help those who are disabled etc.. State employees don't have as good of insurance as people think. And that's whats most peoples problem when they make comments they know nothing about. They don't think. Trust you me. When you have to pay over 300.00 for medication your wife needs or child needs because that's your state health plan don't cover it like most other insurances then you would know that its as difficult to be a state employees as any other job. Most benefits state employees receive they pay themselves.

  • Crumps Br0ther Mar 22, 11:53 a.m.

    Shameful, sickening and a slap in the face to every hard working North Carolinian!! ( especially hard working state employees ).

    http://www.newsobserver.com/2013/01/10/2598132/gov-pat-mccrory-gives-his-cabinet.html
    jaydosse

    and yet you were strangley silent when Barry gave Crazy Joe a raise. I guess its different when dems do it

  • Crumps Br0ther Mar 22, 11:50 a.m.

    Such hypocritical actions by the dems, but that's what we've become used to with them.
    driverkid3

    Its the double standard. Its OK when they do it, but they cant stand having their own rules played against them

  • Crumps Br0ther Mar 22, 11:49 a.m.

    What good will an ocelot habitat be to our children if they have limited access to libraries where they can read about them before going to see them?"

    when was the last time you were in a library?
    Dont get me wrong, I loved going to the library as a child, but with this new generation having any and all information at their fingertips, the need for a library has lessened and the costs have risen. Libraries will be another victim of the interent just like printed newspapers

  • Crumps Br0ther Mar 22, 11:47 a.m.

    Libs hate it when they cant waste your money

  • driverkid3 Mar 22, 11:24 a.m.

    kliberto::::Hope all of you republicans are happy with your choice!

    I think you are mistaken. It's the libs that are always wanting to raise taxes, and you all fall all over yourselves with happiness. But let a REPUBLICAN do it and you all hyperventilate with fear and anger. Let obama do it and it's GREAT, he need to raise them even more, right. Such hypocritical actions by the dems, but that's what we've become used to with them.

  • driverkid3 Mar 22, 10:25 a.m.

    kj90::::The minute republicans dare to touch social issues than I am quick to call for their resignations!

    Don't you understand that things just MIGHT need to be changed a bit or tweaked in order to make them work better? Like with the medicaid thing. Money was being wasted that could have gone to cover more people. If Governor McCrory get's that straightened out, what's to keep him from taking money that is being offered by the DC folks?

  • kj90 Mar 21, 9:10 p.m.

    I would complain about McCrory's budget plans, but I agree with majority of it. We need solutions and a plan to move our state forward. As long as the republicans can continue to focus on education, infrastructure, and jobs than I am fine. The minute republicans dare to touch social issues than I am quick to call for their resignations! People are not moving to NC to pick cotton, but to have a better quality of life. God bless you all and goodnight.

  • Plenty Coups Mar 21, 3:38 p.m.

    "I think it's pretty laughable that McCrory and his tea party are against raising taxes,and even stood up there yesterday and lied about it, but that's exactly what they did. Just check out your 2012 State tax form..."

    Terkel-"Bev was in office in 2012."

    It was a republican budget. The General Assembly overrode her veto.

  • Terkel Mar 21, 3:14 p.m.

    Agree the School Safety Center or whatever has got to go. Someone here mentioned there's already an agency/commission that does that, and clearly this babe is being rewarded for her campaign money and the fact her husband's a judge.

    I could understand the 8% raises, but this is just bad judgment and bad business.

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