The N.C. General Assembly last week approved a temporary budget that keeps state government operating through August 14. Now the real negotiations begin between the House and the Senate.
The number and breadth of the policy changes contained in the Senate budget are difficult to summarize concisely and will likely lead to lengthy budget negotiations.
With that said, on appropriation items of signifigant interest to rural, here is how the two chambers stack up:
Community Development Tools
- Division of Water Infrastructure (DENR) - $11.27 million in FY ’16 and $12.7 million in FY ’17 for water and wastewater infrastructure grants for “rural, economically distressed areas,” plus $9.7 million for state matching funds to draw down federal water and wastewater revolving loan funds. Of the FY ’16 money, there is $10 million from non-recurring funds for infrastructure grants, of which $5 million is limited to Tier 1 and $5 million for Tier 2, but the Tier 2 funds are earmarked. Additional provisions change the priority system for these non-federal loans and grants.
- Only appropriates the state matching funds for the wastewater revolving loan funds ($5,300,000 over the biennium)
- The Rural Economic Development Division in Commerce will get $9.6 million in FY ‘16 and $10.9 million in FY ‘17. It appears from the special provisions that this money is to fund a new grant program "Underserved & Limited Resource Communities/Economic Development Grants." (Commerce is to develop the criteria for these grants.)
- Eliminates $2.5 million for the “Underserved & Limited Resource Communities” and provides $4,410,000 per year in non-recurring funds to expand the existing grant programs (less $390,000/year in recurring funding – a net of $4,020,000/year).
In agreement – Community Development Block Grant
- Subject to federal funds availability, Commerce will receive $15.7 million to make economic development grants and DENR will receive $26.7 million for infrastructure grants, each year, from Community Development Block Grant funds. This amount is consistent in both the House and the Senate versions.
In agreement – DOT will receive $2 million/year for its Rural (public transportation) Capital Grant Program. This amount is consistent in both the House and the Senate versions.
- Clean Water Management Trust Fund will be separated from the Natural Heritage Program and would receive $14 million in new funds - $50 million in availability for the biennium (including $4 million that only can be spent on military buffers).
- Provides $17,140,907 in new funds – bringing total support to $46.7 million over the biennium. That total includes $2 million that only can be spent on military buffers, $2.25 million for administrative expenses (restricting the use of other funds for that purpose), and a provision that earmarks $4.5 million for “strategies to mitigate water quality impairment.”
- Commerce’s Main Street Solutions Fund is slated to receive $1 million in FY’16 from non-recurring dollars to provide matching grants to local governments to revitalize downtowns.
- Provides $2 million in FY ’16, but $1 million of that amount is earmarked for a specific (but un-named) town.
- The Parks and Recreation Trust Fund is to receive an additional $12.5 million (non-recurring) in FY’16 and $1.48 million (recurring) in FY ’17 to bring the funds available to $42.5 million for the biennium.
- Provides $5.16 million over the biennium to bring the total available to $31.9 million.
House Budget Only
- Money is set aside to finance several pending House bills, including $1 million for the Healthy Food, Small Retailer Corner Store Act.
- The Support Center is to be allocated $2.5 million/year from non-recurring funds.
- Budget provisions create a pilot program to assist community colleges in establishing new programs for workforce development. The pilot program is limited to Tier 1 and Tier 2 counties and will be financed by $2 million/year from non-recurring money.
- The Tobacco Trust Fund Program is to receive $1.559 million from non-recurring money to increase the program to $2.5 million in FY ’16 and $3 million in FY’17.
Business Assistance Tools
- The One NC Small Business Fund is to receive $5 million each year of the biennium.
- Provides $3 million each year of the biennium.
In agreement – JDIG numbers
- The appropriation for JDIG is $57,816,215 in FY ’16 and $71,728,126 in FY ’17. (These numbers represent a decrease of $5,229,142 in FY ’16 and an increase of $8,682,769 in FY ’17.) These numbers are the same in both the House and the Senate versions of the budget; however, there are significant policy differences between the two versions.
In agreement – One NC Fund numbers
- The appropriation for One NC is $6,995,976 in FY ’16 and $9,000,000 in FY ’17. (The amount for FY ’16 represents a decrease of $2,004,024.) These numbers are the same in both House and Senate versions of the budget; however, there are policy differences between the two versions.
- NC Biotechnology Center would receive a $5 million/year increase from recurring funds, bringing the total available to $13.6 million.
- Would eliminate funding for the Biotechnology Center.
- The Film Grant Fund is to get an additional $40 million in FY ’16 from fund balances and $40 million in FY’17.
- Would appropriate $10 million/year from non-recurring funds for each year of the biennium.
- The budget targets $1.85 million to aid shellfish and oyster rehabilitation and research.
- Would provide $2.05 million. (The key difference is in the amount appropriated for research and development related to oysters.)
- The House adds $1 million in FY’16 and $2 million in FY ’17 for Commerce to use in marketing and branding the state for travel and business development.
- Eliminates $1.5 million per year for marketing and branding.
House Budget Only
- Commerce will receive funding to establish two competitive grant programs: 1) Rallying Investors & Skilled Entrepreneurs for NC (RISE NC) is to focus on increasing start-up companies, especially those that are high-tech ($2.5 million/year for each year of the biennium). 2) A University Innovation Commercialization Grant Program is to aid in commercializing research from universities and non-profits ($2.5 million in FY ’16 and $5 million in FY’17).
- The NC Venture Muliplier Fund will tap resources in the Escheats Fund (about $40 million) to fund innovations and inventors that have potential commercial value.
Senate Budget Only
- The Senate would appropriate $13,000,000 for the Site Infrastructure Development Fund (in Commerce) in FY ’16.
- The Agricultural Development and Farmland Preservation Trust Fund is slated to receive $2.5 million from recurring funds in FY ’17 and $91, 624 from recurring funds in both years of the biennium.
- Reduces the FY ’16 appropriations by $500,000 and substitutes funding from the TVA Settlement, providing a total available of $2.6 million.
- Provides $20 million from non-recurring funds for each year of the biennium to the Housing Finance Agency to assist with the development of low-income housing units, statewide.
- Uses a portion of the Standard and Poors Settlement to support the program with $10 million in FY’ 16 and $9.3 million in FY ’17. In addition, the Senate would appropriate $700,000 from non-recurring money in FY ’17 to send $10 million/year to the Housing Finance Agency for the program.
In agreement – Rural Health Loan Repayment
- Special provisions will permit DHHS to expand the Rural Health Loan Repayment programs to use state incentives for general surgeons practicing in Critical Access Hospitals and to offer loan repayment program funds for providers using telemedicine to serve rural and underserved areas. Both House and Senate versions of the budget will permit this change.
In agreement – Eliminate apprenticeship fees
- The budget eliminates the apprenticeship fees. This provision is included in both the House and the Senate versions of the budget.
In agreement – ECU Medical School and matching dollars
- Additional funding and/or authority is provided to specific rural areas and facilities (such as $8 million/year to provide sustainability for the ECU medical school, and dollars for specific counties to provide federal grant matching money). These provisions are in both House and Senate versions of the budget.
House Budget Only
- A school connectivity initiative is to bring broadband connectivity to all K-12 public school buildings (a school-level internal Wi-Fi network). The budget adds $12 million/year to expand the funds available ($60 million in E-rate funds, plus $7.9 million in state base budget funds).
Of potential interest
New departments and major changes
Governor proposed a new department of Military and Veterans Affairs and a new department of Information Technology. Also proposed was the transfer of state attractions (parks, aquariums, state zoo, etc.) to the Department of Cultural Resources.
- Both House and Senate budgets create a new Department of Military and Veterans Affairs.
- The Senate budget creates a new Department of Information Technology. The House budget consolidates information technology functions under the current Information Technology Services Office/State Chief Information Officer.
- The Senate budget creates a new Department of Natural and Cultural Resources that will include programs and personnel transferred from the Department of Environment and Natural Resources (parks, state trails, aquariums, the Zoo, the Museum of Natural Sciences (the one with the globe in front), (Also adds the Museum of Forestry [renamed Museum of Natural Sciences at Whiteville] as a satellite of the Museum of Natural Sciences.)
- In the Senate budget, the Department of Environment and Natural Resources becomes the Department of Environmental Quality.
- The Senate also directs the two re-named departments are to study the possibility of also transferring the Albemarle-Pamlico Estuary Partnership, Coastal Reserves Program, Office of Land and Water Stewardship, Environmental Education and Public Affairs, Marine Fisheries, and the Wildlife Resources Commission.
- The House budget directs the Departments of Cultural Resources and Environment and Natural Resources to develop a plan by 2/1/16 to consider the transfer of the Museum of Natural Science, the Zoo, the aquariums, state parks the Division of Environmental Assistance and Customer Services, and Environmental Education. The plan also is to address operations and maintenance of the Clean Water Management Trust Fund, the Pigeon River Fund, the Natural Heritage Program, the Coastal Reserve Program, and the Albemarle-Pamlico National Estuary Partnership.
Tax policy changes
- The House budget raises fees, including DMV fees for renewal of drivers licenses and inspections, but decreases the gas tax. The House budget also extends the renewable energy tax credit, creates a new historic preservation tax credit, re-establishes a tax deduction for medical expenses, extends the sales tax preference for motor sports, incorporates the provisions for tax exemption for datacenters (S 42), and exempts service contracts for aircraft and agricultural fair admissions from sales taxes.
- The Senate budget incorporates the Senate’s tax proposals, including changes to the corporate tax and income tax, the application of sales tax, and the distribution of sales tax revenues to local governments. The Senate authorizes a new local government option for the sales tax.