Tuesday, August 6, 2013 —
Last week, the 2013 long session came to an end. We accomplished a lot during the six month session; certainly our top two accomplishments were the budget and the start of reforming North Carolina’s tax system. After years of much needed tax reform, North Carolina is finally taking a step towards reform that will help our struggling economy. Governor Pat McCrory, the Senate, and the House have combined pieces of their three tax reform plans to create one that will be implemented in our state.
Under this plan, all citizens will receive a decrease in their personal income tax. The three-tier system will be eliminated, and a flat, fair rate of 5.8 percent will take its place in 2014, afterwards reducing to 5.75 percent. This means we will now have the lowest income tax when compared to our surrounding states, other than Virginia.
It increases the standard deduction for low and middle income earners and increases the child credit for low income families. Social security will remain untaxed, while the deduction for mortgage interest and property tax is capped at $20,000. The state wants to be sure to take care of its most vulnerable citizens.
Sales tax will not change on food or medicine, to ensure that necessities like these are affordable for all citizens.
The corporate income tax will be reduced from 6.9 percent to 6 percent in 2014, and afterwards will be 5 percent. By 2015, we will have the second lowest corporate income tax in the southeast, next to South Carolina, making us a much more competitive state. In fact, Americans for Tax Reform predicts that this plan would result in the state going from 44th, to the 17th best business tax climate in the nation. Businesses that are looking for a place to locate will have all the more reason to make North Carolina top of their list, bringing us jobs and boosting our economy. This plan was passed through both the House and the Senate and was signed by the Governor Tuesday, July 23.
As an Appropriations Chair, I had the opportunity and responsibility to work on the budget, along with other chairs in both the House and Senate. We had a total of $20,630,767,645 for the state budget, which is a 2.7 percent increase from the last fiscal year. We were able to fulfill our obligation to state employees by fully funding the state retirement system and state health plan, while also providing them with five bonus leave days. Transitional hold harmless funds were appropriated to ensure the economic stability of certain rural areas, including Montgomery County. To protect our state against unforeseen natural disasters or shortfalls in Medicaid, almost $230 million was set aside from this years’ budget to add to the rainy day fund.
Education is a vital part of the state budget. This is why there has been an increase in the appropriated funds from the last fiscal year, with K-12 being the most increased portion at an increase of 2.1 percent. In fact, this budget spends more money on education than has ever been spent on education in North Carolina. Within the public school system, we must place the safety of our children as our first and foremost priority. Therefore, we have provided funding to implement critical school safety measures, such as resource officers and expand the use of technology and innovation in schools. As I said earlier, teachers will be given five bonus leave days, as well as getting the same income tax cuts as other North Carolinians; also, funds have been put aside specifically for salary adjustments for educators and all other state employees in the fiscal year 2014-2015. This budget eliminates the outdated tenure system, and will bring the education profession more in line with mainstream employment services, which will ensure that students get the highest quality instructors and provide a way to reward teachers for their success. For the community college portion of this part, the budget funds the N.C. Back to Work program, which provides nearly $5 million to allow for a more effective job placement program.
The Health and Human Services portion of this budget grew by nearly $500,000,000 compared to what was budgeted in the last fiscal year, due largely to federal mandates. The most important part of this section is that it paves the road to a Medicaid reform plan, by allowing a Medicaid advisory group to develop a plan that will then be reviewed by the General Assembly.
This is something that has been needed for many years now and will help to provide our most vulnerable citizens with better health outcomes and ensure that we are spending your taxpayer dollars wisely. The budget provides a supplemental, short-term assistance program for group homes for recipients who lost Medicaid personal care service funds. The intent is to provide this support until the new-tiered State-County Special Assistance Block Grant is implemented statewide.
We were sure to take care of those struggling with mental health needs by implementing a new statewide telepsychiatry program and by funding additional state and community psychiatric beds. We also funded an additional 2,500 Pre-K slots, to bring the total number of slots for at-risk four-year-olds to 27,500.
The Natural and Economic Resources portion of this budget has received a 2 percent increase compared to the last fiscal year. One of the most important elements in this portion is the launch of the new Rural Economic Development Division within the Department of Commerce.
This division will administer grants or loans to rural counties for economic development projects and will establish the Rural Infrastructure Authority. We also created the Water Infrastructure Authority to help focus on water and sewer infrastructure across the state.
This budget funds a new Tarheel ChalleNGe Academy that will be in Stanly County. The Tarheel ChalleNGe Academy is part of the National Guard Youth ChalleNGe Program and is a dropout prevention program for youth.
It provides the opportunity for participants to obtain their high school diploma, GED or return to high school. It has proven to be effective in Sampson County and across the country, and this new site will allow for even more North Carolina students to be placed back on a path to become more productive and successful citizens of our state.
Other portions of the budget include capping the gas tax, funding plans for voter photo identification, keeping historic sites open and increasing the Justice and Public Safety portion of the budget by 3.4 percent from the last fiscal year so that we can fund additional critical positions such as magistrates and probation officers. This budget, along with tax reform, will be a step in bringing the state of North Carolina closer to economic recovery from the recession. Not only will this duel process help to bring jobs to our state, but will better protect our state’s spending so that your tax dollars are spent wisely. This budget was passed through Senate Bill 402 on July 24, and I was honored to join the governor when he signed it last Friday.
It is my privilege to serve you as your Representative in Raleigh.
Justin P. Burr serves as the representative for North Carolina House District 67.