@NCCapitol

Contraceptive rules, ride-share fees, hospital construction: More from the NC Senate budget

The state Senate plan is expected to move through the chamber over the next few days. It differs significantly from the budget advanced last month by the House. The two sides will negotiate away those differences over the next few weeks.
Posted 2023-05-16T19:54:11+00:00 - Updated 2023-05-17T04:46:53+00:00

A state budget proposal Senate Republicans moved forward Tuesday would cut taxes, add new fees on ride-share services, put hundreds of millions of dollars toward new hospital construction and lay out nearly $30 billion in annual state funding.

It would also make permanent a rule forbidding state contraception funding to groups that perform abortions.

And it includes a new $1.4 billion endowment to help turn university research projects into money-making business ideas, which would be one of the state’s largest one-time economic development investments of all time.

The plan calls for lower pay raises than state employees and public school teachers had hoped to see. It boosts road construction and puts more into state reserves in case the state’s economy sours. It also includes a threat for hospitals meant to force them to lower rates.

The Senate plan is expected to move through the chamber over the next few days. It differs significantly from the budget advanced last month by the state House. The two sides will negotiate away those differences over the next few weeks before a new state budget — which will cover the next two years — is final.

Senate Republican leaders described the plan as a cautious budget that funds critical priorities. The progressive N.C. Budget and Tax Center complained Tuesday that the proposal prioritizes tax cuts — which it said total some $7.7 billion between now and 2029 under this plan — over adequate funding for public education and other state functions.

“By once again scheduling income tax cuts into the future for the benefit of the very wealthy, they hope that the people won’t notice the state’s diminished commitment to providing every child a sound basic education, ensuring the safety of our drinking water, and protecting the health and well-being of every family,” the center said in a news release.

When lawmakers announced the budget Monday, Senate Appropriations Co-Chair Brent Jackson called it "a strong budget that addresses our state’s needs without breaking the bank" and that gives "money back to the hardworking people of North Carolina."

The biggest tax change would supercharge already planned state personal income tax cuts, dropping the rate to 3.99% in 2025 and to 2.99% by 2029. North Carolina’s income tax is a flat tax, meaning everyone pays the same rate, so rate cuts save wealthier people more money.

The Senate budget also boosts tax exemptions that help airlines, and it expands a fuel tax exemption for cargo ships. It tinkers with the state’s tobacco taxes in a way that is expected to boost those revenues by $3.3 million by 2027.

Senate Republicans revealed their budget proposal Monday evening, then amended it Tuesday to add small taxes on Uber, Lyft and other ride-shares services. A previous Senate proposal would have added fixed fees to these rides; the budget proposes a maximum 2% tax instead.

Sen. Vickie Sawyer, who proposed the amendment, said Uber and Lyft preferred the percentage tax to flat fees.

The Senate budget includes a long list of priorities, laid out in two documents that total roughly 1,000 pages. Some of these line items WRAL News covered Monday. Others include:

Contraception and abortion

Legislative Republicans on Tuesday passed new abortion restrictions over Gov. Roy Cooper’s veto. That legislation, Senate Bill 20, contains new funding for contraception, along with new abortion rules and other measures.

The Senate budget includes language that would forbid the state from sending any family planning money to an entity that performs abortions. Similar language is already part of state law, but in a manner that has to be re-upped every so often, according to Planned Parenthood, which is affected by the language.

The Senate budget would make the rule permanent, Planned Parenthood South Atlantic spokeswoman Molly Rivera said. It would also ensure that Planned Parenthood won’t qualify for contraceptive funding from the abortion bill.

Sen. Natasha Marcus, D-Mecklenburg, asked Republican budget writers in committee Tuesday why they added this language to the budget and didn't get an answer.

“It sounds like nobody in this committee can explain why we would make these policy choices,” Marcus said.

“Thank you for that comment,” replied Jackson, R-Sampson.

New hospital construction, rules

The General Assembly voted earlier this year to expand Medicaid, which provides health insurance to people below certain income thresholds.

Expansion won’t go into effect until the state budget passes, but once it does, not only will expansion take effect, the federal government will send the state roughly $1.6 billion — an enticement that Congress approved for states that hadn’t yet expanded the federally funded program.

The Senate budget would invest much of this enticement in health care infrastructure, including:

  • $500 million for a new UNC children’s hospital in the Triangle area
  • $370 million for a partnership between UNC Chapel Hill and East Carolina on three regional health clinics
  • $50 million for a new regional behavioral hospital in Greenville, with a plan to eventually create five of these facilities in various places.

This budget also has $8 million a year in it for a new forgivable loan program for medical students who go on to practice primary care medicine or psychiatry in poor or rural North Carolina counties. Up to $100,000 per student could be forgiven.

There are a number of other provisions in the Senate's budget affecting hospitals, including a rollback in regulations limiting competition in that industry and a requirement for hospitals to cut costs for the State Health Plan or lose their licenses to operate.

North Carolina Health News reported that the budget also has language in it that would allow Charlotte-based Atrium Health to expand significantly in the state.

School lunches

The Senate budget has $9 million in it over two years to cover reduced-lunch co-pays so that any student eligible for free or reduced lunch would get a free lunch.

The budget also forbids local school systems from penalizing students who have school debts, banning schools from withholding transcripts, report cards and other records. Schools also couldn’t forbid students from participating in graduation ceremonies or receiving their diploma.

School of Civic Life and Leadership

This budget has $4 million in it over two years to start the new School of Civic Life and Leadership at UNC Chapel Hill.

The new school has support from UNC leaders, but it's controversial with faculty and has been seen as an effort to inject more conservative ideas into the campus curriculum.

The Senate budget also cuts $5 million, each, from the UNC School of Government and UNC School of Law over two years.

Governor’s salary

The Senate proposal boosts the governor’s annual salary from $165,750 now to $198,120 starting July 1 and to $203,073 a year come July 2024.

The bill also boosts salaries for other members of the Council of State, which is a group of statewide elected officials including the lieutenant governor and attorney general. Salaries for those nine jobs would be $168,384 a year after July 1, 2024.

Community college changes

Senate Republicans baked into the proposal a number of changes to the state’s community college system, which they’d already proposed in separate legislation.

That includes changes in the way the community college board is appointed, which shifts appointments from the governor to the legislature, and a new requirement that new system presidents be confirmed by votes of the General Assembly.

The system recently hired a new president who won’t be subject to that requirement, even if it passes.

Transportation

This budget boosts road construction, in large part due to continuation of a policy passed last year to shift some of the state’s sales tax revenue into the Department of Transportation’s budget.

Senators proposed $5.3 billion in the first year of this transportation budget, an increase of 17%. The second year would total $5.6 billion.

African American monument

The budget includes $3 million to design and install a long-discussed monument on the state capitol grounds honoring African Americans in the state.

Credits