2018-2019 Senate Budget

On May 12, the state Senate passed its 2018-2019 budget bill, which improves state investments for several county priorities, including NCACC’s top legislative priority to provide increased funding for school capital. The bill also includes a provision to cut taxes by $1 billion, significantly reducing the availability of revenue for the state. The state House is in the process of developing its version of the budget bill. Upon passage by the House, the two chambers will reconcile any differences and pass a final spending bill to present to the Governor for his signature.

The Senate budget maintains the existing level of lottery funding for statewide school capital at $100 million, and creates a new needs-based fund containing an additional $75 million for school capital for Tier 1 and 2 counties. NCACC strongly supports this provision, which mirrors SB 234, and was introduced by Senator Harry Brown earlier in the session.  

The Senate budget provides more spaces for early childhood education, directs $15 million for new behavioral health beds and facilities, and increases funding to the Clean Water Management Trust Fund. The Senate budget also includes an additional $150 million to continue to address Hurricane Matthew recovery needs. Below is a summary of specific budget items of interest to counties.

Finance Provisions 

The Senate budget makes a number of substantial changes to the state’s tax structure and revenue stream. Specifically, it reduces the personal income tax rate from 5.499% to 5.35%, effective January 1, 2018. It also increases the standard deduction for individual income tax payers and lowers the corporate income tax rate. It makes some changes to how the corporate tax is calculated for multi-state organizations and banks, and converts the child tax credit to a deduction. It also makes changes to how much taxpayers can deduct from their taxes for mortgage interest and property tax payments.
While none of these changes directly impact local government revenues, they do substantially lower state revenue availability.  

Health and Human Services 

  • Includes provisions and funding from SB 594 to reform the child welfare system by requiring a transition plan for county departments of social services, mandating a regional model with 30 entities that would deliver child welfare and all other social services.  
  • Implements new oversight and corrective action plans to address challenges facing county Departments of Social Services in accurately determining Medicaid eligibility. The legislation would also require counties to pay back Medicaid claims if they make incorrect eligibility determinations unless the error can be solely attributed to the state.  This provision is consistent with SB 546. 
  • Provides more than $18M over two years to implement the Child Welfare Program Improvement Plan as a result of the recent Child and Family Services Review
  • Appropriates $20M non-recurring and $9.6M recurring for NCFAST operation and development including child services and child welfare case management system projects
  • Appropriates $18.2M from Temporary Assistance for Needy Families (TANF) block grants to expand NC Pre-K spaces for 3,500 more children
  • Eliminates funding for Medicaid non-emergency medical transport
  • Requires $171M in reductions to LME/MCOs over both years, $104.5M of which is recurring; reductions could decrease by up to $30M each fiscal year if a sufficient surplus is in the Medicaid budget
  • Transfers $7.5M from TANF block grants to SSBG each year for county DSS; total funding from the Social Services Block Grant for county departments is about $33M each year
  • Provides targeted increases for behavioral health and community health programs including:  
    • $5M for local inpatient crisis beds (three-way beds)
    • $10M for new behavioral health crisis facilities
    • Funds for opioid overdose quick response teams in seven cities and counties across the state
    • $15M for community health centers
    • $210,000 to continue the community paramedicine pilot in New Hanover County and $250,000 for a pilot to improve access to community based behavioral health services in New Hanover County
  • Limits eligibility for the federal Supplemental Nutrition Assistance Program (SNAP), commonly called food stamps, by removing the policy of qualifying people for SNAP even if their income is higher than the maximum allowed to qualify for SNAP provided they receive other government assistance benefits


  • Maintains $100M in lottery proceeds to the Public School Building Capital Fund
  • Increases allowable lottery advertising expenses from cap of 1% to 2%
  • Creates the Needs-Based School Capital Fund
    • Provides grants to Tier 1 and 2 counties for public school capital building needs with some matching requirements
    • Appropriates $75M from lottery proceeds in each year of upcoming biennium; sets annual award cap of $100M
  • Limits the ability of school boards to sue counties over funding disputes between the board of education and board of county commissioners. It would mandate that absent mutual agreement between disputing parties, the county board of commissioners' funding decision is final. This provision is consistent with SB 531 School Boards Can’t Sue Counties
  • Creates Driver Safety Incentive Program
    • Appropriates $25M for driver education reimbursement
    • Authorizes up to $275/student for driver education course if student obtains learners permit on first try
  • Requires the Dept. of Public Instruction to provide access to annual school report cards on its website beginning with 2017-2018 school year

Justice and Public Safety 

  • Includes provision for raising the age of juvenile jurisdiction for 16 and 17 year olds. Under this proposal, those under age 18 who are charged with a misdemeanor will no longer be tried as an adult. The change would go into effect by 2020. The Senate budget does not include appropriations to cover the cost of implementation.
  • Provides $250,000 to the City of Wilmington to establish a pilot program for Quick Response Teams to address the needs of opiate and heroin overdose victims
  • Appropriates $650,000 for a joint pilot program with Pamlico Community College and Pamlico Correctional Institution to reduce recidivism 
  • Provides $605,089 for 19 new Voice Interoperability Plan for First Responders (VIPER) towers across the state and requires the Program Evaluation Division to evaluate VIPER and FirstNet technology needs and to identify optimal finance structure 
  • Splits the Dept. of Public Safety into separate departments; the Dept. of Public Safety and the Dept. of Adult Corrections and Juvenile Justice
  • Provides $50,000 recurring in FY 2017-18 and $300,000 in FY 2018-19 to replace expiring federal funding for FirstNet
  • Provides funding for 32 additional assistant district attorneys throughout the state
  • Classifies the State Highway Patrol as a PSAP for the purposes of applying for a 911 grant from the PSAP Grant and Statewide 911 Projects Account

Environment and Natural & Cultural Resources

  • Expands funding for the Clean Water Management Trust Fund by almost $2.7M recurring and $850,000 non-recurring in the first year
  • Creates a special fund, the Coastal Storm Damage Mitigation Fund, to be used for costs associated with beach nourishment, artificial dunes, and other projects to mitigate or remediate coastal storm damage 
  • Provides $125,000 for grants to local arts councils and organizations to increase access to the arts for North Carolina's service members, veterans, and military families

Disaster Recovery

  • Appropriates $70M to address unmet needs related to the disasters covered by the Disaster Recovery Act of 2016
  • Appropriates $80M to provide the State match for federal disaster assistance programs to supplement the State match from the Disaster Recovery Act of 2016


  • Provides $1M recurring to the Agricultural Development and Farmland Preservation Trust Fund 

Economic Development

  • Creates a Site Building and Development Fund in the Dept. of Commerce
    • Provides a non-recurring $12.5M for loans to local governments for acquisition and development of business facilities
    • Scaled interest rate of 0% for tier 1, 1% for Tier 2, 2% for Tier 3
  • Appropriates $15M recurring each year for the Film and Entertainment Grant Fund


  • Provides $750,000 for MPOs (with populations of 400,000 or less) and RPOs to fund a portion of the local match required for federal State Planning and Research Program funds
  • Requires local governments that have not completed a project in six years for which they have received Bicycle and Pedestrian Planning Grant funds to return the funds

Information Technology

  • Allocates $2M to implement the government budget transparency efforts directed by the 2015 budget act requiring state agencies and counties to post budgetary and spending data on their websites