McCrory says "tough choices" made in first budget plan - WSFX - FOX Wilmington, NC

RALEIGH, NC (AP) - Gov. Pat McCrory submitted his first budget proposal Wednesday, saying the priority right now is on "fixing a broken government, building an economy in North Carolina, and transforming education."  

McCrory unveiled his spending plan to take effect July 1 through mid-2015. It provides $400 million for the state's rainy day fund, $300 million for state building renovations and $180 million to deal with potential Medicaid shortfalls.

The new Republican governor wants $2.7 million to rebrand and retool the state's economic development strategy and $2 million to consider government reorganization. He also included $10 million to compensate victims of the state's Eugenics Board program, and to fund the Office of Justice for Sterilization Victims, which provides help and counseling to victims.

"I hope he can get help for the victims," said Elnora Mills of Brunswick County, one of the confirmed victims of forced sterilization. "They have just waited too long in Raleigh. A lot of people might die before we get any of the money."

During his morning address, McCrory said his budget team reached out to department heads, members of the Council of State, and appropriations chairmen from the state House and Senate."This budget hasn't been put together in a vacuum just within the governor's office," said the first-term Republican. "We have done extensive outreach in putting this document together.

Here are some highlights of McCrory's $20.6 billion spending proposal. For tax changes, figures are for the amount of revenue generated or lost. For spending changes, figures are for amount spent or saved compared to what was projected to maintain current services.

Taxes, reserves or salaries

- state's rainy day reserve account: $200 million.

- repair and renovation money for state buildings: $150 million.

- Medicaid risk reserve: $90 million.

- 1 percent pay raise for teachers and state employees: $135.7 million.

- state retirement system contribution: $36.1 million.

- State Health Plan contribution to cover 4.7 percent premium increase: $45 million.

- 1 percent cost-of-living adjustment for state pension system retirees: $35 million.

- repeal state estate tax: -$52 million.

- repeal transfer of portion of corporate income tax to public school capital fund: $75 million.

- collect or intercept money from trust funds and special accounts, including Golden LEAF foundation, repeal political party income tax check-off and public campaign financing funds: $142.5 million.

- dozens of capital projects, all paid for by outside funds.

- disaster relief reserve: $10 million.

- government efficiency and reform project: $2 million.

 Public schools:

- partial restoration of textbook spending reduction: $58.3 million.

- teach additional 6,600 public school children in the fall: $11.2 million.

- eliminate teacher assistant funding for 2nd, 3rd grade classes, increase teacher assistant-student ratio in kindergarten, 1st grade: -$117.1 million.

- ACT standardized tests for college students: $7.5 million.

- redirect N.C. Education Lottery receipts toward reading table purchases for students: $26 million from lottery funds.

 
UNC system:

- reduce spending at campuses and at system headquarters, with specifics determined by administrators: -$110.7 million.

- implement operational and administrative efficiencies: -$10 million.

- academic programming efficiencies: -$15.8 million.

- increase out-of-state tuition by 12.3 percent at UNC-Chapel Hill, N.C. State University, N.C. A&T State University, UNC School of the Arts, UNC-Charlotte and UNC-Wilmington and by 6 percent at other campuses: -$54.1 million.

- carry out Strategic Directions Plan to increase percentage of state residents with bachelor's degree, focus on high-growth fields: $19.6 million.

 
Community colleges:

- scale back enrollment funds to reflect actual number of students: -$20 million.

-increase tuition rates by $1 per credit for in-state residents and $4 per hour for out-of-state students: -$6.2 million.

- technical education equipment and infrastructure: $14 million.

- higher-cost degree programs: $16.8 million.

 
Health and Human Services:

- expands North Carolina Pre-Kindergarten for at-risk 4-year-olds by 5,000 slots to 29,400: $9.1 million.

- teen tobacco prevention and cessation: $1.1 million.

- rework Medicaid formula to reflect additional eligible patients: $185 million.

- reduce hospital payments for Medicaid and N.C. Health Choice from 80 percent of cost to 70 percent: -$26.3 million.

- hire temporary staff and contractors when new Medicaid billing system begins July 1: $4.8 million.

- fully implement transfer or local management entities for mental health treatment to managed care organizations: -$15.2 million.

- buy furniture, equipment and other infrastructure for new Broughton Hospital set to open in December 2014: $23 million.

 
Justice and Public Safety:

- end funding for Conference of District Attorneys: -$387,812.

- revive drug treatment courts: $3.4 million.

- move 210 Department of Justice attorneys and support staff that perform routine legal services for agencies and become employed by those agencies: -$7.5 million.

- expands DNA testing, toxicology testing for Triad and Western State Bureau of Investigation labs, hire 40 people: $4.8 million.

- increase enforcement of methamphetamine abuse laws: $365,130.

- close adult male prisons in Wayne, Bladen, Duplin, Robeson counties and Western Youth Institution in Morganton, eliminate 685 positions: -$20.3 million.

- hire 106 positions for probation and parole officers, other officers: $7.2 million.

- expand electronic monitoring of probationers: $3.7 million.

 
Natural and Economic Resources:

- spending reductions in Department of Agriculture: -$2 million.

- Clean Water Management Trust Fund: $6.8 million.

- Job Maintenance and Capital Development business incentives funds: $6.7 million.

- develop new branding strategy for North Carolina economic recruitment, growth plan: $2.7 million.

- Johnson & Wales University: $500,000.

- reduce advertising budget for N.C. Education Lottery from 1 percent to 0.5 percent: -$7.4 million in lottery funds.

- Job Development and Investment business incentives grants: $32.6 million.

Transportation:

- additional Highway Fund maintenance reserve: $59.1 million.

- additional Highway Fund contract resurfacing: $81 million.

- Saturday service at 20 Division of Motor Vehicles offices:  $1.4 million.

Other government agencies:

- largely 1 to 3 percent spending reductions in various agencies.

- savings in Governor's Office: -$419,693.

- restore two positions in Office of the Lt. Governor: $144,534.

- provide $50,000 each to victims of now-defunct sterilization program, continue agency to locate survivors: $10.1 million.

- eliminate 12 positions while closing Aycock Birthplace, Polk Memorial, Vance Birthplace, House in the Horseshoe historic sites and Museum of History's Old Fort/Mountain Gateway site. Sites will be maintained and preserved: -$498,712.

- reduce N.C. Arts Council grants by 6 percent, state aid to public libraries by 4.8 percent: -$1 million.

- withdraw state support for Roanoke Island Commission: -$1.1 million.

- provide state matching funds to release federal Help America Vote Act election funds: $390,871.

Political reaction to the proposal was swift in the hours following McCrory's speech.

"What we're seeing with this budget is the Republican Party's continued commitment to austerity policies for North Carolina and for our nation," said Randy Voller, Chairman of the North Carolina Democratic Party. "This is a status-quo budget that continues to tax the poor to feed the rich. When push comes to shove, will the Governor be able to stand up to this radical, reactionary legislature or will he continue to serve as their rubber stamp—as he has when it comes to slashing unemployment benefits, rejecting health care expansion and increasing taxes on our middle and low-income hardworking families?

"Governor McCrory released a budget today that falls short of returning us to pre-recession levels but does expand investments in critical areas," Alexandra Forter Sirota, Director of the Budget & Tax Center  at the North Carolina Justice Center said in an email news release. "The budget assumes that available revenues will remain the same as collections under the current tax system. The Governor is therefore able to expand investments in certain areas by reducing spending in others, and relying on tuition increases and other fees."

House Speaker Thom Tillis (R-Mecklenberg) released a statement on McCrory's budget proposal. "Gov. McCrory's recommended budget is a positive first step in a long budgeting process," Tillis said in an email release. "The Governor and his staff have worked tirelessly to produce a complex financial plan in a short amount of time, and they are to be commended for their efforts.  Many aspects of Gov. McCrory's budget are much-needed and long overdue, and I am especially glad to see the inclusion of the Eugenics Compensation Program.  The House stands ready to work closely with the administration as the budget moves through the legislative process, and I am confident that together we can continue to put North Carolina back on the path to economic prosperity."

To see the entire budget proposal, click here.

Copyright 2013 WECT. Material from the Associated Press was used in this report.