Comparison of Nonprofit Provisions in House and Senate Budget Proposals for FY

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1 Comparison of Nonprofit Provisions in House and Senate Budget Proposals for FY Revised: June 22, 2017 Issue Senate Budget House Budget Final Budget Total spending $22.9 billion in FY and $23.4 billion in FY $22.9 billion in FY and $23.4 billion in FY $23.0 billion in FY and $23.6 billion in FY Nonprofit sales tax Preserves nonprofit tax exemption. Preserves nonprofit tax exemption. Preserves nonprofit tax exemption. refunds Tax deductions (including charitable deduction) Tax rates Earmarks for nonprofits Nonprofit salaries Nonprofit reporting requirements Increases the standard deduction (or zero tax bracket) by $1,250 for single taxpayers and $2,500 for married taxpayers. This would mean that fewer North Carolinians would be eligible for the state charitable deduction. Increases the cap on mortgage interest deduction but keeps the charitable deduction uncapped. Reduces individual income tax rates from 5.499% to 5.35%. Reduces corporate income tax rates from 3% to 2.5% over two years. None. Codifies a requirement that nonprofits may not spend more than $120,000 per year in state funds on any individual s salary. Increases the standard deduction (or zero tax bracket) by $500 for single taxpayers and $1,000 for married taxpayers. Increases the cap on mortgage interest deduction but keeps the charitable deduction uncapped. No changes to income tax rates. Provides appropriations to two nonprofits providing educational services. Includes a requirement that nonprofits may not spend more than $120,000 per year in state funds on any individual s salary. Unlike the Senate budget, this provision is not codified in the State Budget Act, which means it could be changed in future budgets. Increases the standard deduction (or zero tax bracket) by $1,250 for single taxpayers and $2,500 for married taxpayers, starting in This would mean that fewer North Carolinians would be eligible for the state charitable deduction. Maintains the existing cap on the mortgage interest deduction but keeps the charitable deduction uncapped. Reduces the individual income tax rate from 5.499% to 5.25%, starting in Reduces corporate income tax rates from 3% to 2.5% over three years. Provides $19.28 million in appropriations, most of which is one-time funding, to 91 Includes a requirement that nonprofits may not spend more than $120,000 per year in state funds on any individual s salary. Unlike the Senate budget, this provision is not codified in the State Budget Act, which means it could be changed in future budgets. No changes. No changes. Adds a provision that requires non-state entities that receive new funding in the budget and that not otherwise subject to

2 Competitive grants for nonprofits through the N.C. Department of Health and Human Services (DHHS) Supplemental Nutritional Assistance Program (SNAP) eligibility Brothers Big Sisters and Triangle Residential Options for Substance Abuses rather than requiring them to participate in a competitive grants program. This could reduce red tape for these Several other nonprofits would still need to apply for state funding through a competitive grants program. Removes a provision requiring DHHS to award at least 5% of competitive grants to nonprofits that had not previously received them. Includes a provision that would make nearly 133,000 North Carolinians ineligible for the Supplemental Nutritional Assistance Program (also known as SNAP or food stamps) by eliminating broad-based categorical eligibility. This provision would mean that thousands of additional North Carolina families would rely on nonprofits for food assistance, creating new unfunded burdens on these Brothers Big Sisters, Boys and Girls Clubs, and Triangle Residential Options for Substance Abuses rather than requiring them to participate in a competitive grants program. This could reduce red tape for these Several other nonprofits would still need to apply for state funding through a competitive grants program. Removes a provision requiring DHHS to award at least 5% of competitive grants to nonprofits that had not previously received them. Makes no changes to broad-based categorical eligibility for SNAP. other reporting requirements to report to the Offices of State Budget and Management (OSBM) on how the funds were used, the amount used for administrative purposes, and the amount used for salaries. Because nonprofits with direct appropriations in the state budget or grants that come through state agencies are subject to reporting requirements in the State Budget Act, this provision should only apply to nonprofits receiving new state funding that flows through units of local government. Brothers Big Sisters, Boys and Girls Clubs, and Triangle Residential Options for Substance Abuses rather than requiring them to participate in a competitive grants program. This could reduce red tape for these Several other nonprofits would still need to apply for state funding through a competitive grants program. Removes a provision requiring DHHS to award at least 5% of competitive grants to nonprofits that had not previously received them. Makes no changes to broad-based categorical eligibility for SNAP.

3 Medicaid eligibility monitoring Requires DHHS to monitor eligibility of Medicaid recipients at least once every quarter. Requires county departments of social services to promptly take action based on these determinations and places the burden on Medicaid recipients to challenge any finding of ineligibility for Medicaid benefits. This could place a greater burden on nonprofits to help Medicaid beneficiaries keep their benefits. Makes no changes to Medicaid eligibility monitoring. North Carolina Provides no state Provides $250,000 in one-time funding for the statewide system which connects North Carolinians to nonprofits and other local service providers during disasters and other emergencies. Food deserts Smart Start NC Pre-K Certificate of need Community health center grants Provides no additional support for healthy food initiatives in food deserts. Provides $3.5 million in FY and $7 million in FY for an early literacy program through Smart Starts. Requires 19% matching funds for local Smart Starts. Uses federal money to provide access to an additional 1,150 children in FY and 2,350 children in FY Repeals the state s certificate of need law which limits the ability of new healthcare providers such to build medical facilities, purchase medical equipment, or offer many types of surgical procedures in Provides $7.5 million in additional funding for grants to community health centers, free clinics, and other health service providers in rural and medically underserved communities. Provides $250,000 in one-time funding for healthy food initiatives in food deserts. Provides $1.2 million in FY and $3.9 million in FY for an early literacy program through Smart Starts. Requires 19% matching funds for local Smart Starts. Uses a combination of federal and state money to end the waiting list for NC Pre-K by providing access to an additional 2,300 children in FY and children in FY Makes no changes to certificate of need laws. Provides $7.5 million in additional funding for grants to community health centers, free clinics, and other health service providers in rural and medically underserved communities. Requires DHHS to monitor eligibility of Medicaid recipients at least once every quarter. Requires county departments of social services to promptly take action based on these determinations and places the burden on Medicaid recipients to challenge any finding of ineligibility for Medicaid benefits. This could place a greater burden on nonprofits to help Medicaid beneficiaries keep their benefits. Provides $250,000 in one-time funding for the statewide system which connects North Carolinians to nonprofits and other local service providers during disasters and other emergencies. Provides $250,000 in one-time funding for healthy food initiatives in food deserts. Provides $3.5 million in FY and $7 million in FY for an early literacy program through Smart Starts. Requires 19% matching funds for local Smart Starts. Uses a combination of federal and state money to provide access to an additional 1,725 children in FY and 3,525 children in FY Makes only minor changes to certificate of need laws. Provides $7.5 million in additional funding for grants to community health centers, free clinics, and other health service providers in rural and medically underserved communities.

4 Home and Community Care Block grant Foster care case load Child advocacy centers Arts and cultural grants Nonprofit science museums N.C. Symphony Domestic violence grants Nonprofit private college scholarships Legal services nonprofits Evidence-based budgeting Provides nearly $1 million in additional fund per year. Provides $270,000 additional funding in FY and $2.4 million in additional funding in FY Provides $200,000 in additional funding from the Social Services Block grant, but no additional money from state appropriations. Provides $1 million in additional arts funding, including $750,000 for grassroots arts grants, $125,000 for veterans arts programs, and $125,000 to bring state arts resources to rural counties. Provides a $100,000 annual increase in grants to science museums. Provides $350,000 in additional Requires the N.C. Council for Women to make the first quarterly payments on domestic violence grants within 15 days of the certification of the state budget. Provides no additional support. Makes no changes. Makes no changes. Provides nearly $1 million in additional fund per year. Provides $270,000 additional funding in FY and $2.4 million in additional funding in FY Provides $200,000 in additional funding from the Social Services Block grant, but no additional money from state appropriations. Provides $750,000 in additional arts funding, including $675,000 for grassroots arts grants and $125,000 for veterans arts programs. Provides a $100,000 annual increase in grants to science museums. Provides $300,000 in additional send contracts to domestic violence grantees within 10 days of the certification of the state budget. report to legislators about domestic violence grants within five days of when they are distributed. Provides $2 million per year in additional support for need-based financial aid at nonprofit private colleges and universities, beginning in FY Eliminates Access to Civil Justice Fund, which supports legal services Begins a process of using the Pew- Macarthur Results First Framework to do a cost-benefit analysis of state Provides nearly $1 million in additional fund per year. Provides $270,000 additional funding in FY and $2.4 million in additional funding in FY Provides $1 million in additional one-time state Provides $650,000 in additional arts funding in FY , including $500,000 for grassroots arts grants, $75,000 for veterans arts programs, and $75,000 to bring state arts resources to rural counties and $750,000 in additional arts funding in FY , including $500,000 for grassroots arts grants, $100,000 for veterans arts programs, and $100,000 to bring state arts resources to rural counties. Provides no additional funding for grants to science museums. Provides $350,000 in additional send contracts to domestic violence grantees within 10 days of the certification of the state budget. report to legislators about domestic violence grants within five days of when they are distributed. Provides no additional support. Eliminates Access to Civil Justice Fund, which supports legal services Begins a process of using the Pew- Macarthur Results First Framework to do a cost-benefit analysis of state programs,

5 Tobacco Trust Fund Clean Water Management Trust Fund Agricultural Development and Farmland Preservation Trust Fund Golden LEAF Foundation Provides a $660,000 annual increase in Provides an $850,000 annual funding increase, plus an additional $2.6 million in one-time Provides $1 million in additional onetime Provides $10 million per year in additional funding from the tobacco Master Settlement Agreement. programs, including many programs that work in partnership with Provides $900,000 in one-time additional Provides an $850,000 annual funding increase, plus an additional $3 million in one-time Transfers $1.1 million from another fund. Provides $5 million per year in additional funding from the tobacco Master Settlement Agreement. including many programs that work in partnership with Provides $900,000 in one-time additional Provides a $305,000 annual funding increase in FY , which goes up to $500,000 in FY , plus an additional $4.2 million in one-time Provides $2 million in additional one-time Provides $7.5 million per year in additional funding from the tobacco Master Settlement Agreement North Carolina Center for Nonprofits. For more information, contact David Heinen, Vice President for Public Policy and Advocacy, at dheinen@ncorg.