FOR IMMEDIATE RELEASE
June 18, 2015
Senate Approves State Budget

Statement Included on the Potential Sales Tax Redistribution

Raleigh, N.C. – The North Carolina Senate passed a balanced $21.47 billion state budget on Thursday, June 18, 2015.

Highlights of the Senate budget on coastal issues include:

• Supports three initiatives related to Oyster development (cultch planting, oyster sanctuaries, and oyster research to develop North Carolina oyster brood stock to provide seed for aquaculture) totaling just over $2 million over the biennium.
• Requires the Division of Marine Fisheries to create a proposal to open certain areas of the Core Sound to shellfish cultivation leasing. There are some very lucrative lease sites in the Core Sound but cannot be used due to a lease moratorium law.
• Amends the Senator Jean Preston Marine Shellfish Sanctuary. It requires the Division to develop a plan to construct and manage additional oyster habitat and requires that the new sanctuaries along with existing oyster sanctuaries be included in the Senator Jean Preston Oyster Sanctuary Network. Amends current statute to allow a shellfish cultivation lease survey to be produced by using global positioning system data.
• Reforms the shellfish cultivation leasing process to which renewal leases would be issued for a period of 10 years, instead of 5 years.
• Establishes the Blue Ribbon Oyster Panel, a stakeholder working group to study and advance efforts to ecologically restore the resource and achieve economic stability of the shellfish aquaculture industry.
• Stops the authorization of a Joint Enforcement Agreement (JEA) between our state Marine Patrol inspectors and the law enforcement branch of the National Marine Fisheries Service.

• Amends the for-hire coastal recreation fishing licenses to a voluntaryrequirement to keep a logbook of “catch” and “effort”. It delays any such reporting until January 01, 2016, and requires the creation of a stakeholder’s logbook advisory group. Also, the Division of Marine Fisheries would be required to institute a 12 month implementation process.
• Places a one year moratorium on any temporary supplemental management process to our state’s fishery management plans. While also directing the Marine Fisheries Commission to study its procedures, and to submit the report no later than May 1, 2016, to the General Assembly.

“The shellfish cultivation industry in North Carolina could be a much larger part of our economy. We import 75% of the oysters consumed in North Carolina, yet we have the second largest estuary system in the United States and the largest contained in one state,” Cook said. “Last year, Virginia’s cultured shellfish was valued at $64 million. Our state produced only $330,000 worth of cultured shellfish. This budget puts our state on the path to growing this industry and taking advantage of our abundant natural water resources.”

• Directs the Division of Coastal Management to study and develop a proposed strategy for preventing, mitigating, and remediating the effects of beach erosion. The study shall consider efforts by other states and countries to prevent beach erosion, ocean overwash and incorporate best practices into the strategy.
• Directs the Coastal Resource Commission to amend its rules for the use of temporary erosion control structures in certain situations. It would allow the placement of temporary erosion control structures on a property that is experiencing coastal erosion.

“As we all know very well, several coastal towns are facing the issue of ocean overwash and beach erosion. About 2.4 million visitors travel from all around the world each year to see the outstanding beautiful beaches in the Outer Banks. These two provisions included in the budget will continue to move us in the right direction to address the issue of stabilizing our beaches,” Cook said.

• Provides additional appropriations to the Shallow Draft Inlet Dredging Fund, total estimated funding in FY 2015-16 is at $20 million. It reserves $4 million of that fund for Oregon Inlet dredging needs. While also appropriating $900,000 to the Department of Administration for they can begin the necessary requirements on a long term solution at Oregon Inlet. In addition, Hatteras Inlet has been included in the fund.
• Establishes a Deep Draft Navigation Channel Dredging and Maintenance Fund. The Department of Administration is requested to negotiate with the federal government to acquire the federally owned property needed to manage deep draft navigation channels at the Morehead City State Port facilities in trade for state-owned real property.

• Allows Dare County Board of Commissioners to use up to $3 million each year from its occupancy tax collections to maintain its waterways. However, it would sunset out after five years.
• In addition, allows all coastal municipalities and county governments to remove abandoned vessels from their navigable waters.
• The budget also moves the Zoo, Aquariums, and State Parks to the renamed Department of Natural and Cultural Resources. DENR will become primarily a regulatory agency that will be renamed the Department of Environmental Quality.

“Having open, dependable and navigable waterways are needed to protect and allow economic growth in the region and for the entire State of North Carolina. The federal government has rarely achieved the authorized depth and width of the navigation channel at Oregon Inlet in the last decade, and if and when achieved, it was very short lived. At the present time, dredging is the only approach permitted, and federal maintenance funds have dried up. Our ports and inlets are avenues of commerce for our state. Therefore, this budget will protect and enhance that commerce,” Cook said. “The latest study (completed May 2014) on Oregon Inlet suggests a total annual economic impact of 4,348 jobs and $548.4 million in total to Dare County, the surrounding region, and the State of North Carolina. Additionally, the study showed that if the inlet was passable 365 days a year, the total annual economic impact could reach $1.1 billion. The study currently indicates an annual state/local government taxes & fees of  $23,243,574 million, and if the inlet was stabilized there would substantially more tax revenue for Dare County.”

Other Highlights:

Education:

• Adds 6,756 new teachers over two years to reduce class size ratios in Kindergarten through third grades.
• Fulfills the commitment to increase starting teacher salaries to $35,000 and provides teachers a four percent pay raise on average.
• Increases funding for K-12 public schools by $453 million, for community colleges by $5 million and for the University of North Carolina system by $160 million over two years.
• Increases funding for classroom teacher positions by more than $270 million over the biennium to reduce class sizes in Kindergarten to a 1:17 and in grades 1-3 to a 1:15 teacher-student ratio – a level research has repeatedly shown is key to academic success in early grades.
• Fully funds enrollment and enrollment growth for K-12, community colleges and universities.
• Continues major education reforms and codifies into law the Leandro court rulings that affirmed every child in the state has a constitutional right to the opportunity to receive a ‘sound basic education.’ It also requires local districts to implement a plan to improve student performance at schools that earn a school performance grade of D or F.

• Provides an additional $58 million for textbooks and digital resources over two years.
• Allocates an additional $12 million to fully fund the requirements of the Excellent Public Schools Act, including the Read to Achieve program created to ensure students can read proficiently by fourth grade.

• Increases support for the opportunity scholarship program by close to $7 million each year.
• Provides in-state tuition for veterans at the state’s community colleges and universities and increases funding for the National Guard Tuition Assistance Program.

“My goal for education is every educator’s goal, and I want our students in North Carolina to have the best education possible. That’s why we are funding our top priorities like boosting starting teacher pay and increasing funding for classroom teacher positions so we can reduce class sizes in grades K-3,” Cook said.

Transportation:

• Eliminates $216 million in transfers from the Highway Fund to the General Fund, ensuring transportation revenue is spent on building and maintaining roads and bridges.

• Continues implementation of the Strategic Transportation Investment (STI) law passed two years ago to remove politics from the transportation decision-making process.
• Increases STI funding by $334 million, which will add 70 new highway projects and allow numerous projects to be accelerated over a ten-year period – without incurring any new debt.
• Adjusts DMV fees to reflect inflation since the last adjustment a decade ago.
• Increases and stabilizes aid for municipalities by providing close to $300 million over two years for maintenance of city roads.
• Includes $445 million to replace structurally deficient bridges across the state, adds $66 million to improve the condition and safety of secondary roads and increases recurring funding for pavement preservation to $100 million, extending the life of an additional 8,270 miles of roads.

Tax changes:

• Provides significant tax relief to working families and job-creating businesses, reducing the personal income tax by more than $3 billion over the next five years.
• Reduces the tax burden on North Carolina families and small businesses by cutting the personal income tax rate from 5.75 to 5.5 percent beginning in 2016.

• Keeps the promise of lower corporate income taxes by allowing the rate to fall to four percent in 2016 and three percent in 2017 and moves to calculating corporate income tax on the basis of a single sales factor over three years.
• Protects the state’s long-term fiscal health by adding $500 million to the Rainy Day Fund and $300 million for repairs and renovations of state-owned facilities.
• Streamlines and reduces the franchise tax by 33 percent – cutting what is effectively a statewide property tax on both large and small businesses.

• A proposed new system of sales tax revenue distribution to counties was included in the budget. This proposal would phase in over 5 years where 80 percent of sales tax revenues are allocated based on where people live, with 20 percent allocated based on the county where a sale takes place. In Senate District 1 under the current proposal: Beaufort, Hyde, Camden, Pasquotank, Perquimans, and Gates Counties would over time receive additional appropriations from the sales tax. However, Dare and Currituck Counties would lose appropriations.

“I am opposed to the sales tax redistribution which is included in the Senate budget. I intend to continue to work to find alternative solutions to reduce this inequitable burden to Dare and Currituck Counties when the budget goes into conference. I spoke against this provision on the floor of the Senate yesterday,” Cook said. “However, I supported the budget because it offers much good to District 1. It provides dredging for Oregon Inlet, a project which I have worked on for years that potentially provides hundreds of millions of dollars in economic impact to the Outer Banks and tens of millions of dollars in tax revenue to the coastal communities. It invests in jump starting a shellfish industry on the coast worth 70 to 100 million dollars. It addresses beach erosion issues. It invests hundreds of millions of dollars more in higher teacher pay, smaller class sizes, additional appropriations for our ports, streamlines the health care system, eliminates unnecessary layers of  bureaucracy within state government, provides additional hundreds of millions of dollars to transportation needs, additional resources for our state law enforcement officers, additional appropriations for economic development – all while providing substantial tax relief to working families and small businesses. This budget is not perfect but overall it does a great deal of good for the constituents of Senate District 1.”

Next, Senate and House leaders will put together a list of who will serve as the budget conferees. These budget conferees will attempt to reconcile the substantial differences between the Senate and House spending plans as well as policy items.