This week the N.C. Legislature passed the 2021-2022 Biennium State Budget. This budget has undergone an immense amount of work and is unique in a number of ways. For the first time as Governor, Roy Cooper agreed to sign this budget after negotiations ended last week. This budget includes historic tax breaks for individuals and for businesses, continuing the Republican commitment to improve the tax environment of North Carolina. Lawmakers have prioritized state employee raises, education investment, disaster relief, and much needed funding for infrastructure improvements and renovations across North Carolina.
For those interested in viewing the budget and its related documents, follow this link to be redirected to the bill profile page on the legislature’s website.
Included below are the top points of each major area of state government operations. At the end of this article, you can find an even more detailed document prepared by the General Assembly’s Fiscal Research Division.
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- Budget appropriates 25.9 billion for FY 2021-22 and $27.0 billion for FY 2022-23.
- The “Rainy Day” savings fund will be $4.25 billion at the end of the biennium.
- A 5% pay raise for state employees and teachers over the biennium.
- Implements $15 per hour minimum wage for all non-certified public school personnel and community college staff.
- Provides $2,800 bonuses to most teachers using federal funds.
- Provides bonuses for all state employees using federal funds: $1,500 for state employees who make less than $75,000, and $1,000 for state employees who make more than $75,000.
- $1,500 bonuses for law enforcement, correctional officers and staff, and 24-hour residential or treatment facility employees receive.
- $100 million for a new state-funded teacher salary supplement (1.7% increase) focused on low-wealth counties.
- 5% state and teacher retiree cost-of-living adjustment bonus over the biennium.
- New salary-based schedule for corrections, probation, and parole officers – resulting in average 7% salary increase for correctional officers and 17% raise for probation/parole officers.
Infrastructure / Jobs
- $6 billion to the State Capital and Infrastructure Fund over the biennium to fund infrastructure projects across the state.
- $1.0 billion for UNC System capital projects and $400 million for Community Colleges.
- $1.7 billion for water, sewer, and stormwater improvements.
- Creates a $500 million fund to provide grants to businesses impacted by COVID-19 in the hospitality and entertainment sectors.
- Expands apprenticeship opportunities in high-demand fields at small businesses.
- $1 billion for broadband expansion.
- $46 million for infrastructure at motorsports facilities, including $9 million for Rockingham Speedway, $18 million for North Wilkesboro Speedway and $13 million for Concord for projects connected to Charlotte Motor Speedway.
- Funds hundreds of local projects at museums, laboratories, National Guard facilities, universities and community colleges, local courthouses, dams, hospitals, historic sites, small airports, athletic facilities at schools, trails, and parks across the state.
- $283 million to support deepening and expanding the Wilmington Harbor.
- $338 million for major Economic Development Projects.
- $5 million to the North Carolina Trucking Association Foundation to address the truck driver shortage in the state.
Savings & Taxes
- Increases zero-tax bracket — the amount of income on which people pay no income tax — to $25,500.
- Brings the “Rainy Day” savings fund to $4.25 billion at the end of the biennium – the largest in state history.
- Cuts the personal income tax rate from 5.25% to 3.99%. (North Carolina moved to a flat tax rate system in 2014. Prior to that date, the State used a tiered tax rate system ranging from 6% to 7.75%. The rate in 2014 was 5.8%. The rate has gradually decreased over time to 5.25%, where it stands today)
- Increases child tax deduction by $500 per child.
- Allows businesses impacted by COVID-19 to deduct expenses paid by Paycheck Protection Program (PPP) loans.
- Eliminates state income tax on military pensions.
- Reduces and simplifies the franchise tax on businesses.
- Phases out the corporate tax.
- Expands and extends Historic Preservation Tax Credit.
- Extends Mill Rehabilitation Tax Credit.
- Additional $1.5 billion (10% increase) above the base budget for K-12 education over the biennium.
- $800 million from lottery fund for school capital projects.
- $200 million to the Public School Capital Fund.
- $80 million into a newly created school repair and renovations fund.
- Adds Fayetteville State University to the N.C. Promise program, which guarantees $500 in-state tuition per semester at participating schools.
- Expands funding and eligibility for Opportunity Scholarship Program.
- Ends the requirement that teachers pay for a substitute teacher to cover their classes.
- Improves broadband access for 25 rural community colleges.
- Provides funding for School Safety Grants.
- Includes additional funds for school internet connectivity.
- Fully funds a new Brody School of Medicine at East Carolina University.
- Extends postpartum Medicaid services for new mothers to a full year.
- Allows a parent to retain Medicaid eligibility while their child is temporarily in foster care.
- $15 million for child advocacy centers.
- Creates a 2022 joint legislative study committee on health care access and Medicaid expansion.
- Increase Direct Support Personnel wages to $15 per hour – workers who serve elderly, most medically fragile and the intellectual and developmentally disabled.
- $150 million for lead and asbestos remediation in schools and childcare facilities.
- Provides additional 1,000 Innovations Waiver slots to serve the intellectually and developmentally disabled.
- Over $16 million to combat the opioid crisis.
- Transfers $800 million to the State Emergency Response and Disaster Relief Reserve.
- Appropriates $412 million for disaster recovery from previous events and mitigation efforts to prepare the state for future flooding and other natural disasters.
- $124 million for Tropical Storm Fred relief.
- $25 million for Golden L.E.A.F. that the foundation will use to help local governments plan or pursue resilience projects.
- $20 million to create a Flood Resiliency Blueprint to guide flood mitigation projects.
- $38 million to support flood mitigation in vulnerable areas.
- $32 million in grants to local governments for flood mitigation and disaster recovery projects.
- $40 million to the Coastal Storm Damage Mitigation Fund for grants to local governments for storm damage mitigation projects.
Military and Veterans
- Eliminates state income tax on military pensions. ( Military retirement pay received by a retired member of the Armed Forces of the United States who served at least 20 years or was medically retired – and payments from the Survivor Benefit Plan to a beneficiary of a retired member of the Armed Forces of the United States who served at least 20 years or was medically retired)
- $1 million to support and maintain military presence across the state.
- $2 million to increase the number of scholarships awarded to eligible children of disabled veterans.
- Fully funds a new veterans skilled nursing facility in Wake County.
- $2 million for the No Veteran Left Behind project to assist veterans in crisis.
- Expands veteran employment preference for State jobs to include members of the National Guard.
- Provides $129 million in COVID-19 federal relief funds for food banks, and meat, swine, and dairy producers.
- Provides Forest Service with additional emergency response equipment.
- Provides over $8 million for Farmland Preservation.
- Fully funds the operating requirements for the new Steve Troxler Agricultural Sciences Center.
- $10 million for testing sexual assault evidence collection kits and eliminating the rape kit backlog.
- Nearly $30 million to combat human trafficking and provide support services for victims.
- Provides vital new positions including additional assistant district attorneys, deputy clerks, child advocates, magistrates, and judges.
- $140 million for local courthouse construction, renovations, and repairs.
- $5.6 million to improve safety at prisons over the next two years.
- $4 million to support state search and rescue programs over the next two years.
- $346 million over the base budget for highway maintenance and highway preservation activities.
- Funds new inmate litter crew pilot project.
- $12 million to municipalities for construction and maintenance of municipal roads and bridges
- $3 million in federal funds for extended service at DMV Driver License offices.
- $16 million over the biennium to the Global TransPark for a fuel storage facility and terminal renovations.
- Authorizes DMV to utilize online renewal for permits, licenses, and registrations.
- Limits governor’s emergency powers by requiring approval from the Council of State to extend a statewide emergency beyond 30 days.
- Prohibits collusive settlements by the Attorney General.
- Includes Firefighters Fighting Cancer Act – a provision to assist firefighters dealing with work-related cancers.
Below is the budget analysis document prepared by the General Assembly’s Fiscal Research Division.