Recommended budget adjustments for the 2008-2009 fiscal year will increase tax on cigarettes, beer, fortified wine and spirits.

May 14,
2008

NC NEWS -- Governor Easley has released his
recommended budget adjustments for the 2008-2009 fiscal year, which will
increase tax on cigarettes, beer, fortified wine and spirts. The proposed
budget will provide $12.5 billion for education including a 7% increase in
public school teachers pay. Currently, the difference between the US and North
Carolina average for a teacher with a bachelor's degree and 15 years experience
is 6.9 percent.

The budget proposal further improves the state's ability to
compete for jobs in the global economy, increases funding for mental health
services, and helps communities' better plan to deal with droughts. The
Governor also wants to expand funding for the oversight of prison parolees,
which means, "Operation FreeBird" is working.

The NC Governor also believes the budget better prepares the state
to deal with the uncertain economy by expanding the Rainy Day Fund to $848
million. Unlike most states that are facing shortfalls, North Carolina will end
the current fiscal year with a $152 million surplus. The budget also includes
$396 million in general fund budget cuts equaling nearly 2% of the total
operating budget.

Governor Easley said, "As I release the 2008-09 budget proposal,
the last one of my administration, I remain just as restless about improving
the lives of every North Carolinian. While we have made great progress in this
state, I am still not satisfied. We must build on our strengths to face the
challenges of the global economy and the best way we can do this is to expand
education at all levels."

Governor Easley's budget proposal includes a cigarette tax
increase, recommending a 20-cents-per-pack increase. The increase, which would
total 55 cents per pack, would keep North Carolina's cigarette tax among the
lowest in the nation, about 40th. Easley said, "It takes real revenue to make
real progress in education," therefore, once again singling out evil tobacco
smokers.

The budget recommends state employees receive the equivalent of
a 4 percent pay increase through a 1.5 percent cost-of-living adjustment and a
$1,000 one-time bonus. State employees will also receive five days of paid
bonus leave. The budget also includes a cost of living adjustment for state and
judicial system retirees.

The state mental health system will receive more than $76
million designated to implement changes in and improve services. The additional
costs will be offset by another tax increase on beer, fortified wine and
spirits.

More than $65 million is set aside for repairs to university and
state buildings along with another $97 million for pay-as-you-go finance of new
construction projects and borrowing for another 553 million in projects.

Highlighted recommendations in Easley's budget include:

PUBLIC SCHOOLS -- $492 million overall budget increase.

• $302.7 million to bring teacher pay to the national
  average.


• $90 million to fully funding the ABC bonuses for school
  teachers.


• $39.8 million to increase by 6,345 the number of More At Four
  early childhood education program slots to bring enrollment to 35,000.


• $12 million for increases in at-risk enrollment.


• $6.6 million to expand the Learn and Earn early college high
  school program to continue operation of 55 schools and expand to an additional
  16 schools in 2009-10.


• $6 million to expand broadband high-speed connectivity for
  public schools.


• $2 million to assist those public schools with the greatest
  needs.

COMMUNITY COLLEGES -- $58.3 million overall budget increase.

• $23.8 million for increased enrollment.


• $4.8 million for nurse accreditation programs and to add 55
  allied health faculty positions to cut program waiting lists.


• $5 million to address equipment needs, including health
  programs.


• $2.5 million to expand the NC Community College System Data
  Warehouse.


• $1 million to expand the Minority Male Mentoring initiative.
  

UNIVERSITY OF NORTH CAROLINA -- $107.5 million overall budget
increase.

• $34.6 million for increased enrollment.


• $11 million to implement the recommendations of the UNC
  Campus Safety Task Force recommendations.


• $2.5 million to implement American Bar Association
  recommendations to accredit N.C. Central University Law School.


• $2 million to support a new bioengineering facility and other
  areas at NC State University's College of Engineering.


• Expand EARN grants to accredited private NC colleges and
  universities (can be done within existing budget).

HEALTH AND HUMAN SERVICES -- $217 million overall budget
increase.

• $20.9 million for community hospitals support short-term
  stabilization in psychiatric inpatient services.


• $6.8 million to support 30 mobile mental health crisis
  teams.


• $5.4 million to improve clinical staff ratios by adding 107
  positions to provide closer patient supervision.


• $5.5 million to address shortfalls in shift premiums and
  worker compensation payments.


• $5.2 million to support 36 beds at Dorthea Dix Hospital.


• $4.3 million for crisis intervention services for people who
  have development disabilities by establishing nine regional START teams.


• $4.2 million for walk-in crisis and psychiatric after
  care.


• $10 million to expand Health Choice to provide health care
  for an additional 10,680 children from low income families.


• $9 million to remove 1,110 children from subsidized child
  care waiting lists and keep 931 children from being dropped.


• $8.3 million to increase foster care and adoption assistance
  payments.

JUSTICE AND PUBLIC SAFETY -- $49 million overall budget
increase.

• $22.6 million to restore funding for community programs that
  reach out to delinquent and at-risk youth.


• $9.1 million to restore funding for community-based programs
  that aim at reducing recidivism and the costs of incarceration for the state
  and counties.


• $4 million to improve case management and supervision of
  adult offenders on probation, parole and post-release.


• $1.9 million to ensure female parolees and probationers have
  access to residential substance abuse treatment services.


• $600,000 so uninsured rape victims will no longer have to pay
  a portion of the cost for forensic exams.

NATURAL AND ECONOMIC RESOURCES. -- $10 million for the One North
Carolina Fund to recruit new and expanding businesses.

• $5 million for the One North Carolina Small Business
  Innovation Research Program to assist in capturing federal innovation research
  grants.


• $5 million for the Farmland Preservation Trust Fund.


• $4 million for the N.C. Biotechnology Center.


• $1 million to the N.C. Green Business Fund for grants to
  small businesses to encourage growth of the green economy in the state.


• $1 million to assist those facing foreclosure on their
  homes.


• $870,000 to establish a Drought Response Unit to aid
  communities in preparing to withstand periodic droughts.


• $720,000 to hire ten safety and health compliance officers in
  the Occupational Safety and Health Division, positions that because of federal
  funding cuts have been vacant.


• $400,000 to clean up inactive hazardous waste sites.


• $141,330 for two food safety and security inspectors for the
  meat and poultry industry.

TRANSPORTATION

• $28.8 million increase for highway maintenance
  activities.


• $25 million reduction in the Highway Trust Fund transfer to
  the General Fund as the first step in phasing out the $172.6 million annual
  transfer. These funds may be used for gap funding for N.C. Turnpike Authority
  projects authorized by the legislature or urban loop project in the
  Transportation Improvement Program.

SUPPORTING THE MILITARY

• $ 2.2 million to improve health and mental health services to
  National Guard combat veterans and their families.


• $1 million to support social service and morale programs on
  North Carolina's military installations.


• $1 million for college scholarships for children of National
  Guard members killed or disabled while on active service duty.


• $200,000 for Operation Kids On Guard to assist children of
  deployed members of the N.C. National Guard.

CAPITAL IMPROVEMENTS – Financed Through Appropriations and
Certificates of Participation.

• $280.5 million for five University of North Carolina
  projects that received planning funds previously including $97 million for the
  new library on the N.C. State Centennial Campus; $62 million for the new School
  of Dentistry at East Carolina University; $69 million for a new School of
  Dentistry at UNC-Chapel Hill; $42.6 million for a new classroom building at
  UNC-Greensboro and $9.8 million for the completion of a student activity center
  at Winston-Salem State University


• $14.5 million for a new classroom building at the Upper
  Coastal Plains Higher Education Center.


• $108.3 million for a women's health and mental health
  medical facility in the Department of Corrections.


• $63.1 million for additions to correctional facilities at
  Scotland, Bertie, Lanesboro and Tabor.


• $25.7 million to match federal and local funds for water
  resource and sewer development projects.


• $109.4 million for completion of the Green Square Complex in
  Raleigh.


• $5 million to be added to $10.2 million in receipts to
  renovate a berth at the port in Wilmington and $2.5 million for berth
  construction at the port in Morehead City.


• $40.4 million for a new Capital Area Visitors Center and
  parking deck in downtown Raleigh.

Finally, Governor Easley said, "This budget makes progress in
education, human services, public safety and economic development. I look
forward to working with the General Assembly to get this budget enacted before
June 30."

To read the complete NC Governor's recommended North Carolina State
Budget adjustments for 2008 through 2009 - Click Here.