After months of negotiations, leaders in the North Carolina House and Senate and Gov. Roy Cooper have secured a comprehensive budget for North Carolina. The compromise budget was introduced by the General Assembly this week and quickly passed with bipartisan support in both chambers. With the Governor’s signature today, it became the first budget approved by lawmakers in the state since 2017.
The most recent state budget approved by lawmakers in North Carolina was secured during the 2017 long session. It covered expenditures for two fiscal years, from July 31, 2017 through June 30, 2019. When a budget impasse in 2019 kept lawmakers from approving a new budget, the previous budget’s allocations simply carried over to the next fiscal biennium, which ran from July 31, 2019 until June 30 of this year. This current budget proposal, once approved, will cover allocations for North Carolina’s current fiscal year, FY2021-2022 (July 1, 2021 – June 30, 2022), as well as for the following fiscal year (FY2022-2023) ending on June 30 of 2023. It provides for $25.9 billion in net allocations for the current year and $27 billion for the following year.
The NC Chamber’s advocacy team has been working since budget negotiations began to ensure major items on our 2021 legislative agenda move forward. There’s a lot to unpack from this proposal’s multitude of measures and billions of dollars in spending, but it’s safe to say that numerous NC Chamber priorities will advance if the package were to earn approval. These include a streamlined and reduced franchise tax on business assets, major investments in transportation and broadband infrastructure, financial assistance for the state’s job creators, and support for critical health care programs and personnel.
Key measures in the budget include, but are not limited to:
- A historic $8 billion infrastructure investment plan, aimed at expanding broadband to unserved parts of the state, revamping our road network and other key transportation assets, and modernizing local water and sewer infrastructure
- $6 billion in biennial funding for the State Capital and Infrastructure Fund to support critical infrastructure projects and pay down debt
- $1 billion to expand broadband in the state
- $800 million to fund critical construction projects at our colleges and community colleges
- $283 million to deepen the Wilmington Harbor and enhance capacity at our ports
- A streamlined and reduced franchise tax on business assets that eliminates the two most burdensome of the three tax bases used to calculate this tax
- Other pro-growth tax reforms, including:
- Phased reduction of the personal income tax rate from 5.25 to 3.99 percent (PIT applies to many North Carolina businesses that operate as pass-through entities)
- Elimination of the corporate income tax
- Extension of the Historic Preservation Tax Credit through 2031 to spur development in rural areas
- Tax-free status on PPP loans to support businesses who relied on these loans during the pandemic
- Investments in health care, education, and early childhood services
- Salary increases and bonuses for teachers and other school employees and $100 million in recurring dollars to boost pay for teachers in low-income counties
- Pay raises for direct support personnel who care for elderly and medically fragile individuals
- Establishment of new joint legislative committee to study and recommend solutions to improve access to health care across the state