Tax Reform Bolsters Budgets of Families & Businesses
Governor Pat McCrory signed comprehensive tax
reform into law on Tuesday, July 23.
“I came to the governor’s office a few short
months ago with a sense of urgency and resolve to put North Carolinians back to
work," said Governor McCrory. "I firmly believe that this reform
package will prove to be critical to growing North Carolina's economy and
getting people back to work. This tax reform package puts more money in
families’ budgets and will restore confidence for North Carolina businesses.
Because of this package, job creators will think about relocating to our great
state."
"I would like to once again commend and
thank Senate Pro Tempore Phil Berger, Speaker Thom Tillis, Commerce Secretary
Sharon Decker, Secretary of Revenue Lyons Gray and my Budget Director Art Pope
for their hard work in getting this tax deal done. This historic tax reform
package is a win-win for our state and the working families who live here,”
concluded Governor McCrory.
This plan provides fiscally-responsible tax
relief to all North Carolina taxpayers. Income tax rates for all
taxpayers will be lowered to a uniform rate of 5.8% in 2014. The corporate tax
will be reduced to 6% in 2014, making North Carolina more attractive to
job-creators.
North Carolina Tax Reform at a Glance:
· The plan is uniform for all North Carolinians across the board.
· It broadens the tax base, lowers income tax rates and reduces
taxes for North Carolina working families.
· It is also fiscally responsible and ensures appropriate revenue
for state government services.
Personal Income Tax:
· Reduces and simplifies the 3-tiered state personal income tax
from the current maximum rate of 7.75% and minimum rate of 6% to 5.8% in 2014
and 5.75% in 2015.
· Increases the standard deduction for all taxpayers, applied to
the:
First
$15,000 of income for those married filing jointly
First
$12,000 of income for heads of household
First
$7,500 of income for single filers;
· Retains the state child tax credit and increases it for
families making less than $40,000;
· Offers a $20,000 combined maximum deduction for mortgage
interest and property taxes;
· Makes charitable contributions fully deductible;
· Protects all Social Security income from state taxes.
Corporate Income Tax:
· Reduces the corporate income tax from 6.9% to 6% in 2014 and
then to 5% in 2015; a 29% rate reduction.
· If the state meets revenue targets (i.e. if there is additional
tax revenue growth due to a growing economy), the corporate income tax will
drop to 4% in 2016 and 3% in 2017.
Other Highlights:
· Caps the state gas tax;
· Eliminates North Carolina’s death tax;
· Preserves the sales tax refund for nonprofits.
What they are saying about tax reform: "Showing Lawmakers
on Capitol Hill How it's Done," "Definitely Pro-Business" http://governor.nc.gov/newsroom/press-releases/20130724/what-they-are-saying-tax-reform-showingcapitol-hill-how-its-done
A Fiscally Responsible Budget Signed
Governor Pat McCrory signed a $20.6 billion
budget on Friday, July 26, that increases K-12 education funding, incorporates
fiscally-responsible tax reform and lays the foundation for economic growth and
job creation. The budget reflects a 2.5 percent spending increase compared to
the previous fiscal year.
“This budget is about job creation,” Governor
McCrory said. “It maintains public investments in education,
transportation and health care while at the same time encouraging job creation
investments by the private sector. This is the formula that will unleash North
Carolina’s economic potential.”
In 2013-14, funding for K-12 education is
increased to $ 7.86 billion, up from $7.44 billion in 2012-13. The increase
funds more teachers for North Carolina schools. Teacher assistants for
kindergarten and first grade are also provided. Pre-K seats are increased to
accommodate 2,500 more children. Lottery funds will now also be used for
digital learning improvements.
Overall, 56 percent of the state budget will
go to fund K-12, the 58 community colleges and 17 universities of the
University of North Carolina System. That reflects a one percent increase from
the previous budget.
The fiscally responsible tax reform package
Governor McCrory signed into law is incorporated in this budget. As a
result, North Carolina working families will have more money in their paychecks
during the next two years.
Governor McCrory’s budget provision to
compensate victims of North Carolina’s Eugenics (Sterilization) Program was
also included in this legislation.
Other budget
provisions include:
Education
· Funds Center for Safer Schools which will provide
training, technical support, and serve as a clearinghouse of information on
school safety to educators, law enforcement agencies and parents statewide.
· Allocates an additional $12.4 million to fund services for an
additional 2,500 at-risk four year olds, to serve a total of 27,500 NC Pre-K
children.
· Provides for opportunity scholarships in the second year of the
budget
· Provides $12 million for digital learning efforts.
Health and Human
Services
· Partnership for a Healthy North Carolina: This budget allows the
Department of Health and Human Services to move to the second phase of Medicaid
reform: develop a waiver consistent with the governor’s vision to create a more
sustainable system while improving care for North Carolina's most vulnerable
citizens.
· Provides $1.5 billion in additional Medicaid funding over two
years.
· Invests nearly $30 million over two years to help open the new
Broughton Psychiatric Hospital.
· Keeps North Carolina's three regional Alcohol and Drug Abuse
Treatment Centers (ADATC) open to treat substance abuse and dependency.
· Provides for 10 additional inspectors to monitor North Carolina
abortion clinics and handle complaints.
Commerce
· Partnership for Prosperity authorized to consolidate, streamline
and modernize North Carolina’s economic development efforts.
· Creates a new Rural Development Authority to boost job creation
in rural North Carolina.
· Creates a competitive grant program for non-profit entities.
· Allocates $60 million for Job Development Investment Grants
(JDIG) and $14 million for Job Maintenance and Capital Development Fund (JMAC) over
two years.
Transportation
· Implements transportation reform through governor’s Strategic
Mobility Fund. This reform will connect rural areas to the state’s economic
centers. Population will also factor in more prominently into the location of
future transportation infrastructure projects.
· Upgrades Department of Motor Vehicle technology and funds
extended, customer-friendly hours for offices that issue driver’s licenses.
· Caps the gasoline tax
Public Safety
· Restore funding for Trooper positions - $2,505,713 to fund 69
vacant trooper positions.
· Keep troopers on the road - The increasing cost of gasoline is
taxing the State Highway Patrol's ability to keep troopers on the road and keep
the public safe. $3,677,292 was appropriated to increase the gasoline budget to
the prior year's actual expenditures.
· Expands funding for the juvenile justice community programs by
$1.5 million in each year of the two-year budget.
· Funds 175 new probation officer positions to protect North
Carolina communities. Probation and post-release supervision caseloads
are rising as a result of the Justice Reinvestment Act
· Reinvests $4 million over the next two years in community-based
substance abuse treatment services for moderate and high-risk offenders on
community supervision. Provides increased treatment services in communities and
helps address underlying drug dependency issues that often lead to criminal
activity and prison.
· Funds 12 special Superior Court judges.
· Provides drug treatment funds through North Carolina’s courts.
Financial
Responsibility
· Fully funds state retirement system obligation and state health
plan
· Invests $233 million in the first year in the rainy day fund
bringing its balance to $650 million. An additional $37 million is invested in
the budget’s second year.
· Provides $163 million over two years for repair and renovation
of state facilities.
· $1 million will go to Base Realignment and Closure (BRAC) to
protect North Carolina’s military bases and increase their operational
capability
Legislative Session Ends
Governor Pat McCrory signed 30 bills on July
23, including:
Breast Density Notification & Awareness
(HB 467 - Reps. Faircloth, Adams, Harrison and Fulghum): The bill
requires health care facilities that perform mammograms to inform patients
about breast density findings. It also corrects a statute involving the
cancer registry and makes a correction to a statute involving the cancer
registry.
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