NORTH CAROLINA - NC

1 GOVERNOR COOPER S RECOMMENDED BUDGET 2021-23 NORTH CAROLINA Strong, Resilient, Ready Governor Roy Cooper s Recommended Budget 2021-23 Office of State Budget and Management Office of the Governor Raleigh, NORTH CAROLINA Charles Perusse, State Budget Director Kristin Walker, Deputy Director March 2021 Questions about Governor Cooper s Recommended Budget 2021-23 or requests for further information may be directed to the Office of State Budget and Management, 20320 Mail Service Center, Raleigh, NC 27699-0320, or telephone (984) 236-0600. The document may also be downloaded from the Office of State Budget and Management s website at This page left intentionally blank iii Table of Contents List of Tables and figures v Governor s Message Highlights of the Governor s Recommendations 1 2 Budget Availability Statements 7 Budget and Economic Outlook, Revenue Forecasts.

2 And Demographic Analysis Five-Year Budget Forecast Economic Outlook Revenue Forecasts Population Dynamics 23 25 31 41 Recommended Appropriations Education Education Highlights Public Education Community Colleges The University of NORTH CAROLINA 47 48 56 61 General Government General Government Highlights General Assembly Office of the Governor Office of State Budget and Management NC Housing Finance Agency Department of Military and Veterans Affairs Office of Lieutenant Governor Department of Secretary of State Office of the State Auditor Department of State Treasurer Department of Insurance Department of Administration Office of State Human Resources Office of the State Controller Department of Information Technology Department of Revenue State Board of Elections Office of Administrative Hearings 67 68 71 74 77 80 84 86 90 93 97 101 109 112 115 118 122 126 iv Recommended Appropriations Continued Health and Human Services Health and Human Services Highlights Department of Health and Human Services Division of Aging and Adult Services Division of Social Services Division of Services for the Blind.

3 Deaf and Hard of Hearing Division of Vocational Rehabilitation Division of Central Management and Support Division of Child Development and Early Education Division of Public Health Division of Health Benefits Division of Mental Health/Developmental Disabilities/Substance Abuse Services Division of Health Services Regulations 129 130 131 133 135 136 137 141 144 146 149 151 Justice and Public Safety Justice and Public Safety Highlights Administrative Office of the Courts Indigent Defense Services Department of Justice Department of Public Safety 153 154 158 161 164 Natural and Economic Resources Natural and Economic Resources Highlights Department of Agriculture and Consumer Services Department of Labor Department of Environmental Quality Wildlife Resources Commission Department of Commerce Department of Natural and Cultural Resources 173 174 179 182 193 196 204 Transportation Transportation Highlights Department of Transportation Highway Fund Highway Trust Fund 213 214 215 220 Capital Improvements Capital Highlights Capital Appendix A Capital

4 Appendix B Capital Appendix C 221 233 234 241 Reserves and Other Adjustments Reserves and Other Adjustments Highlights 243 v List of Tables and Figures Tables 1 Governor s Budget Recommendations for FY 2021-23 7 2 Recommended General Fund Budget by Function FY 2021-22 9 3 Governor s Recommended General Fund Budget 2021-22 Adjustments 10 4 Recommended General Fund Budget by Function FY 2022-23 12 5 Governor s Recommended General Fund Budget 2022-23 Adjustments 13 6 Highway Fund and Highway Trust Fund Budget FY 2021-22 15 7 Highway Fund and Highway Trust Fund Budget FY 2022-23 16 8 Summary of General Fund Base Budget Adjustments FY 2021-22 17 9 Summary of General Fund Base Budget Adjustments FY 2022-23 19 10 Five-Year General Fund Expenditure Forecast 22 11 General Fund Revenue by Fiscal Year: History & Forecast 35 12 Highway Fund Revenue by Fiscal Year: History & Forecast 37 13 Highway Trust Fund Revenue by Fiscal Year.

5 History & Forecast 39 Figures 1 Recommended General Fund Budget by Function FY 2021-22 9 2 Recommended General Fund Budget by Function FY 2022-23 18 3 General Fund Five-Year Revenue and Expenditure Forecast 23 4 Leisure and Hospitality Jobs Hardest Hit By COVID-19 Crisis 24 5 Percent Change in Employment 25 6 Percent Change in All Consumer Spending 27 7 Individual Income & Sales Tax Comprise Majority of Own-Source General Fund Revenue 30 8 Volatile Revenue Growth Expected Through 2021-23 Biennium 32 9 Pandemic Caused Fewer Births and More Deaths in NORTH CAROLINA 40 10 NORTH CAROLINA Gained More Migrants Than Neighbors from 2010 to 2019 41 11 Population Change by County, April 1, 2010 July 1, 2019 42 12 Historical and Projected Age Group Populations 43 13 Five of Every Eight People Added Between Through 2030 Will Be a Person of Color 44 vi This page left intentionally blank 20301 MAIL SERVICE CENTER RALEIGH, NC 27699-0301 TELEPHONE.

6 919-814-2000 STATE OF NORTH CAROLINA OFFICE OF THE GOVERNOR ROY COOPER GOVERNOR March 24, 2021 The NORTH CAROLINA Senate The Honorable Phil Berger, President Pro Tempore The NORTH CAROLINA House of Representatives The Honorable Tim Moore, Speaker The People of NORTH CAROLINA Dear Mr. President, Mr. Speaker, Members of the NORTH CAROLINA General Assembly, and Fellow NORTH Carolinians: As our state strives to emerge from the COVID-19 pandemic, we have an extraordinary opportunity and responsibility to lead a resurgence for every community, and I am pleased to present a budget recommendation that provides relief, ignites recovery, and charts a path to ensure NORTH CAROLINA is stronger than ever.

7 Last year, we collaborated to provide emergency relief in public health and economic assistance. I ask that we continue to work together to make long term investments in needed services, infrastructure, and our most valuable resource, the people of NORTH CAROLINA . The pandemic impacted our most vulnerable communities the hardest and their road to recovery is the most precarious. We must make significant commitments to education, including early childhood education and literacy, to make up for achievement gaps exacerbated by the pandemic. Access to high-speed internet, affordable healthcare, and clean water is necessary for all of our communities to share in an equal recovery.

8 We can confront these challenges with confidence. Our state budget availability is strong, with nearly $5 billion in unreserved cash in the General Fund as we enter the FY 2021-2023 biennium. Our economic forecast anticipates continued economic expansion. And our debt affordability of almost $15 billion over the next 10 years presents the state with a generational opportunity to make lasting investments at historically low interest rates. This recommendation is a fiscally responsible path forward, structurally balanced and based on recurring state revenue. Some funding that would ordinarily be proposed in this budget will be presented in my forthcoming recommendations for how we should invest funds from the federal American Rescue Plan.

9 Thank you for your hard work and dedication to the people of NORTH CAROLINA . Together, we can invest in our people, our economy, and our infrastructure to lead our state into a new era of resilience and opportunity for all NORTH Carolinians. Sincerely, Roy Cooper CC: The Honorable Dan Blue The Honorable Robert Reives Empower Success Through Education Retaining & Developing Talented Educators Devotes $ 485 million to teacher and administrator compensation, increasing average pay for existing teachers by 10%, reducing plateaus for veteran teachers, and r estoring Master s Pay. Funds a 10% increase in the Principal salary schedule and a increase for Central Office and non-certified public school employees.

10 Provides funds to implement a $15/hour minimum wage for non-certified, public school employees such as teaching assistants, school nutrition employees, and bus drivers. Provides bonuses for teachers, principals, non-certified public school employees, university employees, and state-funded local community college employees. Includes a $2,000 bonus for those employees in the current fiscal year and $1,000 bonuses in each year of the biennium. Invests $52 million to recruit, retain, and support NORTH CAROLINA s educator workforce, with scholarships, support for training and development, and funding for pilot projects i n high-need districts.