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2016-2017 State Budget Adjustments — Provisions of Interest for Rural Areas

  • Download a PDF of this document
  • Download a spreadsheet of the bills we followed most closely this session
  • Check out this analysis of the key issues we are tracking between now and the start of the long session in January

The 2016 session of the General Assembly has made adjustments to the second year of the budget adopted in 2015. The final version, released on June 27 and scheduled for adoption, includes elements of the budget adjustments passed by the NC House of Representatives on May 19, 2016 and the NC Senate on June 3, 2016. The final version allocates $22.341 billion for the upcoming fiscal year (2016-2017). The adjusted budget adds $401.9 million to the General Fund appropriations made last year. (Plus, transportation adjustments added a combined $91 million to the Transportation and Highway Trust Fund budgets.)

Two provisions are of interest across the state:

Salary Increases:

Salaries for teachers Increased (an average of 4.7%). The budget also provides salary increases for state employees, community college and university employees (1.5%, plus a 0.5% bonus). Funds also will be provided for merit based bonuses, and retired teachers and state employees will receive a one-time 1.6% bonus.

Standard income tax deduction:

The standard deduction will increase over a two-year period. For single taxpayers, the deduction would increase from $7,500 to $8,750. For married taxpayers, filing jointly, the deduction would increase from $15,500 to $17,500.

Other provisions that may aid in achieving the 10 Strategies for Rural North Carolina’s Future include the following items.

Strategy 1: Innovation in education and workforce development

  • A provision in the budget sets aside $600,000 to award bonuses to career and technical education teachers whose students can pass the required examinations and attain industry certifications. Students will be provided a free (one-time) access to the examinations, as well.
  • The NCWorks Apprenticeship Program is increased by $500,000 to provide $1.4 million for the upcoming fiscal year.
  • A budget provision will establish a pilot program in Rutherford County and the Hickory and Newton-Conover school systems to raise the dropout age from 16 to 18.
  • A tuition waiver is available for community college students in apprenticeship programs, funded with an appropriation of $110,000.
  • Four new programs are authorized and funded to test approaches to recruiting more teachers and/or aiding low-performing schools:
    1. The Alternative Teacher Preparation Pilot Program authorizes up to 5 pilots to test local programs for lateral entry instructions and a comparative evaluation of the pilot programs ($500,000)
    2. A pilot program in Anson, Franklin, Moore, Richmond, and Scotland counties will provide tuition assistance for up to 5 teacher assistants per system to pursue teaching degrees. The teaching assistants may get up to $4500/year for up to 4 years.
    3. The UNC system’s institutions that offer teacher training will be setting up Laboratory Schools to aid the teachers and administrators of low-performing schools and the students they teach. Start-up assistance of $1 million is provided in the budget.
    4. Pilot programs in 4 community colleges, including Stanly Community College, will develop a competency-based education program and a system for granting credit for prior learning. The Competency-Based Education Incubator Program is funded with a $500,000 appropriation.
  • Three universities located in rural areas will be part of a new NC Promise Tuition Plan that will reduce instate students’ tuition to $500 per semester, beginning in the 2018 fall semester. The state will provide the funding to “buy down” the tuition rate at Elizabeth City State, UNC Pembroke, and Western Carolina. In implementing the program, the UNC Board of Governors is directed to give consideration to the historical character of the individual schools which includes serving students who are first-generation-college-going, economically disadvantaged, or minority.
  • The budget also establishes a fixed tuition payment program that guarantees NC resident students entering a University system school, beginning this fall semester, a tuition amount that will not increase for eight consecutive semesters (10 semesters for a 5-year degree program). The student must be continuously enrolled to maintain the guarantee.

Strategy 2: Stabilize and transform rural health care

  • The budget provides an appropriation of $7.7 million to start a rural residency program at Cape Fear Valley Hospital in affiliation with Campbell University’s Medical School. An additional $759,000 is provided to cover the anticipated reduction in the Medicaid assessment rate that the rural program will generate.
  • ECU’s Medical School will receive $4 million to aid in its sustainability.
  • The Western School of Medicine – Asheville Campus (a collaboration between the UNC Medical School and the Mountain Area Health Education Center) will receive $3 million for operations and $8 million for facilities.
  • A $20 million reserve is provided to implement recommendations from the Governor’s Task Force on Mental Health and Substance Abuse.
  • Budget provisions establish a “medication-assisted opioid use disorder treatment pilot program.” The 3-year pilot will start with $500,000 from block grant funds. DHHS will select 3 to 5 Federally Qualified Health Centers to participate, with priority accorded the centers that are receiving supplemental federal grants for expanding substance abuse service (with a focus on medication-assisted treatment of opioid use disorders).
  • A special providing in the budget directs DHHS to adjust rates paid to Rural Health Centers and Federally Qualified Health Centers for core services to reflect costs in accordance with federal guidance. The adjustment is effective July 1, 2016.
  • The budget provides $18 million from the sale of the Dix property to expand inpatient capacity, especially in rural areas, for new inpatient psychiatric units or new facility-based crisis centers. Priority is to be provided for rural hospitals.

Strategy 3: Expand accessible and affordable high-speed fiber broadband

  • Commerce is authorized to use $1.25 million in deobligated CDBG funding for a proposed broadband initiative. The department is directed to report how it proposes to use the funding, providing details about how the initiative will comply with the state Broadband Plan and with CDBG requirements. The report, due by 2/1/17 to the legislature’s Economic Development and Global Engagement Committee also is to include the type of sites to be served, the timeline for projects, the constituents to be served, and the outcomes expected.

Strategy 4: Accelerate modernization of essential water infrastructure

  • Water and sewer projects for public schools may be able to tap $4.4 million recovered from previous CDBG grants that will be provided to the Division of Water Infrastructure.
  • The Division of Water Infrastructure also will receive $18.8 million in additional funding for state water and sewer grants benefitting rural, economically distressed areas (however, special provisions will direct the use of $16.6 million). The additional money will increase the available funding for these state grants to $33.8 million.
  • The Clean Water Management Trust Fund will receive an additional $8.6 million, raising the fund’s appropriation to $22.4 million.
  • The budget provides $6 million to extend public infrastructure to serve the Johnston County Research and Training Zone.

Strategy 5: Expand and upgrade transportation and natural gas infrastructure

  • A budget provision will change the allocation of funding for unpaved secondary roads, allocating 50% of the funding based on statewide priority and the other 50% split among the 14 highway divisions to address unpaved road priorities using the statewide priority system.
  • The funding for Rural Transit System Operating Assistance will increase by $2 million to provide $18.8 million for the fiscal year.
  • A special provision permits the use of dividends from the NC Railroad Company to be used to provide grants for shortline railroads.

Strategy 6: Invest in stronger entrepreneurship and small business development systems

  • The budget does not directly address this strategy.

Strategy 7: Strengthen homegrown manufacturing

  • The budget does not directly address this strategy.

Strategy 8: Develop opportunities for agriculture and natural resources, including biotechnology and value-added food processing

  • The budget provides $500,000 for international marketing of NC agricultural products.
  • An initial allotment of $250,000 is provided as a source of funding and assistance for small food retailers operating in low-income areas to provide access to healthy foods. A special provision indicates that Agriculture is to help retailers in “food deserts” find local produce suppliers. Agriculture and Commerce also are directed to report on the feasibility of using CDBG funding to aid small food retailers in low-income areas to improve access to healthy foods. The two departments are to report their findings by 2/1/17.
  • The budget provides $78,000 to the Economic Development Partnership of NC for a position that will work on attracting and maintaining existing food processing entities.
  • Funds ($100,000) will be provided to Commerce for Regional Food Commercialization Centers.
  • Oyster sanctuaries will receive $1.3 million, which boosts the appropriation for the coming fiscal year to $1.38 million.

Strategy 9: Enhance regional collaborations and partnerships

  • The budget does not directly address this strategy.

Strategy 10: Stabilize and leverage rural development funding, capacity building and technical assistance

  • From unused CDBG funds, Commerce may use $750,000 for training local governments in using and accessing CDBG funding.
  • The budget provides $25,000 to community colleges to create a continuing education program for local government finance officers. (This program is to be offered in conjunction with the Local Government Commission and is authorized by H 1035.)
  • Community planners will be located in each of the Prosperity Zones to assist communities with economic development strategic planning, land-use planning, downtown economic revitalization and technical support. The 5 new positions will be supported by a $336,000 appropriation.
  • A total of 56 communities will share in $5,725,020 provided for downtown revitalization grants. (Rural communities will receive $3.7 million of the appropriation.)

Other provisions:

  • Special provisions in the budget specify the General Assembly intends to appropriate funds needed to meet the cash requirements for JDIG and One North Carolina commitments.
  • The budget appropriates $500,000 and makes Commerce the lead agency for the study of the uses of the Broughton Hospital property, including taking the lead for site control and disposition strategies.
  • Special provisions in the budget direct the application of economic tier formula in instances when there is inter-tier cooperation for JDIG projects.
  • The budget adds $1 million to the Agricultural Development and Farmland Preservation Trust Fund, bringing the appropriation for FY 17 to $3.6 million.
  • The budget adds $1.12 million to the Tobacco Trust Fund, increasing the appropriation for FY 17 to $4.1 million. Two FFA pilot programs will share $120,000 of this appropriation.
  • The budget will increase the Natural Heritage Program funding by $314,726. The money restores funds reduced in previous years and provides the program with a total of $764,726 for the year.
  • The budget provides funding for administration of the Connect NC bonds and debt service on the bonds ($1.25 million). The administrative money is allotted to Community Colleges, the State Budget Office, and to the Office of State Construction.
  • The budget has provisions to clarify the application of the sales tax on repair, maintenance, and installation that passed in 2015.

LEADERSHIP

Rural Counts-Square-website LOGO

 

2016-2017 State Budget Adjustments — Provisions of Interest for Rural Areas

  • Download a PDF of this document
  • Download a spreadsheet of the bills we followed most closely this session
  • Check out this analysis of the key issues we are tracking between now and the start of the long session in January

The 2016 session of the General Assembly has made adjustments to the second year of the budget adopted in 2015. The final version, released on June 27 and scheduled for adoption, includes elements of the budget adjustments passed by the NC House of Representatives on May 19, 2016 and the NC Senate on June 3, 2016. The final version allocates $22.341 billion for the upcoming fiscal year (2016-2017). The adjusted budget adds $401.9 million to the General Fund appropriations made last year. (Plus, transportation adjustments added a combined $91 million to the Transportation and Highway Trust Fund budgets.)

Two provisions are of interest across the state:

Salary Increases:

Salaries for teachers Increased (an average of 4.7%). The budget also provides salary increases for state employees, community college and university employees (1.5%, plus a 0.5% bonus). Funds also will be provided for merit based bonuses, and retired teachers and state employees will receive a one-time 1.6% bonus.

Standard income tax deduction:

The standard deduction will increase over a two-year period. For single taxpayers, the deduction would increase from $7,500 to $8,750. For married taxpayers, filing jointly, the deduction would increase from $15,500 to $17,500.

Other provisions that may aid in achieving the 10 Strategies for Rural North Carolina’s Future include the following items.

Strategy 1: Innovation in education and workforce development

  • A provision in the budget sets aside $600,000 to award bonuses to career and technical education teachers whose students can pass the required examinations and attain industry certifications. Students will be provided a free (one-time) access to the examinations, as well.
  • The NCWorks Apprenticeship Program is increased by $500,000 to provide $1.4 million for the upcoming fiscal year.
  • A budget provision will establish a pilot program in Rutherford County and the Hickory and Newton-Conover school systems to raise the dropout age from 16 to 18.
  • A tuition waiver is available for community college students in apprenticeship programs, funded with an appropriation of $110,000.
  • Four new programs are authorized and funded to test approaches to recruiting more teachers and/or aiding low-performing schools:
    1. The Alternative Teacher Preparation Pilot Program authorizes up to 5 pilots to test local programs for lateral entry instructions and a comparative evaluation of the pilot programs ($500,000)
    2. A pilot program in Anson, Franklin, Moore, Richmond, and Scotland counties will provide tuition assistance for up to 5 teacher assistants per system to pursue teaching degrees. The teaching assistants may get up to $4500/year for up to 4 years.
    3. The UNC system’s institutions that offer teacher training will be setting up Laboratory Schools to aid the teachers and administrators of low-performing schools and the students they teach. Start-up assistance of $1 million is provided in the budget.
    4. Pilot programs in 4 community colleges, including Stanly Community College, will develop a competency-based education program and a system for granting credit for prior learning. The Competency-Based Education Incubator Program is funded with a $500,000 appropriation.
  • Three universities located in rural areas will be part of a new NC Promise Tuition Plan that will reduce instate students’ tuition to $500 per semester, beginning in the 2018 fall semester. The state will provide the funding to “buy down” the tuition rate at Elizabeth City State, UNC Pembroke, and Western Carolina. In implementing the program, the UNC Board of Governors is directed to give consideration to the historical character of the individual schools which includes serving students who are first-generation-college-going, economically disadvantaged, or minority.
  • The budget also establishes a fixed tuition payment program that guarantees NC resident students entering a University system school, beginning this fall semester, a tuition amount that will not increase for eight consecutive semesters (10 semesters for a 5-year degree program). The student must be continuously enrolled to maintain the guarantee.

Strategy 2: Stabilize and transform rural health care

  • The budget provides an appropriation of $7.7 million to start a rural residency program at Cape Fear Valley Hospital in affiliation with Campbell University’s Medical School. An additional $759,000 is provided to cover the anticipated reduction in the Medicaid assessment rate that the rural program will generate.
  • ECU’s Medical School will receive $4 million to aid in its sustainability.
  • The Western School of Medicine – Asheville Campus (a collaboration between the UNC Medical School and the Mountain Area Health Education Center) will receive $3 million for operations and $8 million for facilities.
  • A $20 million reserve is provided to implement recommendations from the Governor’s Task Force on Mental Health and Substance Abuse.
  • Budget provisions establish a “medication-assisted opioid use disorder treatment pilot program.” The 3-year pilot will start with $500,000 from block grant funds. DHHS will select 3 to 5 Federally Qualified Health Centers to participate, with priority accorded the centers that are receiving supplemental federal grants for expanding substance abuse service (with a focus on medication-assisted treatment of opioid use disorders).
  • A special providing in the budget directs DHHS to adjust rates paid to Rural Health Centers and Federally Qualified Health Centers for core services to reflect costs in accordance with federal guidance. The adjustment is effective July 1, 2016.
  • The budget provides $18 million from the sale of the Dix property to expand inpatient capacity, especially in rural areas, for new inpatient psychiatric units or new facility-based crisis centers. Priority is to be provided for rural hospitals.

Strategy 3: Expand accessible and affordable high-speed fiber broadband

  • Commerce is authorized to use $1.25 million in deobligated CDBG funding for a proposed broadband initiative. The department is directed to report how it proposes to use the funding, providing details about how the initiative will comply with the state Broadband Plan and with CDBG requirements. The report, due by 2/1/17 to the legislature’s Economic Development and Global Engagement Committee also is to include the type of sites to be served, the timeline for projects, the constituents to be served, and the outcomes expected.

Strategy 4: Accelerate modernization of essential water infrastructure

  • Water and sewer projects for public schools may be able to tap $4.4 million recovered from previous CDBG grants that will be provided to the Division of Water Infrastructure.
  • The Division of Water Infrastructure also will receive $18.8 million in additional funding for state water and sewer grants benefitting rural, economically distressed areas (however, special provisions will direct the use of $16.6 million). The additional money will increase the available funding for these state grants to $33.8 million.
  • The Clean Water Management Trust Fund will receive an additional $8.6 million, raising the fund’s appropriation to $22.4 million.
  • The budget provides $6 million to extend public infrastructure to serve the Johnston County Research and Training Zone.

Strategy 5: Expand and upgrade transportation and natural gas infrastructure

  • A budget provision will change the allocation of funding for unpaved secondary roads, allocating 50% of the funding based on statewide priority and the other 50% split among the 14 highway divisions to address unpaved road priorities using the statewide priority system.
  • The funding for Rural Transit System Operating Assistance will increase by $2 million to provide $18.8 million for the fiscal year.
  • A special provision permits the use of dividends from the NC Railroad Company to be used to provide grants for shortline railroads.

Strategy 6: Invest in stronger entrepreneurship and small business development systems

  • The budget does not directly address this strategy.

Strategy 7: Strengthen homegrown manufacturing

  • The budget does not directly address this strategy.

Strategy 8: Develop opportunities for agriculture and natural resources, including biotechnology and value-added food processing

  • The budget provides $500,000 for international marketing of NC agricultural products.
  • An initial allotment of $250,000 is provided as a source of funding and assistance for small food retailers operating in low-income areas to provide access to healthy foods. A special provision indicates that Agriculture is to help retailers in “food deserts” find local produce suppliers. Agriculture and Commerce also are directed to report on the feasibility of using CDBG funding to aid small food retailers in low-income areas to improve access to healthy foods. The two departments are to report their findings by 2/1/17.
  • The budget provides $78,000 to the Economic Development Partnership of NC for a position that will work on attracting and maintaining existing food processing entities.
  • Funds ($100,000) will be provided to Commerce for Regional Food Commercialization Centers.
  • Oyster sanctuaries will receive $1.3 million, which boosts the appropriation for the coming fiscal year to $1.38 million.

Strategy 9: Enhance regional collaborations and partnerships

  • The budget does not directly address this strategy.

Strategy 10: Stabilize and leverage rural development funding, capacity building and technical assistance

  • From unused CDBG funds, Commerce may use $750,000 for training local governments in using and accessing CDBG funding.
  • The budget provides $25,000 to community colleges to create a continuing education program for local government finance officers. (This program is to be offered in conjunction with the Local Government Commission and is authorized by H 1035.)
  • Community planners will be located in each of the Prosperity Zones to assist communities with economic development strategic planning, land-use planning, downtown economic revitalization and technical support. The 5 new positions will be supported by a $336,000 appropriation.
  • A total of 56 communities will share in $5,725,020 provided for downtown revitalization grants. (Rural communities will receive $3.7 million of the appropriation.)

Other provisions:

  • Special provisions in the budget specify the General Assembly intends to appropriate funds needed to meet the cash requirements for JDIG and One North Carolina commitments.
  • The budget appropriates $500,000 and makes Commerce the lead agency for the study of the uses of the Broughton Hospital property, including taking the lead for site control and disposition strategies.
  • Special provisions in the budget direct the application of economic tier formula in instances when there is inter-tier cooperation for JDIG projects.
  • The budget adds $1 million to the Agricultural Development and Farmland Preservation Trust Fund, bringing the appropriation for FY 17 to $3.6 million.
  • The budget adds $1.12 million to the Tobacco Trust Fund, increasing the appropriation for FY 17 to $4.1 million. Two FFA pilot programs will share $120,000 of this appropriation.
  • The budget will increase the Natural Heritage Program funding by $314,726. The money restores funds reduced in previous years and provides the program with a total of $764,726 for the year.
  • The budget provides funding for administration of the Connect NC bonds and debt service on the bonds ($1.25 million). The administrative money is allotted to Community Colleges, the State Budget Office, and to the Office of State Construction.
  • The budget has provisions to clarify the application of the sales tax on repair, maintenance, and installation that passed in 2015.