Highlights of the 2004 House Budget
June 9, 2004

This session is the short session, which is a budget adjustment session. It makes needed changes to the 04-05 budget that was enacted last year. It makes these adjustments without raising taxes and without affecting the second step of the family friendly tax cuts that are effective for the 04 calendar year.

Last year's budget did not address several items that deserved our attention, those items include:

• A pay raise for teachers and State employees. The bill includes a $1,000 pay raise for state employees, step increases for teachers plus an increase of 0.5%, and an additional 2% increase for community college faculty and professional staff. Total cost is $237.55 million.
• Enrollment increases.
• Community colleges. $24 million
• Public school. $31.4 million
• University. $64.6 million.
• Legislative grants at private colleges. $4.2 million.
• ABC Bonuses. These are incentive awards for teachers and teacher assistants at schools that met or exceeded expectations in the 03-04 school year. Cost is $108 million.

The budget continues our priorities in last year's budget – which are to control spending, restore the State's fiscal integrity, support education at all levels, and provide needed health and human services. The proposed budget exercises fiscal discipline by:

• Keeping spending within the spending cap used by the Governor.
• Putting money ($117 million) in the Rainy Day Fund.
• Putting $100 million in the Repairs and Renovation Fund. The Governor's budget put no money in this fund.
• Continuing to repay the Retirement Fund ($16 million)
• Providing for payment of $30 million of the backlog of debts owed by the Underground Storage Tank Fund.

The proposed budget supports education by:

• Reducing classroom size in 3 rd grade.
• Restoring over $60 million in school construction funds that were cut by the Governor.
• Restoring cuts to the University system made by the Governor.

The North Carolina Constitution requires the State to have a balanced budget and this budget is balanced. The same requirement for a balanced budget will apply next year as well. Each year, budget writers face the same issue – which is how to provide needed services within the available resources.

Last year's critics predicted a major problem with this year's budget due to the failure of revenues to meet the projected growth. Their predictions have proven to be incorrect. This year's critics point to an accounting distinction between recurring and nonrecurring revenue as a major shortcoming in the budget. The issues raised by this distinction are not new. They are simply part of the overall challenge of producing a balanced budget.

The budget is a responsible and balanced budget ! The funding priorities are education enrollment increases and job training/recruitment in NC.