NC legislators passed the $20.2 billion budget (final conference report) on Thursday, June 21. The budget brings together the previously-passed Senate and House budget plans to fund state investments for fiscal year 2012-13, which begins July 1.

According to the NC Budget & Tax Center, the budget funding is at 11.4 percent below pre-recession levels and at a new all-time historic low of 5.47 percent of state personal income. It now awaits action by the Governor Bev Perdue.

To view the full budget agreement, go to www.ncleg.net.  (Note: most of the energy-related provisions and funding are found in the Natural & Economic Resources section, chapter H.)

Commerce (Energy-Related Items)

• NC’s three university energy centers (NCSU’s Solar Center, Appalachian State University and NC A&T) remained at the same funding level as was included in the second year of the two-year budget that legislators passed last summer.

The budget provides $617,603 in FY 2012-13 for the Solar Center at North Carolina State University to continue energy programs — $200,000 of this funding shall be used for the Energy Management Program within the Energy Efficiency and Environmental Research Program in the Department of Mechanical & Aerospace Engineering. It also provides $261,215 in FY 2012-13 to the Appalachian Energy Center at Appalachian State University, and $210,592 in FY 2012-13 to the Center for Energy Research and Technology at North Carolina A&T State University.

• The Tennessee Valley Authority (TVA) settlement funds will be managed by the NC Biofuels Center and NC Department of Agriculture.

Other provisions include:

• $500,000 to RTI to match US Department of Energy grant funds.
• $250,000 to support the salaries and benefits of three positions to staff the Mining and Energy Commission per Senate Bill 820, should that bill become law.
• $2.24 million in funds from the Tennessee Valley Authority (TVA) settlement to be expended on projects described in subsection h of paragraph 128 and in compliance with the requirements of paragraphs 122 through 128 of the Consent Decree. Subsection h allows for funds to be used by the agricultural and forestry sectors to use and produce renewable energy and carbon sequestration. The Department is encouraged to award these funds to projects and programs in Western North Carolina. The settlement agreement provides $11.2 million to North Carolina, which can be drawn down in equal installments over five years; the State was authorized to begin collecting funds in 2011.
• $2.24 million in the Biofuels Center budget with receipts from the TVA Settlement Agreement. A corresponding item within the Commerce section of the budget directs Commerce to apply for funds from the TVA Settlement Agreement which will then be allocated to the Biofuels Center. The Biofuels Center is required to expend these funds on projects described in and in compliance with the requirements of paragraphs 122 through 128 in the Consent Decree. The Center is encouraged to award these funds to projects and programs in Western North Carolina. The settlement agreement provides $11.2 million to North Carolina and can be draw down in equal installments over five years; the State was authorized to begin collecting funds in 2011.
• Most notable are the changes to the OneNC Fund, a $45 million transfer from OneNC to General Fund, leaving a $15 million balance in the Fund.  This differs from the House language, which only transferred $30 million out of the fund, the Senate, which transferred out $50 million. The money report also specifies an additional $9 million in R to be put into the Fund from reserves. Appropriates $5 million of this total amount for an unspecified economic development project not related to OneNC operations—this is likely for the same non-Commerce-requested land purchase that drew heat during the Senate debate.

(The following information is courtesy of the NC Budget & Tax Center):

K-12 Education

• Increases public education budget by a net $62.4 million in recurring funds, or about 0.8% over continuation. This doesn’t include the $85 million in reserves for LEAs to support a 1.2% salary increase.
• Partially restores the LEA adjustment by $143 million, of which $16.2 million is paid out of education lottery surplus (one-time) dollars. This line leaves the LEA Adjustment at a total of about $359.8 million, which is about $63 million less than the current year ($429 million)
• Cuts textbook funding by $4.3 million (new item)
• Includes the majority of the Excellence in Public Schools Act, which was sponsored by Sen. Phil Berger, appropriating $27 million in recurring dollars to fund it (Senate budget)

Community College

• Includes funds to restore part of the management flexibility reduction (5%) with the remaining $83 million to be found by the State Board of Community Colleges. (House budget)
• Includes $5 million in non-recurring dollars to support the NC Back to Work initiative (House budget)
• Eliminates the fee increase for continuing education scheduled to take effect in FY 2012-13 (House budget)

UNC System

• Funds projected enrollment increase with an addition of $1.3 million in recurring dollars (Senate budget)
• Funds the Faculty Retention and Recruitment Fund at $3 million (both Senate and House budgets)
• Increases money to UNC Need-Based Grant by $18 million from Eschaets and Lottery Fund, which is roughly half of what is needed to make up for the 2011 budget’s $35 million cut to the program

Health and Human Services

• Provides $212 million to partially fund the projected enrollment growth in the number of people eligible for Medicaid
• Anticipates $59 million in savings through Community Care of North Carolina
• Changes the eligibility criteria for personal care services and reduces appropriation by $6 million
• Provides for $10.3 million to plan to transition individuals with severe mental illness to community living arrangements and temporary assistance in the amount of $39.7 million to adult care and group homes they transition individuals to community placements (similar to House budget in total dollars, provisions similar to Senate budget)
• Takes no action to address the NC Pre-K waiting list or to restore cuts made last year

Department of Natural and Economic Resources

• Transfers significant functions to the Department of Agriculture and Consumer Services, reducing the budget by 26.6% over continuation (House and Senate budgets)

Clean Water Management Trust Fund

• Eliminates total recurring appropriation ($11.25 million) and replaces with $10.75 million in non-recurring funds. This is a 4.4% cut from continuation for the CWMTF, which before the 2011 session was funded at $100 million annually.

Transportation

• Caps the gas tax at 37.5 cents for FY2012-13. The final budget drops a provision from the House budget that would require DOT to plan as if the gas tax were actually set at 35 cents instead of the current revenue forecast process.
• Directs DOT to collect tolls on all ferries in the state with three exceptions: the Hatteras–Ocracoke ferry and the Knotts Island ferry would remain exempt from tolls per current state law and the Cherry Branch/Minnesott Beach route would be toll-free for FY2012-13 only.
• Transfers $63 million in non-recurring funds from the planned Garden Parkway and Mid-Currituck Bridge toll projects—both of which will not be ready to expend the funds in FY2012-13—to the Mobility Fund. The Mobility Fund also receives a recurring $45 million appropriation.
• One new item in the transportation section is a non-recurring $2 million appropriation to supplement and advance project studies related to the Mid-Currituck Bridge project to move the project forward to construction.
• The Regional New Starts & Capital Program within the Public Transportation Division of DOT is eliminated. The unexpended balance of funds for this program ($25 million) is reallocated to the LYNX Blue Line Extension project in Charlotte. Because this program is eliminated, funding for fixed-guideway projects, commonly referred to as light rail, will compete with highway and road projects for funding from the Highway Trust Fund.
• Makes a $1.9 million recurring cut to public transportation grants, which are often used to draw down federal matching funds. This cut is smaller than the $2.6 million cut proposed by the House. The Senate proposal did not include cuts to the grant program.
• Makes no fee changes to the Drivers Education program (Senate budget)

Justice and Public Safety

• Makes mostly management flexibility cuts to the JPS agencies (Senate budget)
• Expands the Parole Commission by two full-time equivalents and eliminates the Edgecombe Youth Development Center (House budget)
• Transfers the Consumer Protection Division to receipt-support, removes Family Court from continuation review, and uses $200,000 in mortgage settlement funds to cover cuts to the Conference of District Attorneys (House and Senate budgets)

Housing Trust Fund Agency

• Eliminates $7.9 million in General Fund appropriations to the Housing Trust Fund for FY2012-13, swapping this money out with the same amount in non-recurring funds from the National Mortgage Settlement.