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Short Session in Short

The General Assembly convened in May (May 16) with a focus on revising the state budget for the upcoming state fiscal year (July 1, 2018 to June 30, 2019). The budget the legislature enacted was vetoed by Governor Cooper, but his veto was overridden. The General Assembly also enacted legislation to make multiple technical corrections to the budget bill and those corrections became law without the Governor’s signature in the final week before the legislature adjourned on June 29. The legislators are scheduled to return November 27, although the agenda for that session has not yet been established.

Budget Overview

Broadband

The budget creates a new Growing Rural Economies with Access to Technology (GREAT) program to provide $10 million in grants for the development of broadband infrastructure in rural areas. Preference is to be accorded to economic tier one areas and the emphasis is to be placed on serving unserved and underserved areas. Communities will need to partner with private providers, and a match is required, although it is reduced for economically distressed areas.

We applaud the NC General Assembly, and in particular Senator Harry Brown and Representative Dean Arp, for championing this approach to expanding rural broadband infrastructure.

This type of grant program has been one of the top advocacy priorities for the Rural Center since the launch of our Rural Counts advocacy program. In fact, the only dollar amount cited in our original platform was $10 million for just this type of program. That suggestion was for a $10 million recurring annual allocation, but we believe that this initial funding will help the state test the model, make adjustments for maximum effectiveness, and prepare this pilot program to be scaled and institutionalized.

Health

UNC Rockingham Health Care is slated to receive $500,000 to match funding for a primary care rural advancement program.

An appropriation of $4.8 million is provided for surgery and family practice residencies and facility improvements at the Southern Regional Area Health Education Center.

Language in the budget bill directs the Department of Health and Human Services to seek permission to set Medicaid coverage for family nurse practitioners to provide home visits for pregnant women and families with young children.

First responders in Anson, Moore, Richmond, and Scotland counties will be able to use $10,000 per county to purchase naloxone. Grants of $10,000, each, will go to sheriff’s departments in Ashe, Brunswick, Cleveland, Columbus, Rockingham, Rutherford, and Swain counties to fight opioid abuse.

Vaya Health will be granted $1.4 million to help construct a facility-based mental health crisis center in Wilkes County.

Appropriates $4 million to pay for inpatient behavioral health beds in Harnett County.

NC State’s Innovation in Manufacturing Biopharmaceuticals will add $2 million to draw down federal funding targeted to accelerating development of products.

Emergency Response/Disaster Relief

The budget includes a number of actions and appropriations related to the state’s continuing response to disasters and also creates a reserve to address future events. The legislature directed dollars to these items:

  • $14.5 million will be available to match federal funds for future disasters
  • $3.7 million will be used for landslide mapping
  • $250,000 goes to NC 2-1-1
  • $2.83 million will be used for flood warning and dam assessment
  • $2.3 million is directed to search and rescue (includes $100,000 specifically for equipment and training)
  • $700,000 will aid the Forest Service’s emergency response
  • $10 million goes to Golden LEAF for infrastructure grants
  • $24.99 million is for housing-related actions (such as elevation, mitigation, acquisition, relocation)
  • $700,000 is provided to aid Princeville and Fair Bluff in using and managing disaster recovery funding            

Rural Small Business / Downtown Development

Of the 46 grants totaling $3,084,100 targeted for downtown revitalization, $2,493,000 will go to 32 rural communities.

There are 12 additional state-assisted community development grants totaling $1.024 million.

The majority of those grants (10) will go to rural towns and counties providing a total of $744,000 to aid their activities.

Community facilities will receive separate funding with 15 local governments receiving grants that total $1,324,500. Of those grants, 12 will go to rural communities and provide $959,000.

EMS and volunteer fire departments that serve rural areas also received funding. A total of $185,000 was appropriated for EMS grants for Haywood, Jackson, and Rockingham counties, plus Lake Waccamaw.

Fire departments in 34 communities received grants that were provided by $1,125,807 in the state budget. The majority of the grants were small and went to rural communities.

The One NC Small Business Fund received a $1 million appropriation.

The Carolina Small Business Development Fund received a $2.5 million appropriation

Infrastructure

State matching funds were provided for the Clean Water and Drinking Water state revolving loan funds. Both loan funds received additional funding to draw down additional federal dollars.

An additional $1 million was provided to draw down an extra $5 million in federal funding for the Clean Water State Revolving Fund. Plus, an additional $2.7 million provided to the Drinking Water State Revolving Fund will permit the state to add $14 million in additional federal funds. These funds provide loans for local governments to construct sewer and water infrastructure.

Additional infrastructure investments were provided through eight grants to specific systems. The grants totaled $2.327 million, and six of the grants, worth $2.235 million were designated for rural systems.

Economic Development

The Job Development Investment Grant (JDIG) program will have several additional provisions that may assist large economic development projects. The program will have $60.9 million available.

Funding for the other major economic development tools remains available – One NC Fund is expected to need $6.8 million and JMAC (Job Maintenance and Capital Development) is expected to require $7.1 million.

Two changes were made to the calculation of economic development tiers. The budget bills removed the exemption for small counties and phase-out of designation for counties that no longer qualify as tier one. (The small county adjustment automatically made any county with fewer than 12,000 residents a tier 1 county and any county with fewer than 50,000 citizens could not rank higher than tier 2. In addition, any county that had been a tier 1 county would automatically remain a tier 1 county for another year, even if the factors would have moved it to tier 2.)

The Department of Commerce also has been directed to examine the county development factors used for the tier system, and aid counties in improving their performance in areas in which the county lags behind the state performance values.

Agribusiness

The Agricultural Development and Farmland Preservation Trust Fund received $14.7 million.

Carteret Community College will receive $75,000 to create the Shellfish Aquaculture Demonstration Center.

The Healthy Foods Small Retailer program received $250,000 funding for the second year of operations. This program increases the availability of fresh agricultural products in food deserts.

Education

Public school teachers will receive a pay increase that averages 6.5%. Principals are to receive an increase that averages 6.9%. Teachers with 25 or more years of experience will get an additional $70/month.

The budget increases the percentage of lottery profits going to school capital projects. (The budget bill will increase the percentage that is devoted to school construction from the current 16.9% in effect this year to 40% by the 2028-2029 fiscal year.) This change will increase the Needs-Based Public School Capital Fund from $30 million this year to $117.3 million next year. The amount for the upcoming year includes $42.3 million that is a direct appropriation in this year’s budget. Administered by the Department of Public Instruction, preference for use of the money in the Needs-Based Public School Capital Fund is directed to counties in the economic development Tier 1, to counties with greater need and less ability to finance their needs, and to counties with high debt to tax revenue ratio. (All the tier 1 counties are rural.)

Funds for the UNC system operations increase by 1.9%. The university system also will receive $20 million to provide pay increases, but those dollars do not have to be used for across-the-board raises.

Community colleges operating funds increase 3.8%, including about $15 million for short-term workforce training. Community colleges also will receive $1.8 million (one-time funds) to offset declines in enrollment related to Hurricane Matthew. The budget includes $24 million for pay raises for personnel, but those dollars do not have to be used for across-the-board raises.

The budget expands the tuition reimbursement program for teacher assistants to 19 counties (18 of which are rural). Rural schools also will receive a significant portion of the $9.8 million provided in grants to schools and school programs. Among the grantees are school programs in Avery, Burke, Cherokee, Clay, Columbus, Edgecombe, Franklin, Graham, Halifax, Harnett, Johnston, Lee, Robeson, Swain, Transylvania, and Wayne.

Specialized community college programs will receive $14.9 million in the coming year. Community colleges in Carteret, Johnston, Richmond, Surry, Wilkes, and Yancey counties are among the recipients for these funds.

Other Budget Provisions of Interest

Raises for state employees will be allotted at 2% for most non-education (not teachers or college) employees. Corrections employees will get an average increase of 4%, and state troopers will be awarded an 8% increase.

State retirees and retired teachers are slated to receive a 1% bonus in the fall, but there is not COLA for state or local retirees.

 

Beyond the Budget

Very few public bills moved through this session, which truly was a “short session” of the legislature. Among the bills that would advance the Rural Counts priorities, two pieces of legislation were ratified.

  • Improving Rural Health (H 998) is a multi-part bill that seeks to improve access to medical and dental care in rural areas. The bill directs the Department of Health and Human Services (DHHS) to study incentives for medical education in rural areas and assist rural hospitals in becoming designated as teaching hospitals. It directs the Office of Rural Health to ensure the loan repayment program is targeted to benefit health care providers in rural areas in order to recruit and retain providers. Rural Health also is to identify the need for dentists in rural areas and improve access to dentists in rural areas.
  • Heroin and Opioid Prevention and Enforcement (HOPE) Act (S 616) amends laws related to controlled substances and expresses the legislature’s intention to appropriate funds for the 2019-2020 fiscal year for community-based substance use disorder treatment and recovery. The bill further states the General Assembly intends to provide funding for opioid antagonists for law enforcement and for Medicine Drop. As part of the bill, the Office of Rural Health is directed to oversee establishing a program for telepsychiatry.

Build NC Bond

In addition to those bills, the General Assembly passed the Build NC Bond Act of 2018. This act authorizes $3 billion in bonds for highways. About half of the funds are to aid projects that are Division Needs within the Strategic Transportation Investments category. The remainder of the funds must be used for Regional Impact Projects. The bonds will be repaid from the Highway Trust Fund and no more than $300 million in the bonds may be issued in any year. The bonds may not be used for non-highway projects or toll roads. Although specific projects have not been designated to receive the bond funds, the availability of money is expected to advance projects to aid rural areas prior to the original scheduled construction time.

Constitutional Amendments

In the final weeks of the session, the General Assembly adopted six constitutional amendments that will be on the ballot in November. The amendments propose to:

  • Provide that the maximum tax rate on incomes cannot exceed 7.0% (S 75) (the current constitutional limit is 10%)
  • Protect the right to hunt, fish, and harvest wildlife (S 677)
  • Require photo identification to vote (H 1092)
  • Provide a nonpartisan judicial merit commission to nominate and recommend nominees to fill judicial vacancies (S 814)
  • Establish a bipartisan Board of Ethics and Elections Enforcement (H 913)
  • Provide better protections and safeguards to victims of crime (H 551)

Two of these amendments – the nonpartisan judicial merit commission and the bipartisan Board of Ethics and Election Enforcement – were recently blocked by a panel of Superior Court judges. A special session of the General Assembly may be called to clarify the language of these amendments to meet the demands of that panel. Additional details about all of these proposed amendments may be better defined when the legislature re-convenes in late November, after the vote to decide which ones are enacted.

Announcement: Thread Capital activates Hurricane Florence Rapid Recovery Loan Program to assist North Carolina businesses affected by the storm. To learn more, click here.