November 16, 2021

North Carolina House and Senate Republican leaders released a final conference budget on Monday after months of negotiations with Governor Cooper’s office. The two-year budget allocates a combination of revenue streams, including nearly $53 billion from the state’s General Fund and an additional $5.1 billion from the federal government’s American Rescue Plan Act. Highlights of the budget proposal can be found below.

Health Care:

  • Allocates funding to Duke University Hospital for a Hospital-Based Violence Intervention Program to identify and link patients at risk of repeat violent injury with hospital- and community-based resources to address underlying risk factors.
  • Requires NCDHHS to develop a clinical coverage policy for Medicaid coverage of behavioral health services provided to beneficiaries in a hospital setting after 30 hours if the beneficiaries are awaiting discharge for a more appropriate care setting.
  • Increases funding for the statewide Telepsychiatry Program.
  • Creates a competitive grant program in the Office of Rural Health to award grants to hospitals to fund expanded telepsychiatry capabilities to respond to the COVID-19 public health emergency.
  • Fully funds 1,000 new NC Innovations Waiver slots to meet the needs of Individuals with Intellectual or Development Disabilities (I/DD).
  • Funding for a variety of behavioral health services across the state.
  • Increases copayments for Medicaid services to $4.
  • Allows for the parents of children temporarily placed in the child welfare system to retain Medicaid eligibility.
  • Provides Medicaid coverage for postpartum women for up to twelve months following the delivery of a Medicaid eligible dependent.
  • Adds components to hospital assessments to include a Medicare Economic Index as an inflation factor in assessment calculations, cover the state’s share for postpartum Medicaid expansion and Home and Community Based Services expansion.
  • Creates a 2022 joint legislative study committee on health care access and Medicaid expansion.
  • Modifies the Certificate of Need Exemption for Legacy Medical Care Facilities so that a person seeking to operate a legacy medical facility in a tier one or tier two county may request an additional 36-month extension of time to open the facility provided that there is a contract for the acquisition or reopening of a legacy medical facility.
  • Temporarily removes Certificate of Need requirements for acute care hospitals in counties that have a total population between 40,000 and 50,000, is under 460 square miles, contains a portion of a city that is located in more than one county and is located along the state’s border with another state.

Higher Education:

  • Increases the NC Need-Based Scholarship for students attending private postsecondary institutions by $2.2 million each year of the biennium.
  • Allocates funds to NC’s private colleges and universities to offset expenditures incurred to directly respond to the COVID-19 pandemic. A provision was added that excludes colleges from receiving the federal pandemic relief funding if less than 10 percent of the degree-seeking undergraduate student population receives the NC Need-Based Scholarship, preventing Duke University from receiving funds.
  • Directs the NC Collaboratory to identify faculty expertise, technology, and instrumentation located within institutions of higher education in the state, including Duke University, for PFAS analysis.
  • Allocates over $7 million to the National College Advising Corps to support a temporary expansion of the placement of college advisers in public schools through CAC’s program over a two-year period for the purpose of increasing the number of underrepresented, low-income, or first-generation postsecondary degree or certificate students entering and completing their postsecondary education at community colleges and universities. Duke University runs a College Advising Corps program.

Taxes:

  • Cuts personal income tax from 5.25% to 3.99% over six years, including cutting to 4.99% beginning January 1, 2022.
  • Increases zero-tax bracket to $12,750 or $25,500 for married couples, up from $10,750 and $21,500.
  • Increases child tax deduction by $500 per child.
  • Eliminates state income tax on military pensions.
  • Phases out the corporate income tax beginning in 2025, reaching zero by the end of the decade.

Miscellaneous:

  • Requires the Governor to have agreement from a majority of the Council of State in order to exercise certain executive powers, and sets expiration dates for executive orders issued under the Emergency Management Act.
  • Prohibits state agencies and the attorney general’s office from settling lawsuits in certain cases and gives that power to the legislature instead. 
  • Provides $1 billion for broadband expansion.
  • Allocates $1,000 bonuses for all state employees and teachers, and an additional $500 for all state employees and teachers making less than $75,000, as well as correctional workers.
  • Sets the state’s Savings Reserve at $4.25 billion at the end of the 2022-2023 fiscal year.

One major provision that is notably absent from the budget is Medicaid expansion – a top priority for Governor Cooper since 2019 when he vetoed the budget over a lack of Medicaid expansion. Although Republican leaders and Governor Cooper couldn’t reach a compromise on Medicaid expansion this year, a number of the Governor’s priority issues were included in the budget and Republicans are confident they will have a strong bipartisan vote and that the Governor will sign the budget into law. Despite opposition to some provisions, Governor Cooper announced that he would sign the budget because of its critical and necessary investments across the state. The Senate passed the budget on its second reading today (40-8) and a third reading is scheduled for tomorrow, followed by House votes tomorrow night and Thursday. Governor Cooper then has ten days to sign the bill into law.