WS Chronicle

photo above: Gov. Pat McCory

Historic preservation and film credits return and a new service tax is added after long legislative battles

By Todd Luck

The Chronicle

On Friday, Gov. Pat McCrory signed the $21.7 billion state budget long after its initial July 1 deadline.

“Now we can work together to implement a common-sense vision for our great state that includes job creation, education, healthcare and transportation,” McCrory said in a release.

The release also said the budget invests in additional textbooks and digital resources and funded an initiative to bring broadband access to all schools. Teacher assistants, who would’ve been laid off by the thousands in the Senate version of the budget, all got to keep their jobs. Teachers and state employees will receive a one-time $750 bonus. Beginning teachers retain a $2,000 salary raise from a stopgap spending measure that kept the state funded after the budget deadline.

But critics of the budget say that it continues to underfund education, spending less per pupil than in 2008, and does little to solve the teacher shortage as teachers continue to go to other states or leave the profession. North Carolina is 42nd in the country in teacher pay and 46th in per-pupil expenditures.

Forsyth County Association of Educators President Ronda Gordon said while she was grateful for teachers assistants were kept, the bonus just isn’t enough, especially after taxes. She said that there should have rather been an across-the-board pay raise, which the House version had for state employees, to help retain teachers. She said underfunding of schools is causing textbook shortages. She felt the budget shouldn’t have increased school voucher funding, which helps students pay for private school, by $14 million over two years when there’s so much need in public schools.

“It’s not addressing the need for our children and our public system,” Gordon said about the budget.

The majority of Senate Democrats voted against the budget, including N.C. Sen. Paul Lowe, who represents District 32. He said he voted against it because of what he considered inadequate education funding. He also objected to a new tax on services, such as automobile repairs, which he said will be felt by lower- and middle-income taxpayers.

“The budget doesn’t help to improve education and puts a greater hardship on working people,” said Lowe.

The money generated from the service tax goes to rural counties whose residents pay more in sales taxes then their local governments collect and prevents the “sales tax shift,” which would’ve taken state money from urban counties and given them to rural ones, a move that many city leaders and McCrory opposed.

The majority of House Democrats also voted against the budget, including Rep. Ed Hanes, who represents District 72. Hanes had some input as one of many vice chairs on the conference committee responsible for the final budget, but said only a handful of lawmakers got to make decisions on it.  Hanes echoed Lowe’s objections to the level of education funding and putting a tax burden on lower income taxpayers.

“Even though we did get life-saving legislation put in the budget for body cameras and dash board cams and unauthorized use of force training, it was still something that I didn’t feel at this point I could support,” he said.

Hanes said the monthslong delay was a result in the radical difference between the House version of the budget, which had more spending and bipartisan support, and the Senate version, which drastically cut that spending and was supported by Republicans.

He said particularly contemptuous issues like Medicaid reform and the state bond where put into separate bills. Medicaid reform is a compromise between the Senate version, whose plan would’ve relied on for-profit managed care insurers, and the House version, which relied on provider-led groups headed by hospitals and physicians groups. The final bill, which has both managed care and provider-led entities, was approved by the House and Senate on Tuesday.

The Connect NC Bond funds numerous infrastructure projects for places like community colleges and national guard facilities. The University of North Carolina system would get $921 million for projects like a $52 million new science building at Winston-Salem State University and a $97 million new engineering building at N.C. A&T State University. The version the House approved is $2.85 billion including $400 million for transportation projects and would be on the primary ballot. The Senate version introduced Monday is $2 billion with no road projects would would be on the ballot in the General Election.

Also in the budget was $30 million for the film production credit, which expired at the end of 2014 and had been replaced with a grant program worth $10 million in rebates. The expired historic tax credit is back in a smaller form with a 15 percent tax credit for qualified expenditures of up to $10 million and 10 percent for qualified expenditures that are $10 million to $20 million, and 15 percent for expenditures between $10,000 and  $22,500 for non-income producing structures.

There’s also a slight reduction in the individual income tax rate and an expansion of the standard deduction. It also restores deductions for medical expenses with no spending cap and raises pay for prison guards.