For the first time since the 2018-2019 fiscal year, North Carolina has a budget, albeit 4 months after the start of the 2021-2022 fiscal year. The legislature passed the budget on Thursday, November 18, and Governor Cooper signed it a few hours later. It spends $25.9 billion in FY 21-22 and $27 billion in FY 22-23. It leaves $4.25 billion in the Rainy Day fund.
Importantly, the budget includes a number of NCAH’s priorities, and some MAJOR policy wins! We have summarized those wins, and some things we will keep working on, as well as other provisions of interest below. You can also compare our priorities in the House, Senate, and final versions of the budget here.
2021-22 Budget Summary
- Tobacco Use Prevention and Cessation Funding – The budget includes $19 million over two years for tobacco use prevention and cessation programs! Since 2011, NCAH has been working to restore funding for tobacco use prevention and cessation programs and services. While there have been smaller amounts of funding provided over the past few years, none of the funding has come close to the $17 million in recurring funds NCAH has requested. The funding comes from the State’s settlement of the JUUL Labs, Inc., and will continue in smaller amounts past the biennium.
- School Nutrition Program Indirect Costs – The budget includes statutory changes to limit the amount of indirect costs districts can charge SNPs! For many, many years, School Nutrition Programs (SNPs) have paid significant rates of indirect costs to the districts, sometimes reaching as high as 18% of their unrestricted funds. Many times, these indirect costs have affected the fiscal solvency of the programs and required districts to pay funds back to the programs to balance their budgets. These changes will allow SNPs to keep more money in their programs to meet their goal: feeding children nutritious meals.
- Food Bank Funding – The budget includes $40 million in nonrecurring funds for the North Carolina Feeding the Carolinas food banks! We appreciate everything the food banks do every day, and especially in the past few months. We are glad that the NC General Assembly also sees their value and provided them with funding to support their critical work. The budget also provides $10 million to support community organizations in partnership with food banks.
- FarmsSHARE Funding – The budget includes $2 million in nonrecurring funds for FarmsSHARE! This amazing program was born out of the pandemic and is run by our friends at Carolina Farm Stewardship Association. It provides locally sourced food boxes to families who would benefit from these resources. We are excited to see this program continue with the State’s support.
- Unserved Prepared Food Recovery – The budget includes $62,500 in nonrecurring funds to support the Safe Plates Program at NC State in developing a set of standard operating procedures and trainings for unserved prepared food recovery across the state. This funding will help create consistency and clarify the regulations around recapturing unserved prepared food, allowing more programs across the state to utilize this method to reduce food insecurity and food waste. This need was originally identified by the local food councils who are involved in network of NC food councils supported by Community Food Strategies. We look forward to following this process and can’t wait to hear wonderful stories about safely recapturing unserved prepared food.
- Medicaid Expansion – After the announcement last week that Medicaid Expansion would not be included in the final budget, the exclusion of Medicaid Expansion isn’t surprising, but it doesn’t make it any less disappointing. We applaud our partners at Care4Carolina for their immense efforts this session and look forward to our continued partnership to ensure all North Carolinians have access to affordable health coverage. The budget does create a Joint Legislative Committee on Access to Healthcare and Medicaid Expansion. The committee’s members will consist of 9 members each from the House and Senate, appointed by the leaders of those respective chambers.
- Cigar Tax Cap and Other Provisions – Cigar taxes are capped at $.30 in the final budget. This is especially disappointing as we know that cigars are commonly smoked by youth and because price increases are one of the most effective deterrents to tobacco use initiation, and one of the most effective strategies to help people quit. There are also a few other provisions regarding tobacco sales that are problematic, and we will work next year to reverse these changes.
- Minimum Wage Increase for Noncertified School Employees – We absolutely support increasing the minimum wage for noncertified school employees and are thrilled to see this provision in the budget. However, the wage increase for SNP staff was not funded, so those programs will have to figure out how to make up the difference on their own. This is going to put SNPs in a really tough position and is another priority we will be working to address next year.
- Not Included – There were a few priorities which, unfortunately, weren’t included in the budget: $2 million in nonrecurring funds for a GAP cost-share program; a $3 million recurring increase for tobacco cessation programs; changes to the Strategic Transportation Investment funding formula; funding for Safe Routes to Schools; and Master’s pay for all teachers, including Physical Education teachers. Many of these priorities will remain on our agenda for next year and we look forward to working with you to make them happen.
Provisions in the News
- A 5% pay raise for most state employees and an average 5% pay raise for teachers over the biennium
- State employee bonuses
- New teacher salary supplement focused on low-wealth counties
- $6 billion for infrastructure over the biennium
- $1 billion for broadband expansion
- An increase in the zero-tax bracket to $25,500
- A reduction in the personal income tax rate to 3.99% by 2027, beginning with a decrease to 4.99% in 2022
- An increase in the child tax deduction by $500 per family
- A revision to the Emergency Management Act requiring the Council of State to vote to extend a statewide emergency beyond 30 days, beginning on January 1, 2023
- A requirement that the Speaker of the House and the President Pro Tempore of the Senate approve a consent judgment in any “dispute, claim, or controversy” that challenges an NC statute or the NC Constitution and in which the Speaker of the House and President Pro Tempore of the Senate are jointly named in their official capacities as parties or have intervened on behalf of the NC General Assembly.
Revenue
- $25.2 million in revenue expected next fiscal year from the cigar tax expansion provision
Education
- $15 million in nonrecurring funds for broadband access for 25 rural community colleges
- $3,500 annual salary supplement for school psychologists, speech pathologists, and audiologists
- $1,000 annual salary supplement for school counselors
- $18,148,000 in nonrecurring funds to increase Wi-Fi connectivity on school buses
- $3 million in FY 21-22 and $2,824,616 in FY 22-23 for extraordinary transportation costs for qualifying students
- $4.6 million in recurring funds to match the federal increase from $150 to $167 per student over 5 years for broadband connectivity
- $500,000 in nonrecurring funds for the Life Changing Experiences Program that focuses on activities that negatively impact teenagers, including alcohol and drugs, dangerous driving, violence, and bullying
- $1.5 million in additional, nonrecurring funds for the NC Food Innovation Lab in Kannapolis
- $30 million in nonrecurring funds for the North Carolina Policy Collaboratory to award research grants to monitor, assess, and address the public health and economic impacts of the COVID-19 pandemic
- $4.8 million in recurring funds for the Southern Regional Area Health Education Center to support additional residencies
- $150,000 in nonrecurring funds for the Soldier to Agriculture Program and NC State University
- $150,000 in nonrecurring funds to create beekeeping programs for high school chapters of Future Farmers of America
- $2.95 million in recurring funds for the Brody School of Medicine at East Carolina University
- $500,000 in nonrecurring funds for UNC Pembroke to operate mobile medical units in rural and at-risk communities to respond to the COVID-19 pandemic
Health and Human Services
- $3,585,000 in nonrecurring funds for nutrition services for older adults in response to the COVID-19 pandemic
- $7.5 million in nonrecurring funds to Camino Community Development Corporation, Inc. which provides low-income families with primary care, behavioral health, and wellness services, as well as a thrift store and food pantry, for mobile units to support service delivery
- $15 million in nonrecurring funds for the NC Association of Free and Charitable Clinics
- $1 million in nonrecurring funds for Atrium Health to support school-based virtual health services in Anson County and Winston-Salem/Forsyth County school districts
- $4,909,144 in nonrecurring funds for the Small Rural Hospital Improvement Program
- $4 million in nonrecurring funds for the Rural Health Loan Assistance Repayment Program to recruit doctors, physician assistants, dentists, nurse practitioners, and certified nurse midwives to rural areas
- $10 million in recurring funds for Smart Start
- Increases Medicaid beneficiary copayments to $4, effective July 1, 2022
- $5,551,509 in recurring funds to provide Medicaid services in charter schools
- $51,326 in recurring funds beginning in FY 22-23 for Physical Activity and Prevention
- $35,000 in nonrecurring funds in FY 21-22 and $3,000 in nonrecurring funds in FY 22-23 for the Temporary Assistance for Need Families and Food Nutrition Services report
- $50,000 in nonrecurring funds for the Greater High Point Food Alliance
- $250,000 in nonrecurring funds for A Touch of the Father’s Love, a food pantry in Nash County
- $10,000 in nonrecurring funds for The Pastor’s Pantry to provide monthly groceries to low-income seniors
- $10,000 in nonrecurring funds for the West Davidson Food Pantry
Agriculture and Consumer Services
- $10 million in nonrecurring funds for the Food Distribution Division
- $10 million in nonrecurring funds for Golden LEAF for grants to support nonprofit organizations in becoming partner agencies with food banks
- $5 million in nonrecurring funds for Reinvestment Partners for its Produce Prescription Program
- $17 million in nonrecurring funds for meat and seafood processing grants for producers impacted by COVID-19
- $30 million in nonrecurring funds for swine and dairy grants for producers impacted by COVID-19
- $119,000 in nonrecurring funds for the Commodity Supplemental Food Program
- $50 million in nonrecurring funds for crop loss assistance grants to farmers impacted by Tropical Storm Fred
Commerce
- $5 million in nonrecurring funds to the NC Rural Center for capacity-building grants for community development financial institutions (CDFIs)
- $7 million in nonrecurring funds to the Carolina Small Business Development Fund for supporting small businesses, startups, and community-based organizations
- $1 million in nonrecurring funds to the City of High Point for the High Point Equity Project
Natural and Cultural Resources
- $40 million in nonrecurring funds for water and sewer projects at State Parks
- $1 million in nonrecurring funds to create trails related to moonshine and motorsports
- $10 million in nonrecurring funds for local libraries impacted by COVID-19
- $650,000 in nonrecurring funds to build a public sculpture park between the Legislative Building and the Governor’s Mansion to commemorate historic and ongoing struggles for freedom in North Carolina and especially the enduring roles of African-Americans in the struggle for freedom in the State
- $8 million in nonrecurring funds in each year of the biennium for Parks and Recreation Trust Fund grants
- $29,250,000 in nonrecurring funds for State trails
- $500,000 in nonrecurring funds for the construction of the Friends of the Ecusta Trail
- $10 million in nonrecurring funds for local governments to support parks for persons with disabilities
Budget and Management
- $10 million in nonrecurring funds for the City of Winston-Salem to construct affordable housing units
- $35 million in nonrecurring funds for Dare County to construct affordable housing units
- $10 million in nonrecurring funds to 7 State-recognized American Indian Tribes to mitigate and respond to the impacts of COVID-19
- $11.4 million in nonrecurring funds for a statewide grant program for YMCAs for recovery from the economic impacts of COVID-19
- $2 million in nonrecurring funds for Habitat for Humanity to construct affordable housing units
- $100,000 in nonrecurring funds for Veteran’s Farm of North Carolina
- $860,000 in nonrecurring funds for grants to specific YMCAs
Elections
- $5 million in nonrecurring funds to assist individuals who need photo identification to vote in person
- $2.8 million in nonrecurring funds for election security
Housing Finance Agency
- $170 million in nonrecurring funds for the Workforce Housing Loan Program to assist with the development of multi-family affordable housing units
- $10 million in nonrecurring funds for a multi-family affordable housing project in Robeson County
Information Technology
- $1 billion in nonrecurring funds for various grants to expand broadband access, specifically in rural areas
- $4.25 million in recurring funds for NC HealthConnex
Transportation
- $2 million in nonrecurring funds for planning paved trails and identifying federal matching funds for implementation
- $209,718 in nonrecurring funds for the Rural Transit Assistance Program