New fees help cover budget priorities
To find money for its priorities, the Senate is proposing to raise fees on a variety of business interests and tap state reserves.
The increased fees would generate about $28 million total and the bulk would come from hospitals.
The Senate’s budget puts more of the cost of treating the Medicaid patients on hospitals, to the tune of $15 million a year. It would be the second year in a row the surcharge to providers levied by the state increased, according to the N.C. Hospital Association.
Other fees changes:
Even bigger sums would come from the state’s reserve accounts, including nearly $57 million left unspent from a year ago. Another approximately $23 million would be diverted from two accounts used for incentives to recruit companies to North Carolina.
In addition, the state would issue general obligation debt, which does not need public approval, to spend $15 million to construct a new western crime laboratory in Edneyville. John Frank, (Raleigh) News & Observer
Truck, RV taxes would rise
The highway use tax the state can collect on vehicle sales from businesses that buy trucks, and from other people who buy recreational vehicles, would rise under the budget proposal.
There would be no change in the taxes collected on most car and truck sales.
Currently commercial vehicles are capped at $1,000 and recreational vehicles at $1,500. Both caps would rise to $2,000 in January and $3,000 in July 2015 under the Senate plan. That would be enough to generate an additional $11 million in annual state revenues.
“We’re opposed to that,” said Bob Glaser, president of the N.C. Automobile Dealers Association.
He said farmers and businesses that buy heavy commercial trucks would be hurt by the increase, and N.C. truck dealers could lose sales.
Taxes on vehicle sales actually will remain lower in North Carolina than in most neighboring states.
North Carolina’s highway use tax brings in nearly $600 million a year, so a proposed 1 point tax rate increase would be worth about $200 million. Bruce Siceloff, (Raleigh) News & Observer
UNC funding to hold steady
The Senate plan contains no substantial cuts to the UNC system, unlike Gov. Pat McCrory’s proposal. And while UNC staff would see the same raise as other state employees, there is no pay increase for faculty or administrators in the Senate plan.
Despite the positive overall financial picture for the UNC system, there was a bombshell: a provision requiring the UNC Board of Governors to develop a plan for “dissolving” any campus where enrollment has declined by more than 20 percent between 2010-11 and 2013-14. The provision does not specifically identify Elizabeth City State University, but senators confirmed that it targets ECSU.
ECSU has been through several rounds of budget cuts as enrollment dropped, and the university is downsizing and tailoring its academic offerings. Jane Stancill and Lynn Bonner, (Raleigh) News & Observer
DPI would face $15 million cut
The big-ticket item for public education is $468 million to fund an average 11 percent pay increase for teachers – but it would only be available to those who give up tenure. The N.C. Association of Educators called the proposal a “political game” and “a vindictive and cynical attempt to take advantage of economically hard-pressed teachers in North Carolina.”
School administrators would not see raises, and nonteaching school and central office staff would see a $500 raise – lower than the one proposed for other state employees.
State funds for teacher assistants would be cut nearly in half, by $233 million, paying for them only in kindergarten and first grade. Before reductions in the last few years, teacher assistants had staffed classrooms from kindergarten through third grade.
The Senate plan would cut the state Department of Public Instruction by 30 percent, or $15 million.
The budget did not provide an increase in textbook money, now funded at about $15 per child. Instead it directs schools to begin to transition from books to digital materials.
Gov. Pat McCrory, whose budget included smaller raises for teachers, had doubled the textbook budget. On Thursday, he expressed disappointment with the Senate plan, saying: “I think we need a more comprehensive approach, long-term sustainable and fiscally responsible approach.” Jane Stancill and Lynn Bonner, (Raleigh) News & Observer