A BILL TO BE ENTITLED
AN ACT to modify the current operations and capital appropriations act of 2005; to set the public utilities regulatory fee and the insurance regulatory charge; to authorize a private well‑water testing fee; to clarify fees for mental health, developmental disabilities, and substance abuse service facilities; to make a technical correction to the licensure fee cap for review of health care facility construction projects; to repeal the fee for mine safety education/training programs; to increase the public water systems annual operating permit fees; to impose public water system plan review fees; to lower the state sales and use tax by one‑quarter percentage point effective January 1, 2007; to lower the upper income tax rate by one‑eighth percentage point effective for taxable years beginning on or after January 1, 2007; to provide for a health insurance tax credit capped at $200 per Eligible employee; to expand the definition of a development zone to include an economic development and training district; to extend the sunset on aviation fuel sold to motorsports racing teams; to enhance the tax benefits relating to Ethyl alcohol and biodiesel; to provide for a sales and use tax benefit for research and development companies; and to eliminate sales and use tax refunds for purchases of alcoholic beverages.
The General Assembly of North Carolina enacts:

PART i. INtroduction and title of act

INTRODUCTION
SECTION 1.1.  The appropriations made in this act are for maximum amounts necessary to provide the services and accomplish the purposes described in the budget.  Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes and, except as allowed by the Executive Budget Act, or this act, the savings shall revert to the appropriate fund at the end of each fiscal year.

TITLE OF ACT
SECTION 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2006."

PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

CURRENT OPERATIONS AND EXPANSION/GENERAL FUND
SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated are adjusted for the fiscal year ending June 30, 2007, according to the schedule that follows.  Amounts set out in brackets are reductions from General Fund appropriations for the 2006‑2007 fiscal year.

Current Operations – General Fund	FY 2006‑2007

EDUCATION

Community Colleges System Office	$	42,924,642

Department of Public Instruction	150,669,892

University of North Carolina System
	Appalachian State University	$	2,189
	East Carolina University
		Academic Affairs	(1,589,622)
		Health Affairs	0
	Elizabeth City State University	(28,887)
	Fayetteville State University	42,675
	NC Agricultural and Technical University	(223,690)
	North Carolina Central University	(312)
	North Carolina School of the Arts	29,159
	North Carolina State University
		Academic Affairs	(3,908,353)
		Agricultural Extension	65,287
		Agricultural Research	0
	University of North Carolina at Asheville	(569,398)
	University of North Carolina at Chapel Hill
		Academic Affairs	(846,370)
		Health Affairs	(795,501)
		Area Health Education Centers	0
	University of North Carolina at Charlotte	(471,439)
	University of North Carolina at Greensboro	(1,138)
	University of North Carolina at Pembroke	(299,992)
	University of North Carolina at Wilmington	(100,910)
	Western Carolina University	(7,325,381)
	Winston‑Salem State University	0
	General Administration	(5,396,824)
	University Institutional Programs	141,936,597
	Related Educational Programs	0
	North Carolina School of Science and Mathematics	52,250
	UNC Hospitals at Chapel Hill	                   0
Total University of North Carolina Board of Governors	$	120,570,340

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Office of the Secretary	$	(56,346,653)
	Division of Aging	5,541,765
	Division of Blind Services/Deaf/HH	0
	Division of  Child Development	25,561,908
	Division of Education Services	996,783
	Division of Facility Services	0
	Division of Medical Assistance	(106,150,000)
	Division of Mental Health	57,068,476
	NC Health Choice	0
	Division of Public Health	26,214,501
	Division of Social Services	17,319,957
	Division of Vocation Rehabilitation	                   0
Total Health and Human Services	$	(29,793,263)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	$	3,748,123

Department of Commerce
	Commerce	20,312,483
	Commerce State‑Aid	10,453,138
	NC Biotechnology Center	4,000,000
	Rural Economic Development Center	0

Department of Environment and Natural Resources
	Environment and Natural Resources	13,615,057
	Clean Water Management Trust Fund	0

Department of Labor	613,894

JUSTICE AND PUBLIC SAFETY

Department of Correction	$	36,877,659

Department of Crime Control and Public Safety	6,623,243

Judicial Department	26,734,418
	Judicial Department – Indigent Defense	6,985,055

Department of Justice	4,728,270

Department of Juvenile Justice and Delinquency Prevention	3,554,520

GENERAL GOVERNMENT

Department of Administration	$	4,208,759

Office of Administrative Hearings	281,367

Department of State Auditor	57,564

Office of State Controller	0

Department of Cultural Resources
	Cultural Resources	4,210,053
	Roanoke Island Commission	0

State Board of Elections	634,791

General Assembly	168,346

Office of the Governor
	Office of the Governor	100,000
	Office of State Budget and Management	409,938
	OSBM – Reserve for Special Appropriations	1,353,253
	Housing Finance Agency	17,125,000

Department of Insurance
	Insurance	388,398
	Insurance – Volunteer Safety Workers' Compensation	0

Office of Lieutenant Governor	88,433

Department of Revenue	1,279,782

Department of Secretary of State	468,067

Department of State Treasurer
State Treasurer	281,784
State Treasurer – Retirement for Fire and Rescue Squad Workers	514,000

TRANSPORTATION

Department of Transportation	$	0

RESERVES, ADJUSTMENTS AND DEBT SERVICE

Reserve for Compensation Increases	$	693,676,935

Reserve for Teachers' and State Employees' Retirement Contributions	29,650,000

Retirement System Payback	30,000,000

Information Technology Fund	42,087,229

Reserve for Heating and Cooling Assistance	10,000,000

Trust Fund for MH/DD/SAS	24,205,000

State Emergency Response Account	20,000,000

Targeted County Medicaid Relief	35,000,000

Pending Ethics Legislation (HB 1843 & HB 1844)	422,871

Economic Development Initiatives	10,000,000

Higher Education and County Programs/Facilities	59,825,000

Debt Service
	General Debt Service	(50,000,000)
	Federal Reimbursement	0

ADJUSTMENTS TO APPROPRIATIONS – GENERAL FUND	$	1,352,754,041

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  Section 2.2(a) of S.L. 2005‑276 is repealed. The General Fund availability used in adjusting the 2006‑2007 budget is shown below:

	FY 2006‑2007
Unappropriated Balance from FY 2005-06, S.L. 2005-276	117,227,875
	Net Adjustments - S.L. 2005-345 	(4,148,833)
	Net Adjustments - S.L. 2005-435, S.L. 2005-406, 
		S.L. 2005-376, S.L. 2005-391 	(5,826,000)
	Adjustment From Estimated to Actual 2005-2006 
		Beginning Unreserved Balance	6,133,946
Revised Unappropriated Balance Remaining 2005-2006	$	113,386,988

Emergency Appropriation for 		Department of Correction, S.L. 2006-2	(15,000,000)
Projected Reversions from FY 2005‑2006	125,000,000
Projected Over Collections from FY 2005‑2006	1,072,100,000
Year End Unreserved Credit Balance before Earmarkings	$	1,295,486,988

Credit to Savings Reserve	$	(323,871,747)
Credit to Repairs and Renovation Reserve Account	(210,955,188)
Revised Year End Unreserved Credit Balance	$	760,660,053

Revenues Based on Existing Tax Structure	$	16,951,416,000

Nontax Revenues	
	Investment Income	$	78,700,000
	Judicial Fees	168,605,271
	Disproportionate Share	100,000,000
	Insurance	51,543,813
	Other Nontax Revenues	202,719,921
	Highway Trust Fund Transfer	252,663,009
	Highway Fund Transfer	0
Subtotal Nontax Revenues	$	854,232,014

Total General Fund Availability	$	18,566,308,067

Adjustments to Availability:  2006 Session	
	Baseline Revenue Forecast	$	698,864,995
	Sales Tax Reduction from 
		4.5% to 4.25% – January 1, 2007	(118,000,000)
	Upper Income Tax from 
		8.25% to 8.125% – January 1, 2007	(14,300,000)
	Small Business Health Insurance Tax Credit	(10,800,000)
	529 Plan Tax Deduction	(2,000,000)
	IRC Update Conformance	(5,100,000)
	Mill Rehabilitation Tax Credit	(2,800,000)
	Taxation of Logging Machinery	(2,900,000)
	Bill Lee Adjustments	(800,000)
	Aviation Fuel Credit Sunset – January 1, 2007	(90,000)
	Tax Incentive for Ethyl Alcohol Sales	(50,000)
	Joint Filing Options	(1,000,000)
	Research & Development Sales Tax Rate Change	(4,100,000)
	Reduce Transfer to Highway Trust Fund	(195,176,407)
	Adjust Transfer from Insurance Regulatory Fund 	388,398
	Adjust Transfer from Treasurer's Office	281,784
	Transfer from Master Settlement Agreement Funds	6,300,000
Subtotal Adjustments to Availability:  2006 Session	$	348,718,770

Revised General Fund Availability for 2006‑2007 Fiscal Year	$	18,915,026,837

Total General Fund Appropriations 
			for 2006‑2007 Fiscal Year	(18,915,026,837)

Unappropriated Balance Remaining	$	0

SECTION 2.2.(b)  Notwithstanding G.S. 143‑15.2 and G.S. 143‑15.3A, the State Controller shall transfer two hundred ten million nine hundred fifty‑five thousand one hundred eighty‑eight dollars ($210,955,188) from the unreserved credit balance to the Repairs and Renovations Reserve Account on June 30, 2006.  This subsection becomes effective June 30, 2006.
SECTION 2.2.(c)  Funds transferred under this section to the Repairs and Renovations Reserve Account are appropriated for the 2006‑2007 fiscal year to be used in accordance with G.S. 143‑15.3A.
SECTION 2.2.(d)  Section 2.2(e) of S.L. 2005‑276 is repealed effective June 30, 2006.  This subsection becomes effective June 30, 2006
SECTION 2.2.(e) Section 2.2.(f) of S.L. 2005‑276 reads as rewritten:
"SECTION 2.2.(f)  Notwithstanding G.S. 105‑187.9(b)(1), the sum to be transferred under that subdivision for the 2005‑2006 fiscal year is two hundred fifty million dollars ($250,000,000) and for the 2006‑2007 fiscal year is fifty‑five million dollars ($55,000,000)."
SECTION 2.2.(f)  Pursuant to G.S. 105‑187.9(b)(2), the sum to be transferred under that subdivision for the 2006‑2007 fiscal year is two million four hundred eighty‑six thousand six hundred two dollars ($2,486,602).

PART iII. current operations and expansion/highway fund

CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND
SECTION 3.1.  Appropriations from the Highway Fund of the State for maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the fiscal year ending June 30, 2007, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Fund Appropriations for the 2006‑2007 fiscal year.

Current Operations – Highway Fund		2006‑2007
Department of Transportation
	Administration			$	0

Division of Highways
	Administration		0
	Construction		39,439,500
	Maintenance		188,824,200
	Planning and Research		0
	OSHA Program		0

Aeronautics		2,000,000

Ferry Operations		1,000,000

State Aid
	Municipalities		1,439,500
	Public Transportation		(14,000,000)
	Railroads		3,198,750

Governor's Highway Safety		0
Division of Motor Vehicles		1,386,701
Other State Agencies		1,462,420
Reserves and Transfers		30,080,000

TOTAL					$254,831,071

HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund availability used in developing the 2005‑2007 biennial budget is shown below:

Highway Fund Availability Statement		2006‑2007

Beginning Credit Balance		26,600,000
Estimated Revenue		1,767,140,000

Total Highway Fund Availability		$ 1,793,740,000

PART iv. highway trust fund appropriations

HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 4.1.  Appropriations from the Highway Trust Fund of the State for maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the fiscal year ending June 30, 2007, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Trust Fund Appropriations for the 2006‑2007 fiscal year.

Current Operations – Highway Trust Fund		2006‑2007
		
Intrastate System		100,567,595
Urban Loops		40,665,346
Aid to Municipalities		10,551,886
Secondary Roads 		9,271,360
Program Administration		(1,189,780)
Transfer to General Fund		(195,176,407)
		
Grand Total Current Operations 
	and Expansion		($35,310,000)

PART V. BLOCK GRANTS

 DHHS BLOCK GRANTS
SECTION 5.1.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2007, according to the following schedule:

TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT 

Local Program Expenditures

Division of Social Services

01.	Work First Family Assistance (Cash Assistance)	$108,000,000

02.	Work First County Block Grants	94,653,315

03.	Child Protective Services – Child Welfare
	Workers for Local DSS	12,452,391

04.	Work First – Boys and Girls Clubs	1,500,000

05.	Work First – After‑School Services for
	At‑Risk Children	2,249,642

06.	Work First – After‑School Programs for
At‑Risk Youth in Middle Schools	500,000

07.	Child Welfare Collaborative	1,000,000

08.	Work First – Work Central	550,000

09.	Adoption Services – Special Children's
Adoption Fund	3,000,000

10.	Family Violence Prevention	2,200,000

11.	Foster Care	2,000,000

12.	Child and Family Mental Health Services	4,000,000

13.	Emergency Housing Assistance	4,000,000

Division of Child Development

14.	Subsidized Child Care Program	53,237,268

DHHS Administration

15.	Division of Social Services	586,931

16.	Office of the Secretary	65,836

17.	Office of the Secretary/DIRM – TANF
	Automation Projects	592,500

18.	Office of the Secretary/DIRM – NC FAST
	Implementation	1,800,000

Transfers to Other Block Grants

Division of Child Development

19.	Transfer to the Child Care and
	Development Fund	81,292,880

Division of Social Services

20.	Transfer to Social Services Block Grant for
	Department of Juvenile Justice and Delinquency
	Prevention – Support Our Students	2,749,642

21.	Transfer to Social Services Block Grant for Child
	Protective Services – Child Welfare Training in
	Counties	2,550,000

22.	Transfer to Social Services Block Grant for
	Maternity Homes	838,000

23.	Transfer to Social Services Block Grant for Teen
	Pregnancy Prevention Initiatives	2,500,000

24.	Transfer to Social Services Block Grant for County
	Departments of Social Services for Children's Services	4,500,000

25.	Transfer to Social Services Block Grant for
	Foster Care Services	1,181,907

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT	$388,000,312

SOCIAL SERVICES BLOCK GRANT

Local Program Expenditures

Divisions of Social Services and Aging and Adult Services

01.	County Departments of Social Services	$ 28,868,189
(Transfer from TANF – $4,500,000)

02.	State In‑Home Services Fund	2,101,113

03.	State Adult Day Care Fund	2,155,301

04.	Child Protective Services/CPS Investigative
	Services‑Child Medical Evaluation Program	238,321

05.	Foster Care Services	1,706,063
	(Transfer from TANF – $1,181,907)

06.	Child Protective Services‑Child Welfare Training
	for Counties	2,550,000
(Transfer from TANF)

07.	Maternity Homes	838,000
(Transfer from TANF)

08.	Local DSS Services for Hurricane Victims	509,272

Division of Aging and Adult Services

09.	Home and Community Care Block Grant (HCCBG)	1,834,077

Division of Mental Health, Developmental Disabilities, and Substance
	Abuse Services

10.	Mental Health Services Program	422,003

11.	Developmental Disabilities Services Program	5,000,000

12.	Mental Health Services‑Adult/Mental Health Services‑
Child/Developmental Disabilities Program/
	Substance Abuse Services‑Adult	3,234,601

Division of Child Development

13.	Subsidized Child Care Program	3,150,000

Division of Vocational Rehabilitation

14.	Vocational Rehabilitation Services – Easter Seal
	Society/UCP	188,263

Office of the Secretary – Office of Economic Opportunity

15.	Elderly Supplemental Grant Program	41,302

Division of Public Health

16.	Teen Pregnancy Prevention Initiatives	2,500,000
(Transfer from TANF)

DHHS Program Expenditures

Division of Aging and Adult Services

17.	UNC‑CARES Training Contract	247,920

Division of Services for the Blind

18.	Independent Living Program	3,314,114

Division of Facility Services

19.	Adult Care Licensure Program	411,897

20.	Mental Health Licensure and Certification Program	205,668

DHHS Administration

21.	Division of Aging and Adult Services	630,636

22.	Division of Social Services	869,058

23.	Office of the Secretary/Controller's Office	123,059

24.	Office of the Secretary/DIRM	82,009

25.	Division of Child Development	15,000

26.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	18,098

27.	Division of Facility Services	62,986

28.	Office of the Secretary‑NC Inter‑Agency Council
	For Coordinating Homeless Programs	250,000

29.	Office of the Secretary‑Housing Coalition	100,000

Transfers to Other State Agencies

Department of Administration

30.	NC Commission of Indian Affairs In‑Home
	Services for the Elderly	203,198

Department of Juvenile Justice and Delinquency Prevention

31.	Support Our Students	2,749,642
	(Transfer from TANF)

Transfers to Other Block Grants

Division of Public Health

32.	Transfer to Preventive Health Services Block Grant for
	HIV/STD Prevention and Community Planning	145,819

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 64,765,609

LOW‑INCOME ENERGY BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low Income Energy Assistance Program (LIHEAP)	$ 28,684,494

02.	Crisis Intervention Program (CIP)	20,831,114

Office of the Secretary – Office of Economic Opportunity

03.	Weatherization Program	9,431,545

04.	Heating Air Repair & Replacement Program (HARRP)	4,399,042

Local Administration

Division of Social Services

05.	County DSS Administration	2,057,992

Office of the Secretary – Office of Economic Opportunity

06.	Local Residential Energy Efficiency Service
	Providers – Weatherization	257,185

07.	Local Residential Energy Efficiency Service
	Providers – HARRP	119,955

DHHS Administration

08.	Division of Social Services	319,774

09.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	7,146

10.	Office of the Secretary/DIRM	245,395

11.	Office of the Secretary/Controller's Office	11,211

12.	Office of the Secretary/Office of Economic
	Opportunity – Weatherization	257,185

13.	Office of the Secretary/Office of Economic
	Opportunity – HARRP	119,955

Transfers to Other State Agencies

14.	Department of Administration – 
N.C. State Commission of Indian Affairs	58,455

TOTAL LOW‑INCOME ENERGY BLOCK GRANT	$ 66,800,448

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development

01.	Subsidized Child Care Services	$165,102,685

02.	Subsidized Child Care Services
	(TANF to CCDF)	81,292,880

DHHS Program Expenditures

Division of Child Development

03.	Quality and Availability Initiatives	34,951,707

Local Administrations

Division of Child Development

04.	Administrative Expenses (Non‑Direct Subsidy
	Services Support)	1,849,000

DHHS Administration

05.	DCD Administrative Expenses	6,028,354

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$289,224,626

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Adult	$ 7,184,481

02.	Mental Health Services – Child	3,921,991

03.	Comprehensive Treatment Service
Program	1,500,000

Local Administration

04.	Division of Mental Health	100,000

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 12,706,472

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

Local Program Expenditures

01.	Substance Abuse Services – Adult	$ 20,537,390

02.	Substance Abuse Treatment Alternative for
	Women	8,069,524

03.	Substance Abuse – HIV and IV Drug	4,816,378

04.	Substance Abuse Prevention – Child	5,835,701

05.	Substance Abuse Services – Child	4,940,500

06.	Substance Abuse Strengthening Families – 
	Prevention	851,156

Division of Public Health

07.	Risk Reduction Projects	383,980

08.	Aid‑to‑Counties	209,576

09.	Maternal Health	37,779

DHHS Administration

10.	Division of Mental Health	500,000

TOTAL SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT	$ 46,181,984

MATERNAL AND CHILD HEALTH BLOCK GRANT

Local Program Expenditures

Division of Public Health

01.	Healthy Mothers/Healthy Children	9,359,236

02.	Children's Health Services	4,114,216

03.	Healthy Beginnings	404,559

04.	Maternal Health	397,761

05.	Teen Pregnancy Prevention Initiatives	85,710

DHHS Program Expenditures

Division of Public Health

06.	Children's Health Services	3,149,826

07.	Maternal Health	185,488

08.	State Center for Health Statistics	29,432

09.	Local Technical Assistance & Training	47,424

10.	Injury and Violence Prevention	149,438

11.	Office of Minority Health	98,236

12.	Special Supplemental Nutrition Program
	for Women, Infants, and Children (WIC)	22,856

13.	Immunization Program – Vaccine Distribution	414,175

DHHS Administration

14.	Division of Public Health Administration	550,681

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 19,009,038

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	NC Statewide Health Promotion	$1,755,653

02.	Services to Rape Victims	197,112

03.	HIV/STD Prevention and Community Planning
	(Transfer from Social Services Block Grant)	145,819

DHHS Program Expenditures

04.	NC Statewide Health Promotion	431,444

05.	Oral Health	114,251

06.	Osteoporosis Program	67,593

DHHS Administration

07.	Division of Public Health	109,211

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$2,821,083

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity – Community Services Block Grant

01.	Community Action Agencies	$ 15,071,666

02.	Limited Purpose Agencies	823,261

DHHS Administration

03.	Office of Economic Opportunity	823,261

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 16,718,188

GENERAL PROVISIONS
SECTION 5.1.(b)  Information To Be Included in Block Grant Plans. – The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department, and each plan shall include the following:
(1)	A delineation of the proposed allocations by program or activity, including State and federal match requirements.
(2)	A delineation of the proposed State and local administrative expenditures.
(3)	An identification of all new positions to be established through the Block Grant, including permanent, temporary, and time‑limited positions.
(4)	A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.
(5)	A projection of current year expenditures by program or activity.
(6)	A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.
SECTION 5.1.(c)  Changes in Federal Fund Availability. – If the Congress of the United States increases the federal fund availability for any of the Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall allocate the increase proportionally across the program and activity appropriations identified for that Block Grant in this section.  In allocating an increase in federal fund availability, the Department shall not propose funding for new programs or activities not appropriated in this section or increase State administrative expenditures.
If the Congress of the United States decreases the federal fund availability for any of the Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall reduce State administration by at least the percentage of the reduction in federal funds. After determining the State administration, the remaining reductions shall be allocated proportionately across the program and activity appropriations identified for that Block Grant in this section. In allocating a decrease in federal fund availability, the Department shall not eliminate the funding for a program or activity appropriated in this section unless it is related to the State administration.
Prior to allocating the change in federal fund availability, the proposed allocation must be approved by the Office of State Budget and Management. If the Department adjusts the allocation of any Block Grant due to changes in federal fund availability, then a report shall be made to the Joint Legislative Commission on Governmental Operations, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(d)  All changes to the budgeted allocations to the Block Grants administered by the Department of Health and Human Services that are not specifically addressed in this section shall be approved by the Office of State Budget and Management, and a report shall be submitted to the Joint Legislative Commission on Governmental Operations for review prior to implementing the changes. All changes to the budgeted allocations to the Block Grant shall be reported immediately to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division. This subsection does not apply to block grant changes caused by legislative salary increases and benefit adjustments.
SECTION 5.1.(e)  The Department of Health and Human Services shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on positions funded from federal Block Grants. The report shall include the following for each Block Grant:
(1)	All State positions currently funded through the Block Grant, including permanent, temporary, and time‑limited positions.
(2)	Budgeted salary and fringe benefits for each position.
(3)	Identify the percentage of Block Grant funds used to fund each position.
The report shall be submitted no later than December 1, 2006.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT (TANF)
SECTION 5.1.(f)  The sum of five hundred eighty‑six thousand nine hundred thirty‑one dollars ($586,931) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 5.1.(g)  The sum of two million two hundred thousand dollars ($2,200,000) appropriated under this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to provide domestic violence services to Work First recipients.  These funds shall be used to provide domestic violence counseling, support, and other direct services to clients.  These funds shall not be used to establish new domestic violence shelters or to facilitate lobbying efforts.  The Division of Social Services may use up to seventy‑five thousand dollars ($75,000) in TANF funds to support one administrative position within the Division of Social Services to implement this subsection.
Each county department of social services and the local domestic violence shelter program serving the county shall jointly develop a plan for utilizing these funds. The plan shall include the services to be provided and the manner in which the services shall be delivered. The county plan shall be signed by the county social services director or the director's designee and the domestic violence program director or the director's designee and submitted to the Division of Social Services by December 1, 2006. The Division of Social Services, in consultation with the Council for Women, shall review the county plans and shall provide consultation and technical assistance to the departments of social services and local domestic violence shelter programs, if needed.
The Division of Social Services shall allocate these funds to county departments of social services according to the following formula:  (i) each county shall receive a base allocation of five thousand dollars ($5,000); and (ii) each county shall receive an allocation of the remaining funds based on the county's proportion of the statewide total of the Work First caseload as of July 1, 2006, and the county's proportion of the statewide total of the individuals receiving domestic violence services from programs funded by the Council for Women as of July 1, 2006. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.
SECTION 5.1.(h)  The sum of two million two hundred forty‑nine thousand six hundred forty‑two dollars ($2,249,642) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to expand after‑school programs and services for at‑risk children. The Department shall develop and implement a grant program to award grants to community‑based programs that demonstrate the ability to reach children at risk of teen pregnancy, school dropout, and gang participation. The Department shall award grants to community‑based organizations that demonstrate the ability to develop and implement linkages with local departments of social services, area mental health programs, schools, and other human services programs in order to provide support services and assistance to the child and family. These funds may be used to fund one position within the Division of Social Services to coordinate at‑risk after‑school programs and shall not be used for other State administration.
SECTION 5.1.(i)  The sum of twelve million four hundred fifty‑two thousand three hundred ninety‑one dollars ($12,452,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year for child welfare improvements, shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and postadoption services for eligible families.
SECTION 5.1.(j)  The sum of three million dollars ($3,000,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Special Children Adoption Fund, for the 2006‑2007 fiscal year shall be used in accordance with Section 10.48 of S.L. 2005‑276.  The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services program. No local match shall be required as a condition for receipt of these funds.
SECTION 5.1.(k)  The sum of one million eight hundred thousand dollars ($1,800,000) in this section appropriated to the Department of Health and Human Services in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to implement N.C. FAST (North Carolina Families Accessing Services through Technology). The N.C. FAST Program involves the entire automation initiative through which families access services and local departments of social services deliver benefits, supervised by the Department of Health and Human Services, Divisions of Social Services, Aging and Adult Services, Medical Assistance, and Child Development. The statewide automated initiative shall be implemented in compliance with federal regulations in order to ensure federal financial participation in the project. The Department of Health and Human Services shall report on its compliance with this subsection to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than January 1, 2007.
SECTION 5.1.(l)  The sum of five hundred thousand dollars ($500,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to expand after‑school programs for at‑risk children attending middle school. The Department shall develop and implement a grant program to award funds to community‑based programs demonstrating the capacity to reach children at risk of teen pregnancy, school dropout, and gang participation. These funds shall not be used for training or administration at the State level. All funds shall be distributed to community‑based programs, focusing on those communities where similar programs do not exist in middle schools.
SECTION 5.1.(m)  In implementing the TANF Block Grant, the Department of Health and Human Services shall review policies, programs, and initiatives to ensure that they support men in their role as fathers and strengthen fathers' involvement in their children's lives.  The Department shall encourage county departments of social services to ensure their Work First programs emphasize responsible fatherhood and increased participation by noncustodial fathers.
SECTION 5.1.(n)  The sum of five hundred fifty thousand dollars ($550,000) appropriated in this section to the Department of Health and Human Services in the TANF Block Grant for the 2006‑2007 fiscal year shall be transferred to Work Central, Inc. Work Central, Inc., shall report on the number of people served and the services received as a result of the receipt of funds. The report shall contain expenditure data, including the amount of funds used for administration and direct training. The report shall also include the number of people who have been employed as a direct result of services provided by Work Central, Inc., including the length of employment in the new position. The Department of Health and Human Services shall evaluate the program and ensure that services provided are not duplicative of local employment security commissions in the nine counties served by Work Central, Inc. The evaluation report shall be submitted to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than May 1, 2007.
SECTION 5.1.(o)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section to the Department of Health and Human Services in the Social Services Block Grant for Boys and Girls Clubs for the 2006‑2007 fiscal year shall be used to make grants for approved programs. The Department of Health and Human Services, in accordance with federal regulations for the use of Social Services Block Grant funds, shall administer a grant program to award funds to the Boys and Girls Clubs across the State in order to implement programs that improve the motivation, performance, and self‑esteem of youths and to implement other initiatives that would be expected to reduce gang participation, school dropout, and teen pregnancy rates. The Department shall encourage and facilitate collaboration between the Boys and Girls Clubs and Support Our Students, Communities in Schools, and similar programs to submit joint applications for the funds if appropriate.
SECTION 5.1.(p)  The sum of four million dollars ($4,000,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to increase work participation rates by providing substance abuse and mental health services.  The services shall be provided to families and children with child welfare issues and mental health or substance abuse problems that are an impediment to work.  The Division of Social Services shall work with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services in the development and implementation of this program.
SECTION 5.1.(q)  The sum of four million dollars ($4,000,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to increase work participation rates by providing targeted emergency housing assistance for families and children receiving TANF.  The funds shall be used to provide short‑term rent assistance or security deposits for families to maintain stable housing, transition from homelessness, or prevent homelessness, including domestic violence situations. The Division of Social Services shall work with the North Carolina Housing Finance Agency in the development and implementation of this program.
SECTION 5.1.(r)  The sum of one million dollars ($1,000,000) appropriated in this section to the Child Welfare Collaborative in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to provide service awards for students receiving undergraduate or graduate degrees in social work.
SECTION 5.1.(s)  It is the intent of the General Assembly that effective beginning with the 2007‑2008 fiscal year, North Carolina counties will use county funding to replace any lost TANF and Maintenance of Effort (MOE) funds resulting from North Carolina being penalized for not meeting work participation rates in the 2006‑2007 fiscal year and thereafter.  The Department of Health and Human Services, Division of Social Services, shall develop a plan for implementation of county penalty payments.  The Department shall report on its development and implementation of the plan to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than April 1, 2007.

SOCIAL SERVICES BLOCK GRANT
SECTION 5.1.(t)  Social Services Block Grant funds appropriated to the North Carolina Inter‑Agency Council for Coordinating Homeless Programs and the North Carolina Housing Coalition are exempt from the provisions of 10A NCAC 71R.0201(3).
SECTION 5.1.(u)  The sum of two million seven hundred forty‑nine thousand six hundred forty‑two dollars ($2,749,642) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services and transferred to the Department of Juvenile Justice and Delinquency Prevention for the 2006‑2007 fiscal year shall be used to support the existing Support Our Students Program, including gang prevention, and to expand the Program statewide, focusing on low‑income communities in unserved areas. These funds shall not be used for administration of the Program.
SECTION 5.1.(v)  The sum of two million five hundred fifty thousand dollars ($2,550,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to support various child welfare training projects as follows:
(1)	Provide a regional training center in southeastern North Carolina.
(2)	Support the Masters Degree in Social Work/Baccalaureate Degree in Social Work Collaborative.
(3)	Provide training for residential child care facilities.
(4)	Provide for various other child welfare training initiatives.
SECTION 5.1.(w)  The sum of eight hundred thirty‑eight thousand dollars ($838,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services for the 2006‑2007 fiscal year shall be used to purchase services at maternity homes throughout the State.
SECTION 5.1.(x)  The sum of one million seven hundred six thousand sixty‑three dollars ($1,706,063) appropriated in this section in the Social Services Block Grant for child caring agencies for the 2006‑2007 fiscal year shall be allocated to the State Private Child Caring Agencies Fund.
SECTION 5.1.(y)  The Department of Health and Human Services is authorized, subject to the approval of the Office of State Budget and Management, to transfer Social Services Block Grant funding allocated for departmental administration between divisions that have received administrative allocations from the Social Services Block Grant.

LOW‑INCOME HOME ENERGY ASSISTANCE PROGRAM
SECTION 5.1.(z)  Additional emergency contingency funds received may be allocated for Energy Assistance Payments or Crisis Intervention Payments without prior consultation with the Joint Legislative Commission on Governmental Operations. Additional funds received shall be reported to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division upon notification of the award. The Department of Health and Human Services shall not allocate funds for any activities, including increasing administration, other than assistance payments, without prior consultation with the Joint Legislative Commission on Governmental Operations.

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
SECTION 5.1.(aa)  The sum of no more than four hundred thousand dollars ($400,000) appropriated in this section to the Department of Health and Human Services in the Child Care and Development Fund Block Grant for the 2006‑2007 fiscal year may be used for the operations of the Medical Child Care Pilot.
SECTION 5.1.(bb)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 5.1.(cc)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.

MENTAL HEALTH BLOCK GRANT
SECTION 5.1.(dd)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section in the Mental Health Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2006‑2007 fiscal year, and the sum of four hundred twenty‑two thousand three dollars ($422,003) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to continue a Comprehensive Treatment Services Program for Children in accordance with Section 10.25 of S.L. 2005‑276.
SECTION 5.1.(ee)  The Department of Health and Human Services shall contract with the University of North Carolina at Chapel Hill for the purpose of providing psychology student stipends in the amount of fifty thousand dollars ($50,000) for the 2006‑2007 fiscal year. Twenty‑five thousand dollars ($25,000) of this contract shall be paid from the Mental Health Block Grant.

MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 5.1.(ff)  If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104‑193 (42 U.S.C. § 710), for the 2006‑2007 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an Abstinence Until Marriage Education Program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C‑81(e1)(4). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
SECTION 5.1.(gg)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.

NER BLOCK GRANTS
SECTION 5.2.(a)  Appropriations from federal block grant funds are made for fiscal year ending June 30, 2007, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

	01.	State Administration	$	1,000,000

	02.	Urgent Needs and Contingency	1,000,000

	03.	Scattered Site Housing	13,200,000

	04.	Economic Development	8,710,000

	05.	Community Revitalization	13,500,000

	06.	State Technical Assistance	450,000

	07.	Housing Development	2,000,000

	08.	Infrastructure	5,140,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2007 Program Year	$	45,000,000

SECTION 5.2.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 5.2.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 5.2.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million dollars ($1,000,000) may be used for State Administration; not less than one million dollars ($1,000,000) may be used for Urgent Needs and Contingency; up to thirteen million two hundred thousand dollars ($13,200,000) may be used for Scattered Site Housing; up to eight million seven hundred ten thousand dollars ($8,710,000) may be used for Economic Development, including Urban Redevelopment Grants and Small Business or Entrepreneurial Assistance; not less than thirteen million five hundred thousand dollars ($13,500,000) shall be used for Community Revitalization; up to four hundred fifty thousand dollars ($450,000) may be used for State Technical Assistance; up to two million dollars ($2,000,000) may be used for Housing Development; up to five million one hundred forty thousand dollars ($5,140,000) may be used for Infrastructure. If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 5.2.(e)  Increase Capacity for Nonprofit Organizations. – Assistance to nonprofit organizations to increase their capacity to carry out CDBG‑eligible activities in partnership with units of local government is an eligible activity under any program category in accordance with federal regulations.  Capacity building grants may be made from funds available within program categories, program income, or unobligated funds.
SECTION 5.2.(f)  The Department of Commerce will create a small business/entrepreneurship program in coordination with micro‑lending programs and other small business assistance groups in the State.  The Department of Commerce shall award up to one million dollars ($1,000,000) in grants to local governments to provide assistance to low‑to‑moderate income individuals for small business and entrepreneurship development.
SECTION 5.2.(g)  The Department of Commerce shall consult with the Joint Legislative Commission on Governmental Operations prior to reallocating Community Development Block Grant Funds.  Notwithstanding the provisions of this subsection, whenever the Director of the Budget finds that:
(1)	A reallocation is required because of an emergency that poses an imminent threat to public health or public safety, the Director of the Budget may authorize the reallocation without consulting the Commission. The Department of Commerce shall report to the Commission on the reallocation no later than 30 days after it was authorized and shall identify in the report the emergency, the type of action taken, and how it was related to the emergency.
(2)	The State will lose federal block grant funds or receive less federal block grant funds in the next fiscal year unless a reallocation is made, the Department of Commerce shall provide a written report to the Commission on the proposed reallocation and shall identify the reason that failure to take action will result in the loss of federal funds. If the Commission does not hear the issue within 30 days of receipt of the report, the Department may take the action without consulting the Commission.

PART VI. general provisions

CONTINGENCY AND EMERGENCY FUND ALLOCATIONS
SECTION 6.1.(a)  Section 6.2 of S.L. 2005‑276 is repealed.
SECTION 6.1.(b)  Funds in the amount of five million dollars ($5,000,000) for the 2006‑2007 fiscal year are appropriated to the Contingency and Emergency Fund.  Except as provided in subsection (c) of this section, these funds shall be expended only as:
(1)	Required by a court, Industrial Commission, or administrative hearing officer's order;
(2)	Required to call out the national guard; or
(3)	Required to respond to an unanticipated disaster such as a fire, hurricane, or tornado, if funds for this purpose are not available in the Reserve for Disaster Expenses as authorized in G.S. 166A.
SECTION 6.1.(c)  Up to five hundred thousand dollars ($500,000) may be spent for purposes other than those set out in subsection (b) of this section. Notwithstanding any other provision of law authorizing expenditures from the Contingency and Emergency Fund, no more than five hundred thousand dollars ($500,000) of these funds shall be expended for purposes other than those set out in subsection (b) of this section.

STATE EMERGENCY RESPONSE ACCOUNT
SECTION 6.5.(a)  G.S. 166A‑6.01(b)(2) reads as rewritten:
"(b)	Disaster Assistance Programs – Type I Disaster. – In the event that a Type I disaster is proclaimed, the Governor may make State funds available for disaster assistance in the disaster area in the form of individual assistance and public assistance as provided in this subsection.
…
(2)	Public assistance. – State disaster assistance in the form of public assistance grants may be made available to eligible entities located within the disaster area on the following terms and conditions:
a.	Eligible entities shall meet the following qualifications:
1.	The eligible entity suffers a minimum of ten thousand dollars ($10,000) in uninsurable losses;
2.	The eligible entity suffers uninsurable losses in an amount equal to or exceeding one percent (1%) of the annual operating budget;
3.	For a state of disaster proclaimed pursuant to G.S. 166A‑6(a) after the deadline established by the Federal Emergency Management Agency pursuant to the Disaster Mitigation Act of 2002, P.L. 106‑390, the eligible entity shall have a hazard mitigation plan approved pursuant to the Stafford Act; and
4.	For a state of disaster proclaimed pursuant to G.S. 166A‑6(a) after August 1, 2002, the eligible entity shall be participating in the National Flood Insurance Program in order to receive public assistance for flooding damage.
b.	Eligible entities shall be required to provide non‑State matching funds equal to twenty‑five percent (25%) of the eligible costs of the public assistance grant.
c.	An eligible entity that receives a public assistance grant pursuant to this subsection may use the grant for the following purposes only:
1.	Debris clearance.
2.	Emergency protective measures.
3.	Roads and bridges.
4.	Crisis counseling.
5.	Assistance with public transportation needs."
SECTION 6.5.(b)  Article 1 of Chapter 166A of the General Statutes is amended by adding a new section to read:
"§ 166A‑6.02.  State Emergency Response Account.
(a)	Account Established. – There is established a State Emergency Response Account as a reserve in the General Fund. Any funds appropriated to the Account shall remain available for expenditure as provided by this section, unless directed otherwise by the General Assembly.
(b)	Purpose of Funds. – The Governor may spend funds from the Account for the following purposes:
(1)	To cover the start‑up costs of State Emergency Response Team operations for an emergency that poses an imminent threat of a Type I, Type II, or Type III disaster as defined by G.S. 166A‑6.
(2)	To cover the cost of first responders to a Type I, Type II, or Type III disaster and any related supplies and equipment needed by first responders that are not provided for under subdivision (1) of this subsection.
All other types of disaster assistance authorized by G.S. 166A‑6 shall continue to be financed by the funds made available under G.S. 166A‑6.01.
(c)	Reporting Requirement. – The Governor shall report to the Joint Legislative Commission on Governmental Operations and to the Chairs of the Appropriations Committees of the Senate and House of Representatives on any expenditures from the State Emergency Response Account no later than 30 days after making the expenditure. The report shall include a description of the emergency and type of action taken."
SECTION 6.5.(c)  G.S. 166A‑4(1) reads as rewritten:
"(1a)	Disaster. – An occurrence or imminent threat of widespread or severe damage, injury, or loss of life or property resulting from any natural or man‑made accidental, military or paramilitary cause."
SECTION 6.5.(d)  G.S. 166A‑4 is amended by adding a new subdivision to read:
"(1)	Account. – The State Emergency Response Account  established in G.S. 166A‑6.02."

INFORMATION TECHNOLOGY FUND AVAILABILITY AND APPROPRIATIONS
SECTION 6.6.(a)  Section 6.13(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 6.13.(a)  The availability used to support appropriations made in this act from the Information Technology Fund established in G.S. 147‑33.72H is as follows:
	FY 2005‑2006	FY 2006‑2007
Estimated Information Technology Fund Balance,
June 30, 2006		$4,212,225

Receipts from Information Technology
	Enterprise Fee (G.S. 147‑33.82)	$5,000,000	$5,000,000

Transfer from June 30, 2005, Information Technology 
	Services Internal Service Fund cash balance to 
		support statewide IT initiatives	$5,000,000

		Appropriation from General Fund	$24,375,000	$50,112,229

Total Funds Available	$34,375,000	$59,324,454."
SECTION 6.6.(b)  Appropriations from the Information Technology Fund established in G.S. 147‑33.72H are adjusted for the fiscal year ending June 30, 2007, as follows:

Appropriations based on S.L. 2005-276, Section 6.14	$	13,025,000
ITS Operating Expenses	$	3,108,326
BEACON	$	43,191,129
Total Appropriation 2006-2007	$	59,324,454

AMEND CIVIL PENALTY AND FORFEITURE FUND AVAILABILITY
SECTION 6.9.(a)  Section 6.37(a) of S. L. 2005‑276 reads as rewritten:
"SECTION 6.37.(a) Availability. – The availability used to support appropriations made in this act from the Civil Penalty and Forfeiture Fund is based upon estimated collections of fines and forfeitures from the agencies and in the amounts listed below:
				FY 2005‑2006	FY 2006‑2007
Department of Revenue	$ 80,000,000	$ 	63,000,000
Department of Transportation	$ 15,000,000	$ 15,000,000
Employment Security Commission	$ 3,000,000	$ 3,000,000
Department of Insurance	$ 3,000,000	$ 	1,000,000
University of North Carolina	$ 5,000,000	$ 	3,500,000
Other Agencies	$ 14,500,000	$ 	10,000,000
Total Funds Available	$ 120,500,000	$ 	95,500,000"
SECTION 6.9.(b) Section 6.37(b) of S.L. 2005‑276 reads as rewritten: 
"SECTION 6.37.(b)  Appropriations. – Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2007, as follows:
	2005‑2006	2006‑2007
School Technology Fund	$ 18,000,000	$ 18,000,000
State Public School Fund	$ 102,500,000	$ 	77,500,000
Total Appropriation	$ 120,500,000	$ 	95,500,000"
SECTION 6.9.(c)  G.S. 115C‑457.2  reads as rewritten:
"§ 115C‑457.2. Remittance of moneys to the Fund.
The clear proceeds of all civil penalties, civil forfeitures, and civil fines that are collected by a State agency and that the General Assembly is authorized to place in a State fund pursuant to Article IX, Section 7(b) of the Constitution shall be remitted to the Office of State Budget and Management by the officer having custody of the funds within 10 days after the close of the calendar month in which the revenues were received or collected. Notwithstanding any other law, all such funds shall be deposited in the Civil Penalty and Forfeiture Fund. The clear proceeds of these funds include the full amount of all civil penalties, civil forfeitures, and civil fines collected under authority conferred by the State, diminished only by the actual costs of collection, not to exceed twenty percent (20%) of the amount collected. The collection cost percentage to be used by a State agency shall be established and approved by the Office of State Budget and Management on an annual basis based upon the computation of actual collection costs by each agency for the prior fiscal year."

TARGETED COUNTY MEDICAID RELIEF
SECTION 6.12.  Of the funds appropriated in this act to the Office of State Budget and Management for the 2006‑2007 fiscal year, the sum of thirty‑five million dollars ($35,000,000) in nonrecurring funds for the 2006‑2007 fiscal year shall be reserved and allocated to reduce the county share of the nonfederal share of Medical Assistance Program expenditures, as follows:
(1)	Forty percent (40%) shall be allocated among counties with a Medicaid‑eligible population of twenty‑five percent (25%) or greater of the total county population. The allocation shall be based on a county's percentage of the total Medicaid budget for all counties with a Medicaid‑eligible population of twenty‑five percent (25%) or greater.
(2)	Fifty‑five percent (55%) shall be allocated among counties with a Medicaid‑eligible population of at least fifteen percent (15%) but less than twenty‑five percent (25%) of the total county population. The allocation shall be based on a county's percentage of the total Medicaid budget for all counties with a Medicaid population of at least fifteen percent (15%) but less than twenty‑five percent (25%).
(3)	Five percent (5%) shall be allocated to counties with a Medicaid population of less than fifteen percent (15%) of the total county population. The allocation shall be based on a county's percentage of the total Medicaid budget for all counties with a Medicaid population of less than fifteen percent (15%).

ELIZABETH CITY AVIATION RESEARCH AND DEVELOPMENT COMMERCE PARK
SECTION 6.13.  Of the funds appropriated in this act to the Office of State Budget and Management, the sum of four million dollars ($4,000,000) shall be allocated to the Elizabeth City/Pasquotank County Airport Authority for land acquisition and site development to establish the Elizabeth City Aviation Research and Development Commerce Park.  The Authority shall transfer a minimum of 20 acres of acquired land to Elizabeth City State University, upon request of the Board of Governors of The University of North Carolina, to establish an aviation educational center and aviation educational programs at the Park.

COMMUNITY COLLEGE CAPITAL
SECTION 6.14.(a)  Of the funds appropriated in this act to the Office of State Budget and Management, the sum of forty million dollars ($40,000,000) shall be allocated to the Community Colleges System Office for a Community College Capital Fund to be used for the purpose of awarding grants to community colleges for capital needs. The Community Colleges System Office shall develop a competitive grant application process and guidelines for capital projects and shall award grants on the merit of the applications received. These grants shall be awarded on a matching basis of two State dollars for every one non‑State dollar and no individual grant may exceed the sum of two million dollars ($2,000,000).
SECTION 6.14.(b)  Beginning September 1, 2006, the Community Colleges System Office shall submit a quarterly report to the Office of State Budget and Management and the Fiscal Research Division containing the following information about each capital project that was awarded a grant: (i) the name of the community college; (ii) a description of the project; (iii) the project location; (iv) the cost‑benefit analysis conducted by the Community Colleges System Office and the rationale for awarding the grant; and (v) the amount of the grant.

Education Lottery Fund Revenue and Appropriations
SECTION 6.15.(a)  Pursuant to G.S. 18C‑164, the revenue used to support appropriations made in this act is transferred from the State Lottery Fund in the amount of four hundred twenty‑five million dollars ($425,000,000) for the 2006‑2007 fiscal year.
SECTION 6.15.(b)  The appropriations made from the Education Lottery Fund pursuant to G.S. 18C‑164(d) for the 2006‑2007 fiscal year are as follows:

Class Size Reduction	$	127,864,291
Prekindergarten Program		84,635,709
Public School Building Capital Fund		170,000,000
Scholarships for Needy Students		42,500,000

Total Appropriation	$	425,000,000

ECONOMIC DEVELOPMENT INITIATIVES
SECTION 6.16.(a)  There is established in the Department of Commerce a reserve to be known as the North Carolina Economic Development Reserve Fund. Funds from the Reserve Fund shall not be expended or transferred except in accordance with the provisions of this section.
SECTION 6.16.(b)  Of the funds appropriated in this act to the Department of Commerce, the sum of ten million dollars ($10,000,000) shall be allocated to the North Carolina Economic Development Reserve Fund for the purpose of awarding grants for statewide economic development projects.  The Department of Commerce shall develop a competitive grant application process and guidelines for statewide economic development projects and shall award grants on the merits of the applications received.  No individual grant shall exceed the sum of one million dollars ($1,000,000).
SECTION 6.16.(c)  Beginning September 1, 2006, the Department of Commerce shall submit a quarterly report to the Office of State Budget and Management and the Fiscal Research Division containing the following information about each economic development project that was awarded a grant: (i) the name of the business involved; (ii) a description of the project; (iii) the project location; (iv) the cost‑benefit analysis conducted by the Department and the rationale for awarding the grant; and (v) the amount of the grant.

PART vII. PUBLIC SCHOOLS

TEACHER SALARY SCHEDULES
SECTION 7.1.(a)  Effective for the 2006‑2007 school year, the Director of the Budget shall transfer from the Reserve for Experience Step Salary Increase for Teachers and Principals in Public Schools funds necessary to implement the teacher salary schedules set out in subsection (b) of this section and for longevity in accordance with subsection (c) of this section, including funds for the employer's retirement and social security contributions for all teachers whose salaries are supported from the State's General Fund.
These funds shall be allocated to individuals according to rules adopted by the State Board of Education.
SECTION 7.1.(b)  The following monthly salary schedules shall apply for the 2006‑2007 fiscal year to certified personnel of the public schools who are classified as teachers.  The schedule contains 31 steps with each step corresponding to one year of teaching experience.

2006‑2007 Monthly Salary Schedule
"A" Teachers

Years Of Experience	"A" Teachers	NBPTS Certification
		
	0	$2,851	N/A
	1	$2,893	N/A
	2	$2,937	N/A
	3	$3,093	$3,464
	4	$3,233	$3,621
	5	$3,367	$3,771
	6	$3,496	$3,916
	7	$3,600	$4,032
	8	$3,648	$4,086
	9	$3,697	$4,141
	10	$3,747	$4,197
	11	$3,796	$4,252
	12	$3,847	$4,309
	13	$3,898	$4,366
	14	$3,951	$4,425
	15	$4,005	$4,486
	16	$4,060	$4,547
	17	$4,115	$4,609
	18	$4,174	$4,675
	19	$4,232	$4,740
	20	$4,290	$4,805
	21	$4,352	$4,874
	22	$4,413	$4,943
	23	$4,479	$5,016
	24	$4,543	$5,088
	25	$4,608	$5,161
	26	$4,674	$5,235
	27	$4,742	$5,311
	28	$4,813	$5,391
	29	$4,884	$5,470
	30+	$4,982	$5,580.

2006‑2007 Monthly Salary Schedule
"M" Teachers

	Years Of Experience	"M" Teachers	NBPTS Certification
			
	0	$3,136	N/A
	1	$3,182	N/A
	2	$3,231	N/A
	3	$3,402	$3,810
	4	$3,556	$3,983
	5	$3,704	$4,148
	6	$3,846	$4,308
	7	$3,960	$4,435
	8	$4,013	$4,495
	9	$4,067	$4,555
	10	$4,122	$4,617
	11	$4,176	$4,677
	12	$4,232	$4,740
	13	$4,288	$4,803
	14	$4,346	$4,868
	15	$4,406	$4,935
	16	$4,466	$5,002
	17	$4,527	$5,070
	18	$4,591	$5,142
	19	$4,655	$5,214
	20	$4,719	$5,285
	21	$4,787	$5,361
	22	$4,854	$5,436
	23	$4,927	$5,518
	24	$4,997	$5,597
	25	$5,069	$5,677
	26	$5,141	$5,758
	27	$5,216	$5,842
	28	$5,294	$5,929
	29	$5,372	$6,017
	30+	$5,480	$6,138.

SECTION 7.1.(c)  Annual longevity payments for teachers shall be at the rate of one and one‑half percent (1.5%) of base salary for 10 to 14 years of State service, two and twenty‑five hundredths percent (2.25%) of base salary for 15 to 19 years of State service, three and twenty‑five hundredths percent (3.25%) of base salary for 20 to 24 years of State service, and four and one‑half percent (4.5%) of base salary for 25 or more years of State service.  The longevity payment shall be paid in a lump sum once a year.
SECTION 7.1.(d)  Certified public schoolteachers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.  Certified public schoolteachers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.
SECTION 7.1.(e)  The first step of the salary schedule for school psychologists shall be equivalent to Step 5, corresponding to five years of experience, on the salary schedule established in this section for certified personnel of the public schools who are classified as "M" teachers.  Certified psychologists shall be placed on the salary schedule at an appropriate step based on their years of experience.  Certified psychologists shall receive longevity payments based on years of State service in the same manner as teachers.
Certified psychologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified psychologists. Certified psychologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for certified psychologists.
SECTION 7.1.(f)  Speech pathologists who are certified as speech pathologists at the masters degree level and audiologists who are certified as audiologists at the masters degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists. Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
SECTION 7.1.(g)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 7.1.(h)  As used in this section, the term "teacher" shall also include instructional support personnel.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 7.2.(a)  Effective for the 2006‑2007 school year, the Director of the Budget shall transfer from the Reserve for Compensation Increases funds necessary to implement the salary schedules for school‑based administrators as provided in this section.  These funds shall be used for State‑paid employees only.
SECTION 7.2.(b)  The base salary schedule for school‑based administrators shall apply only to principals and assistant principals.  The base salary schedule for the 2006‑2007 fiscal year, commencing July 1, 2006, is as follows:

2006‑2007
Principal and Assistant Principal Salary Schedules
Classification

Yrs. of	Assistant	Prin I	Prin II	Prin III	Prin IV
Exp	Principal	(0‑10)	(11‑21)	(22‑32)	(33‑43)

0‑4	$3,592				
5	$3,741				
6	$3,884				
7	$4,000				
8	$4,053	$4,053			
9	$4,108	$4,108			
10	$4,163	$4,163	$4,218		
11	$4,218	$4,218	$4,274		
12	$4,274	$4,274	$4,331	$4,389	
13	$4,331	$4,331	$4,389	$4,450	$4,511
14	$4,389	$4,389	$4,450	$4,511	$4,572
15	$4,450	$4,450	$4,511	$4,572	$4,637
16	$4,511	$4,511	$4,572	$4,637	$4,702
17	$4,572	$4,572	$4,637	$4,702	$4,766
18	$4,637	$4,637	$4,702	$4,766	$4,835
19	$4,702	$4,702	$4,766	$4,835	$4,903
20	$4,766	$4,766	$4,835	$4,903	$4,976
21	$4,835	$4,835	$4,903	$4,976	$5,047
22	$4,903	$4,903	$4,976	$5,047	$5,120
23	$4,976	$4,976	$5,047	$5,120	$5,192
24	$5,047	$5,047	$5,120	$5,192	$5,268
25	$5,120	$5,120	$5,192	$5,268	$5,347
26	$5,192	$5,192	$5,268	$5,347	$5,426
27	$5,268	$5,268	$5,347	$5,426	$5,535
28	$5,347	$5,347	$5,426	$5,535	$5,646
29	$5,426	$5,426	$5,535	$5,646	$5,759
30	$5,535	$5,535	$5,646	$5,759	$5,874
31	$5,646	$5,646	$5,759	$5,874	$5,991
32		$5,759	$5,874	$5,991	$6,111
33			$5,991	$6,111	$6,233
34			$6,111	$6,233	$6,358
35				$6,358	$6,485
36				$6,485	$6,615
37					$6,747

Principal and Assistant Principal Salary Schedules
Classification

Yrs. of	PrinV	PrinVI	PrinVII	PrinVIII
Exp	(44‑54)	(55‑65)	(66‑100)	(101+)

0‑14	$4,637			
15	$4,702			
16	$4,766	$4,835		
17	$4,835	$4,903	$5,047	
18	$4,903	$4,976	$5,120	$5,192
19	$4,976	$5,047	$5,192	$5,268
20	$5,047	$5,120	$5,268	$5,347
21	$5,120	$5,192	$5,347	$5,426
22	$5,192	$5,268	$5,426	$5,535
23	$5,268	$5,347	$5,535	$5,646
24	$5,347	$5,426	$5,646	$5,759
25	$5,426	$5,535	$5,759	$5,874
26	$5,535	$5,646	$5,874	$5,991
27	$5,646	$5,759	$5,991	$6,111
28	$5,759	$5,874	$6,111	$6,233
29	$5,874	$5,991	$6,233	$6,358
30	$5,991	$6,111	$6,358	$6,485
31	$6,111	$6,233	$6,485	$6,615
32	$6,233	$6,358	$6,615	$6,747
33	$6,358	$6,485	$6,747	$6,882
34	$6,485	$6,615	$6,882	$7,020
35	$6,615	$6,747	$7,020	$7,160
36	$6,747	$6,882	$7,160	$7,303
37	$6,882	$7,020	$7,303	$7,449
38	$7,020	$7,160	$7,449	$7,598
39		$7,303	$7,598	$7,750
40		$7,449	$7,750	$7,905
41			$7,905	$8,063
SECTION 7.2.(c)  The appropriate classification for placement of principals and assistant principals on the salary schedule, except for principals in alternative schools and in cooperative innovative high schools, shall be determined in accordance with the following schedule:
Number of Teachers
Classification	Supervised

Assistant Principal
Principal I		Fewer than 11 Teachers
Principal II	11‑21 Teachers
Principal III	22‑32 Teachers
Principal IV	33‑43 Teachers
Principal V	44‑54 Teachers
Principal VI	55‑65 Teachers
Principal VII		66‑100 Teachers
Principal VIII		More than 100 Teachers

The number of teachers supervised includes teachers and assistant principals paid from State funds only; it does not include teachers or assistant principals paid from non‑State funds or the principal or teacher assistants.
The beginning classification for principals in alternative schools and in cooperative innovative high school programs shall be the Principal III level. Principals in alternative schools who supervise 33 or more teachers shall be classified according to the number of teachers supervised.
SECTION 7.2.(d)  A principal shall be placed on the step on the salary schedule that reflects total number of years of experience as a certificated employee of the public schools and an additional step for every three years of experience as a principal. A principal or assistant principal shall also continue to receive any additional State‑funded percentage increases earned for the 1997‑1998, 1998‑1999, and 1999‑2000 school years for improvement in student performance or maintaining a safe and orderly school.
SECTION 7.2.(e)  Principals and assistant principals with certification based on academic preparation at the six‑year degree level shall be paid a salary supplement of one hundred twenty‑six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary supplement of two hundred fifty‑three dollars ($253.00) per month.
SECTION 7.2.(f)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 7.2.(g)  If a principal is reassigned to a higher job classification because the principal is transferred to a school within a local school administrative unit with a larger number of State‑allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the higher job classification.
If a principal is reassigned to a lower job classification because the principal is transferred to a school within a local school administrative unit with a smaller number of State‑allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the lower job classification.
This subsection applies to all transfers on or after the effective date of this section, except transfers in school systems that have been created, or will be created, by merging two or more school systems. Transfers in these merged systems are exempt from the provisions of this subsection for one calendar year following the date of the merger.
SECTION 7.2.(h)  Participants in an approved full‑time masters in school administration program shall receive up to a 10‑month stipend at the beginning salary of an assistant principal during the internship period of the masters program.  For the 2006‑2007 fiscal year and subsequent fiscal years, the stipend shall not exceed the difference between the beginning salary of an assistant principal and any fellowship funds received by the intern as a full‑time student, including awards of the Principal Fellows Program. The Principal Fellows Program or the school of education where the intern participates in a full‑time masters in school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 7.2.(i)  During the 2006‑2007 fiscal year, the placement on the salary schedule of an administrator with a one‑year provisional assistant principal's certificate shall be at the entry‑level salary for an assistant principal or the appropriate step on the teacher salary schedule, whichever is higher.

CENTRAL OFFICE SALARIES
SECTION 7.3.(a)  The monthly salary ranges that follow apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2006‑2007 fiscal year, beginning July 1, 2006.
	School Administrator I	$3,079	$5,781
	School Administrator II	$3,268	$6,132
	School Administrator III	$3,468	$6,505
	School Administrator IV	$3,608	$6,764
	School Administrator V	$3,753	$7,037
	School Administrator VI	$3,982	$7,463
	School Administrator VII	$4,142	$7,764
The local board of education shall determine the appropriate category and placement for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or finance officer within the salary ranges and within funds appropriated by the General Assembly for central office administrators and superintendents. The category in which an employee is placed shall be included in the contract of any employee hired on or after July 1, 2006.
SECTION 7.3.(b)  The monthly salary ranges that follow apply to public school superintendents for the 2006‑2007 fiscal year, beginning July 1, 2006.
	Superintendent I	$4,396	$8,236
	Superintendent II	$4,667	$8,734
	Superintendent III	$4,952	$9,266
	Superintendent IV	$5,255	$9,828
	Superintendent V	$5,578	$10,428
The local board of education shall determine the appropriate category and placement for the superintendent based on the average daily membership of the local school administrative unit and within funds appropriated by the General Assembly for central office administrators and superintendents.
SECTION 7.3.(c)  Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees under the State Personnel Act.
SECTION 7.3.(d)  Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided pursuant to this section. Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for under this section.
SECTION 7.3.(e)  The State Board of Education shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.
SECTION 7.3.(f)  The annual salary increase for all permanent full‑time personnel paid from the Central Office Allotment shall be five percent (5%), commencing July 1, 2006. The State Board of Education shall allocate these funds to local school administrative units. The local boards of education shall establish guidelines for providing salary increases to these personnel.
SECTION 7.3.(g)  The Director of the Budget shall transfer from the Reserve for Compensation Increases funds necessary to provide a one‑time, lump‑sum compensation bonus payable at the end of the employee's first pay period after October 1, 2006, in the amount of three hundred dollars ($300.00) for all central office employees whose salaries are supported from the State's General Fund, who were employed for all or part of fiscal year 2005‑2006, and who are employed by the public schools on October 1, 2006. The compensation bonus shall be adjusted pro rata for permanent part‑time employees and employees working on a schedule requiring less than 12 months' service per year.
Local boards of education shall provide a one‑time, lump‑sum compensation bonus payable at the end of the employee’s first pay period after October 1, 2006, of three hundred dollars ($300.00) for all such employees whose salaries are not supported from the State's General Fund, who were employed by a local board of education for all or part of fiscal year 2005‑2006, and who are employed by that local board of education on October 1, 2006. The compensation bonus shall be adjusted pro rata for permanent part‑time employees and employees working on a schedule requiring less than 12 months' service per year.

NONCERTIFIED PERSONNEL SALARY AND FAIR MINIMUM PAY
SECTION 7.4.(a)  The annual salary increase for permanent, full‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be five percent (5%), commencing July 1, 2006. 
SECTION 7.4.(b)  Local boards of education shall increase the rates of pay for such employees who were employed for all or part of fiscal year 2005‑2006 and who continue their employment for fiscal year 2006‑2007 by providing an annual salary increase for employees of five percent (5%). 
SECTION 7.4.(c)  The State Board of Education may adopt salary ranges for noncertified personnel to support increases of five percent (5%) for the 2006‑2007 fiscal year.
SECTION 7.4.(d)  Effective July 1, 2006, permanent full‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be paid a minimum salary of at least twenty thousand one hundred twelve dollars ($20,112) per year. Permanent, full‑time employees working on a schedule requiring less than 12 months' service per year and permanent part‑time employees, whose salaries are supported from the State's General Fund, shall be paid the minimum salary pro rata. The fair minimum wage salary adjustment provided by this section shall be calculated and awarded after any across‑the‑board salary increases authorized by this act.
SECTION 7.4.(e)  The Director of the Budget shall transfer from the Reserve for Compensation Increases funds necessary to provide a one‑time, lump‑sum compensation bonus payable at the end of the employee's first pay period after October 1, 2006, in the amount of three hundred dollars ($300.00) for all noncertified public school employees whose salaries are supported from the State's General Fund, who were employed for all or part of fiscal year 2005‑2006, and who are employed by the public schools on October 1, 2006. The compensation bonus shall be adjusted pro rata for permanent part‑time employees and employees working on a schedule requiring less than 12 months' service per year.
Local boards of education shall provide a one‑time, lump‑sum compensation bonus payable at the end of the employee's first pay period after October 1, 2006, of three hundred dollars ($300.00) for all such employees whose salaries are not supported from the State's General Fund, who were employed by a local board of education for all or part of fiscal year 2005‑2006, and who are employed by that local board of education on October 1, 2006. The compensation bonus shall be adjusted pro rata for permanent part‑time employees and employees working on a schedule requiring less than 12 months' service per year.

BONUS FOR CERTIFIED PERSONNEL AT THE TOP OF THEIR SALARY SCHEDULES
SECTION 7.5.  Effective July 1, 2006, any permanent personnel employed on July 1, 2006, and paid at the top of the principal and assistant principal salary schedule shall receive a one‑time bonus equivalent to two percent (2%). Personnel defined under G.S. 115C‑325(a)(5a) are not eligible to receive the bonus.

FUNDS TO IMPLEMENT THE ABCS OF PUBLIC EDUCATION
SECTION 7.6.(a)  The State Board of Education shall use funds appropriated in this act for State Aid to Local School Administrative Units to provide incentive funding for schools that met or exceeded the projected levels of improvement in student performance during the 2005‑2006 school year, in accordance with the ABCs of Public Education Program. In accordance with State Board of Education policy:
(1)	Incentive awards in schools that achieve higher than expected improvements may be up to:
a.	One thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and
b.	Five hundred dollars ($500.00) for each teacher assistant.
(2)	Incentive awards in schools that meet the expected improvements may be up to:
a.	Seven hundred fifty dollars ($750.00) for each teacher and for certified personnel; and
b.	Three hundred seventy‑five dollars ($375.00) for each teacher assistant.
SECTION 7.6.(b)  Notwithstanding G.S. 143‑23, the State Board of Education may use funds appropriated to the Department of Public Instruction and to the State Public School Fund to establish a consolidated, comprehensive program through which to provide assistance to low‑performing schools.  For this purpose only, the Board may, with approval from the Office of State Budget and Management, transfer funds between personal service and nonpersonal service line items currently supporting positions, related operating costs, and contracts for school improvement teams and for assistance teams.  Funds transferred pursuant to this section shall not be used to raise the salary of existing employees.
The Board shall report to the Joint Legislative Education Oversight Committee and the Joint Legislative Commission on Governmental Operations by January 15, 2007, on any restructuring of the assistance program pursuant to this section.
SECTION 7.6.(c)  The Joint Legislative Education Oversight Committee shall review the incentive award structure described in this section and determine whether the relationship between awards for teachers and teacher assistants at each level of achievement is appropriate.

CHILDREN WITH DISABILITIES
SECTION 7.7.  The State Board of Education shall allocate funds for children with disabilities on the basis of two thousand nine hundred seventy‑two dollars and fifty‑two cents ($2,972.52) per child for a maximum of 170,240 children for the 2006‑2007 school year.  Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities, or (ii) twelve and five‑tenths percent (12.5%) of the 2006‑2007 allocated average daily membership in the local school administrative unit.
The dollar amounts allocated under this section for children with disabilities shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

FUNDS FOR ACADEMICALLY GIFTED CHILDREN
SECTION 7.8.  The State Board of Education shall allocate funds for academically or intellectually gifted children on the basis of nine hundred sixty‑one dollars and sixty cents ($961.60) per child.  A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2006‑2007 allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. The State Board shall allocate funds for no more than 57,419 children for the 2006‑2007 school year.
The dollar amounts allocated under this section for academically or intellectually gifted children shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve academically or intellectually gifted children.

LEARN AND EARN HIGH SCHOOLS
SECTION 7.11.  Section 7.32 of S.L. 2005‑276 is amended by adding the following new subsections:
"SECTION 7.32.(e)  Enrollment fees and tuition for The University of North Carolina courses in which Learn and Earn students are enrolled are allowable uses of these funds. Tuition costs may include laboratory fees assessed to all students enrolled in the course or a similar course. 
SECTION 7.32.(f)  Textbooks required for college courses in which Learn and Earn students are enrolled may be purchased with these funds. 
SECTION 7.32.(g)  Payment of fees from these funds by local school administrative units to partnering community colleges and universities are restricted to technology or course fees. Funds appropriated in this act shall not be used to support the cost of athletic or other student activity or campus fees not required by enrollment in a specific course.
SECTION 7.32.(h)  The State Board of Education shall allot funds for university enrollment, tuition and fees, and textbooks on the basis of and after verification of the credit hour enrollment of Learn and Earn students in university courses. The State Board of Education shall allot funds for community college fees and textbooks on the basis of and after verification of the credit hour enrollment of Learn and Earn students in community college courses."

NC WISE POSITIONS
SECTION 7.12.(a)  Notwithstanding G.S. 143‑23, the State Board of Education may, in consultation with the Office of Information Technology Services, use funds appropriated in this act for NC WISE to create a maximum of  20 positions and incur expenditures necessary to transfer the maintenance and administration of the NC WISE system from the vendor to the Department of Public Instruction. 
SECTION 7.12.(b)  The Department of Public Instruction shall report on a quarterly basis to the Joint Legislative Education Oversight Committee on the implementation of the NC WISE project.

21st Century Literacy Coaches
SECTION 7.13.(a)  Local boards of education are strongly encouraged to use restored base budget funds, low-wealth supplemental funding, or other funds available to them, to hire literacy coaches in middle schools or other public schools with an eighth grade. These coaches shall provide middle school teachers with research-based teaching practices and job-embedded professional development to enable them to address the needs of students who lack the literacy skills needed to master 21st century skills.
SECTION 7.13.(b)  Local boards of education are strongly encouraged to contract with the North Carolina Teacher Academy to train middle school teachers in methods for supporting the following student competencies:
(1)	Basic Literacy;
(2)	Technological Literacy;
(3)	Visual Literacy;
(4)	Informational Literacy;
(5)	Higher Order Thinking;
(6)	Cultural Competency; and
(7)	Self‑Direction.
As part of the training, the North Carolina Teacher Academy is encouraged to provide an online professional development network for additional training opportunities for participants.
SECTION 7.13.(c)  The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to January 15, 2007, on the use of funds for literacy coaches.

EXPAND LEA ACCESS TO EDUCATION VALUE ADDED ASSESSMENT SYSTEM (EVAAS)
SECTION 7.14.(a)  The State Board of Education shall identify local school administrative units to receive funds for purchasing licenses to EVAAS diagnostic software based on criteria that shall include (i) identified need, (ii) readiness, and (iii) county wealth, as defined in the Low‑Wealth Supplemental Funding Formula. The Board shall identify as many units as possible within funds available for this purpose.
SECTION 7.14.(b)  Funds appropriated for EVAAS in the 2005‑2006 fiscal year shall not revert, but shall be carried forward to the 2006‑2007 fiscal year for expenditures for training related to expanding local school administrative units' access to the EVAAS tool.  Any such funds not spent by June 30, 2007, shall revert to the General Fund.
SECTION 7.14.(c)  This section becomes effective June 30, 2006.

NORTH CAROLINA VIRTUAL PUBLIC SCHOOL
SECTION 7.16.(a)  The North Carolina Virtual Public School (NCVPS) Program shall report to the State Board of Education and shall maintain an administrative office at the Department of Public Instruction.
SECTION 7.16.(b)  The Director of NCVPS will ensure that course quality standards are established and met and that all e‑learning opportunities offered by State‑funded entities to public school students are consolidated under the NC Virtual Public School Program, eliminating course duplication. The Director shall report on the proposed consolidation and operating plan for 2007‑2008 to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division no later than January 15, 2007. Consolidation will be completed by June 30, 2007. Notwithstanding G.S 143‑23, the State Board of Education may move funds within the budget to implement the consolidation.
SECTION 7.16.(c)  Subsequent to course consolidation, the Director will prioritize e‑learning course offerings for students residing in rural and low‑wealth county LEAs, in order to expand available instructional opportunities. First‑available e‑learning instructional opportunities should include courses required as part of the standard course of study for high school graduation and AP offerings not otherwise available. 
SECTION 7.16.(d)  The State Board of Education shall develop an allotment formula for funding e‑learning, effective in the 2007‑2008 fiscal year. In developing the formula, the Board shall consider, at a minimum, the following:
(1)	The number of students in average daily membership (ADM) projected to enroll in e‑learning,
(2)	The projected cost of fees for e‑learning courses,
(3)	The extent to which projected enrollment in e‑learning courses affects funding required for other allotments that are based on ADM.

DISTANCE EDUCATION
SECTION 7.17.  Notwithstanding G.S. 143‑23, the State Board of Education may use monies from the State Public School Fund in the 2006‑2007 fiscal year only to pay for the additional costs associated with an increased number of registration fees for students enrolling in Distance Education courses.

ADMINISTRATIVE FUNDING FOR TEACHING FELLOWS PROGRAM
SECTION 7.19.(a)  G.S. 115C‑363.23A(f) reads as rewritten:
"(f)	All funds appropriated to or otherwise received by the Teaching Fellows Program for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall be placed in a revolving fund. This revolving fund shall be used for scholarship loans granted under the Teaching Fellows Program. With the prior approval of the General Assembly in the Current Operations Appropriations Act, the revolving fund may also be used for campus and summer program support, and costs related to disbursement of awards and collection of loan repayments.
With the prior approval of the General Assembly in the Current Operations Appropriations Act, the revolving fund may also be used by the Public School Forum, as administrator for the Teaching Fellows Program, for costs associated with administration of the Teaching Fellows Program."
SECTION 7.19.(b)  The Public School Forum, as administrator for the Teaching Fellows Program, may use up to eight hundred ten thousand dollars ($810,000) for the 2006‑2007 fiscal year from the balance in the revolving fund established in G.S. 115C‑363.23A(f) for costs associated with administration of the Teaching Fellows Program.  The funding provided for administration of the Teaching Fellows Program in this subsection shall be used to meet current administrative expenses of the Program, expand minority recruitment initiatives, and expand the Program to up to four additional campuses using a merit‑based selection process developed by the North Carolina Teaching Fellows Commission.
The Teaching Fellows Program shall report to the Joint Legislative Education Oversight Committee by March 15, 2007, on:
(1)	Actual expenditures for the 2005‑2006 fiscal year and budgeted expenditures for the 2006‑2007 fiscal year for administration of the Program;
(2)	Initiatives to recruit minorities to the Program; and
(3)	The additional campuses selected to participate in the Program and the selection process.

REFUND OF LOCAL SALES AND USE TAXES TO A LOCAL SCHOOL ADMINISTRATIVE UNIT
SECTION 7.20.(a)  G.S. 105‑467(b) reads as rewritten:
"(b)	Exemptions and Refunds. – The State exemptions and exclusions contained in G.S. 105‑164.13, the State sales and use tax holiday contained in G.S. 105‑164.13C, and the State refund provisions contained in G.S. 105‑164.14 apply to the local sales and use tax authorized to be levied and imposed under this Article. Except as provided in this subsection, a taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax. A local school administrative unit and a joint agency created by interlocal agreement among local school administrative units pursuant to G.S. 160A‑462 to jointly purchase food service‑related materials, supplies, and equipment on their behalf is allowed an annual refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal property and services, other than electricity and telecommunications service. Sales and use tax liability indirectly incurred by the entity on building materials, supplies, fixtures, and equipment that become a part of or annexed to any building or structure that is owned or leased by the entity and is being erected, altered, or repaired for use by the entity is considered a sales or use tax liability incurred on direct purchases by the entity for the purpose of this subsection. A request for a refund shall be in writing and shall include any information and documentation required by the Secretary. A request for a refund is due within six months after the end of the entity's fiscal year. Refunds applied for more than three years after the due date are barred."
SECTION 7.20.(b)  Section 7.51(c) of S.L. 2005‑276, as amended by Section 7 of S.L. 2005‑345, reads as rewritten:
"SECTION 7.51.(c)  Subsection (b) of this section becomes effective July 1, 2006. Notwithstanding the provisions of G.S. 105‑164.44H, for the 2006‑2007 fiscal year, the amount transferred to the State Public School Fund each quarter shall equal one‑fourth of the amount refunded under G.S. 105‑164.14(c)(2b) and (2c) during the 2005‑2006 fiscal year for State sales and use taxes only plus or minus the percentage of that amount by which the total collection of State sales and use tax increased or decreased during the preceding fiscal year. The remainder of this section becomes effective July 1, 2005, and applies to sales made on or after that date."
SECTION 7.20.(c)  This section becomes effective July 1, 2005, and applies to sales made on or after that date.

study the compensation of school psychologists with national certification
SECTION 7.22.  The State Board of Education shall study the adequacy of the compensation of school psychologists who are designated as Nationally Certified School Psychologists by the National School Psychology Certification Board.  In the course of the study, the State Board of Education shall consider (i) whether these school psychologists should be compensated at the same level as teachers who are certified by the National Board for Professional Teaching Standards (NBPTS) and (ii) the cost of compensating them at that level.
The State Board of Education shall report the results of its study to the Joint Legislative Education Oversight Committee prior to January 15, 2007.

PART VIII. COMMUNITY COLLEGES

SALARIES OF COMMUNITY COLLEGE FACULTY AND PROFESSIONAL STAFF
SECTION 8.1.(a)  Section 8.3 of S.L. 2005‑276 is amended by adding a new subsection to read:
"SECTION 8.3.(b1)  For the 2006‑2007 school year, the minimum salaries for nine‑month, full‑time, curriculum community college faculty shall be as follows:
	Education Level	Minimum Salary
		2006‑2007
Vocational Diploma/Certificate or Less	$31,728
Associate Degree or Equivalent	$32,195
Bachelors Degree	$34,220
Masters Degree or Education Specialist	$36,016
Doctoral Degree	$38,607
No full‑time faculty member shall earn less than the minimum salary for his or her education level.
The pro rata hourly rate of the minimum salary for each education level shall be used to determine the minimum salary for part‑time faculty members."
SECTION 8.1.(b)  Section 8.3(g) of S.L. 2005‑276 reads as rewritten:
"SECTION 8.3.(g)  For the 2005-2006 fiscal year, funds appropriated in this act for salary increases shall be used to increase faculty and professional staff salaries by an average of two percent (2%). These increases are in addition to other salary increases provided for in this act and shall be calculated on the average salaries prior to the issuance of the compensation increase. For the 2006-2007 fiscal year, funds appropriated in this act for salary increases shall be used to increase faculty and professional staff salaries by six percent (6%). Colleges may provide additional increases from funds available.
The State Board of Community Colleges shall adopt rules to ensure that these funds are used only to move faculty and professional staff to the respective national averages. These funds shall not be transferred by the State Board or used for any other budget purpose by the community colleges."

USE OF FUNDS FOR THE COLLEGE INFORMATION SYSTEM PROJECT
SECTION 8.3.(a)  Funds appropriated to the Community Colleges System Office for the College Information System Project shall not revert at the end of the 2005‑2006 fiscal year but shall remain available until expended.
SECTION 8.3.(b)  Notwithstanding G.S. 143‑23, the Community Colleges System Office may, subject to the approval of the Office of State Budget and Management, in consultation with the Office of Information Technology Services, and after consultation with the Joint Legislative Commission on Governmental Operations, use funds appropriated in this act for the College Information System Project to create a maximum of 20 positions or incur expenditures necessary to transfer the maintenance and administration of the College Information System Project from the vendor to the System Office.
SECTION 8.3.(c)  The Community Colleges System Office shall report on a quarterly basis to the Joint Legislative Education Oversight Committee on the implementation of the College Information System Project.
SECTION 8.3.(d)  Subsection (a) of this section becomes effective June 30, 2006.

CARRYFORWARD FOR EQUIPMENT
SECTION 8.4.(a)  Subject to the approval of the Office of State Budget and Management and cash availability, the North Carolina Community Colleges System Office may carry forward an amount not to exceed ten million dollars ($10,000,000) of the operating funds that were not reverted in fiscal year 2005‑2006 to be reallocated to the State Board of Community Colleges' Equipment Reserve Fund.  These funds shall be distributed to colleges consistent with G.S. 115D‑31.
SECTION 8.4.(b)  This section becomes effective June 30, 2006.

NC COMMUNITY COLLEGE SYSTEM MAY USE STATE FUNDS IN LIEU OF FEDERAL FUNDS DUE TO FEDERAL MANDATES
SECTION 8.5.  Notwithstanding G.S. 143‑23, the Community Colleges System Office may use State literacy funds to fund the State administration of the GED office.  Federal funds previously used to support the State administration functions shall be reallocated to the colleges.

REPORT ON THE NCCCS BIONETWORK
SECTION 8.6.  The Community Colleges System Office shall report by November 1, 2006, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division on the implementation of the NCCCS BioNetwork.  This report shall include an explanation of the BioNetwork's activities, accomplishments, and expenditures.

STUDY OF NEW AND EXPANDING INDUSTRY TRAINING
SECTION 8.7.  The Office of State Budget and Management shall conduct a study to analyze and evaluate the New and Expanding Industry Training program of the North Carolina Community College System.  This study shall examine the companies served, the number of times each company has been served, the number of jobs created, the length of time the company has remained in North Carolina after receiving New and Expanding Industry Training funds, and whether the company has maintained employment levels at the same level promised when training was received.  The findings of the study shall be reported to the Joint Legislative Education Oversight Committee no later than April 1, 2007.

MATCHING REQUIREMENT FOR BOND FUNDS
SECTION 8.8.  Section 3(d) of S.L. 2000‑3 reads as rewritten:
"Section 3.(d)  If the State Board of Community Colleges determines that a community college has not met its matching requirements by July 1, 2007, with respect to a capital improvement project for which bond proceeds are allocated in this act, the Board shall certify that fact to the State Treasurer by October 1, 2007. All of these bond proceeds with respect to which the Board certifies that the matching requirement has not been met by July 1, 2007, shall be placed by the State Treasurer in a special account within the Community Colleges Bond Fund and shall be used for making grants to community colleges. Bond proceeds in the special account shall be allocated among the community colleges in accordance with the following conditions:
(1)	The State Board of Community Colleges shall generate, by October 1, 2007, a priority ranking of legitimate community college capital improvement needs using a formula based on objective meaningful factors relevant to capital needs, including actual and projected enrollment, space requirements, current capacity, construction costs, and any other factors the State Board considers relevant.
(2)	The State Board of Community Colleges shall provide the State Treasurer a projected allocation of the proceeds in the special account in accordance with this priority ranking, except that:
a.	No projected allocation shall be made for a community college that the Board certified in accordance with this subsection had failed to meet a matching requirement.
b.	No more than four million dollars ($4,000,000) shall be allocated to a single community college.
c.	Funds shall not be allocated for more than one project per community college.
(3)	The proceeds of grants made from bond proceeds in the special account shall be allocated and expended for paying the cost of community college capital improvements in accordance with this allocation by the State Board of Community Colleges, to the extent and as provided in this act. The Director of the Budget is empowered, when the Director of the Budget determines it is in the best interest of the State and the North Carolina Community College System to do so, and if the cost of a particular project is less than the projected allocation, to use the excess funds to increase the size of that project or increase the size of any other project itemized in this section, or to increase the amount allocated to a particular community college within the aggregate amount of funds available under this section. The Director of the Budget shall consult with the Advisory Budget Commission and the Joint Legislative Commission on Governmental Operations before making these changes."

PART iX. UNIVERSITIES

UNC-NCCCS 2+2 E-LEARNING INITIATIVE
SECTION 9.1.  The University of North Carolina and Community Colleges System Office shall report by September 1, 2006, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division of the General Assembly on the implementation of the UNC‑NCCCS 2+2 E‑Learning Initiative.  This report shall include:
(1)	The courses and programs within the 2+2 E‑Learning Initiative;
(2)	The total number of prospective teachers that have taken or are taking part in this initiative to date broken down by the current academic period and each of the previous academic periods since the program's inception;
(3)	The total number of teachers currently in the State's classroom, by local school administrative unit, who have taken part in this initiative;
(4)	The change in the number of teachers available to schools since the program's inception;
(5)	The qualitative data from students, teachers, local school administrative unit personnel, university personnel, and community college personnel as to the impact of this initiative on our State's teaching pool; and
(6)	An explanation of the expenditures and collaborative programs between the North Carolina Community College System and The University of North Carolina, including recommendations for improvement.

TEACHER EDUCATION PROGRAM ENROLLMENT PLANS
SECTION 9.2.  The University of North Carolina Board of Governors' Task Force on Meeting Teacher Supply and Demand called for the President to develop a plan for enrollment growth in the University System's teacher education programs to respond to the State's shortage of teachers. In a presentation to the Joint Legislative Education Oversight Committee and to the Board of Governors, a commitment was made to increase the number of teacher education graduates. The University of North Carolina General Administration shall obtain plans from each constituent institution as to how they will maintain their current enrollment in the teacher education programs and achieve their growth targets to ensure such increases in those programs occur. Plans may include using enrollment growth funds for targeted admissions, enhanced student support, and advising, recruiting, increases in faculty in necessary instructional areas that lead to certification, and other methods General Administration believes will achieve those results. The University of North Carolina General Administration shall report back to the Office of State Budget and Management and the Joint Legislative Education Oversight Committee no later than December 30, 2006, on each constituent institution's plan. No later than March 31, 2007, The University of North Carolina General Administration shall submit a report on progress towards meeting this priority for the 2007‑2008 academic year, based on each constituent institution's current students in the education programs, and the students who have been accepted for the 2007‑2008 fiscal year who are enrolling in the education programs. The report shall also explain the distribution of enrollment growth funds by specific initiative.

NORTH CAROLINA IN THE WORLD PROJECT
SECTION 9.3.  In collaboration with the State Board of Education and the NC Department of Commerce, the NC Center for International Understanding shall develop a plan to ensure that public K‑12 international education efforts such as teacher and student exchanges, curriculum development, and other initiatives for students, teachers, and administrators are focused on key countries and regions of strategic economic interest to North Carolina. The NC Center for International Understanding shall report to the Office of State Budget and Management and the Joint Legislative Education Oversight Committee on the activities and accomplishments of the two hundred thousand dollar ($200,000) nonrecurring appropriation for North Carolina in the World Project no later than March 31, 2007.

A+ Schools – Budget Technical Correction
SECTION 9.3A.  Recurring funds in the amount of one hundred thousand dollars ($100,000) appropriated to the Department of Public Instruction for the 2006‑2007 fiscal year in S.L. 2005‑276 as pass‑through funds for A+ Schools shall be transferred to the Board of Governors of The University of North Carolina to provide pass‑through funds for A+ Schools for the same purpose of providing support for the program that assists schools in implementing comprehensive school reform by integrating arts into the curriculum.

clarify Requirements for students receiving PHYSICAL EDUCATION – COACHING SCHOLARSHIP LOANS 
SECTION 9.3B.(a)  G.S. 116‑209.36(a) reads as rewritten:
"(a)	There is established the Physical Education – Coaching Scholarship Loan Fund. The purpose of the Fund is to provide scholarship loans to students who are pursuing college degrees to become public schoolteachers and coaches or assistant coaches. Coaching Fellows shall be offered a curriculum and extracurricular activities that advance skills in physical education and coaching and that instill a strong motivation not only to remain in the coaching profession but to provide leadership in the schools where they coach. The State Education Assistance Authority shall administer the Fund. The Fund shall provide 25 scholarship loans per year."
SECTION 9.3B.(b)  The Board of Governors of The University of North Carolina, in consultation with the North Carolina Independent Colleges and Universities, Inc., the North Carolina High School Athletic Association, Inc., and the North Carolina Coaches Association, shall study the curriculum and extracurricular activities appropriate for recipients of scholarship loans.  The extracurricular activities may include programs and seminars with teachers currently coaching in North Carolina public schools.
The Board of Governors shall report the results of the study, including the costs of implementing its proposals, to the Joint Legislative Education Oversight Committee prior to January 15, 2007.

GRADUATE NURSE SCHOLARSHIP PROGRAM FOR FACULTY PRODUCTION
SECTION 9.6.(a)  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2006‑2007 fiscal year, the sum of one million two hundred thousand dollars ($1,200,000) shall be used to establish the Graduate Nurse Scholarship Program for Faculty Production.
SECTION 9.6.(b)  The allocation of funds under subsection (a) of this section is contingent upon the enactment of House Bill 2003 of the 2005 Regular Session of the General Assembly or substantially similar legislation that establishes the Graduate Nurse Scholarship Program for Faculty Production.  If House Bill 2003 of the 2005 Regular Session of the General Assembly or substantially similar legislation that establishes the Graduate Nurse Scholarship Program for Faculty Production is not enacted, then the funds allocated under subsection (a) of this act shall revert to the General Fund.

MANAGEMENT FLEXIBILITY TO REORGANIZE BUDGET CODE 16012 UNC BOARD OF GOVERNORS RELATED EDUCATIONAL PROGRAMS
SECTION 9.7.  Notwithstanding G.S. 143‑23, for the 2006‑2007 fiscal year, the General Administration of The University of North Carolina and the State Educational Assistance Authority shall, with the approval of the Office of State Budget and Management, reorganize budget code 16012, UNC Board of Governors Related Educational Programs, so that the budget reflects and segregates each specific program individually.  The Office of State Budget and Management shall work with The University of North Carolina General Administration and the State Educational Assistance Authority to ensure that each program represented in code 16012 is identified and budgeted separately.

TUITION AND CONTRACTUAL GRANTS FOR TEACHING/NURSING
SECTION 9.13.(a)  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2006‑2007 fiscal year, the sum of one million five hundred thousand dollars ($1,500,000) shall be used to implement the provisions of House Bill 1928 of the 2005 Regular Session of the General Assembly, Senate Bill 1476 of the 2005 Regular Session of the General Assembly, or substantially similar legislation to provide State Contractual Scholarship Fund grants and legislative tuition grants for students who have bachelors degrees but are pursuing licensure as nurses or teachers.
SECTION 9.13.(b)  The allocation of funds under subsection (a) of this section is contingent upon the enactment of House Bill 1928 of the 2005 Regular Session of the General Assembly, Senate Bill 1476 of the 2005 Regular Session of the General Assembly, or substantially similar legislation that provides State Contractual Scholarship Fund grants and legislative tuition grants for students who have bachelors degrees but are pursuing licensure as nurses or teachers.  If House Bill 1928 of the 2005 Regular Session of the General Assembly, Senate Bill 1476 of the 2005 Regular Session of the General Assembly, or substantially similar legislation that provides State Contractual Scholarship Fund grants and legislative tuition grants for students who have bachelors degrees but are pursuing licensure as nurses or teachers is not enacted, then the funds allocated under subsection (a) of this act shall revert to the General Fund.

north carolina research campus at Kannapolis 
SECTION 9.14.(a)  The Director of the Office of State Budget and Management shall not release funds appropriated in this act to the Board of Governors of The University of North Carolina for the North Carolina Research Campus (NCRC) at Kannapolis until the President of The University of North Carolina certifies to the Director that The University System and the developers of NCRC have entered into a Memorandum of Understanding concerning the participation in and use of space at the North Carolina Research Campus that is approved by the President.
SECTION 9.14.(b)  The Director of the Office of State Budget and Management shall not release funds appropriated in this act to the North Carolina Community Colleges System Office for the North Carolina Research Campus (NCRC) at Kannapolis until the President of the North Carolina Community College System certifies to the Director that the Community College System and the developers of NCRC have entered into a Memorandum of Understanding concerning the participation in and use of space at the North Carolina Research Campus that is approved by the President.

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

RATE SETTING FOR CHILD CARING INSTITUTIONS
SECTION 10.2.(a)  Section 10.47(b) of S.L. 2005‑276 is repealed.
SECTION 10.2.(b)  G.S. 110‑93.1 is repealed.
SECTION 10.2.(c)  G.S. 143B‑153(2)d. reads as rewritten:
"§ 143B‑153.  Social Services Commission – creation, powers and duties.
There is hereby created the Social Services Commission of the Department of Health and Human Services with the power and duty to adopt rules and regulations to be followed in the conduct of the State's social service programs with the power and duty to adopt, amend, and rescind rules and regulations under and not inconsistent with the laws of the State necessary to carry out the provisions and purposes of this Article. Provided, however, the Department of Health and Human Services shall have the power and duty to adopt rules and regulations to be followed in the conduct of the State's medical assistance program.
…
(2)	The Social Services Commission shall have the power and duty to establish standards and adopt rules and regulations:
…
d.	For the payment of State funds to private child‑placing agencies as defined in G.S. 131D‑10.2(4) and residential child care facilities as defined in G.S. 131D‑10.2(13) for care and services provided to children who are in the custody or placement responsibility of a county department of social services. The Commission shall establish standardized rates for child caring institutions in this State, which rates shall be updated annually on July 1. Rate‑setting recommendations provided by the Office of the State Auditor shall be incorporated into the Department of Health and Human Services' rate-setting methodology; and
…
…."
SECTION 10.2.(d)  The effective date for establishing standardized rates for child caring institutions in this State, as enacted in subsection (c) of this section, shall be July 1, 2007.

MEDICAID
SECTION 10.3.(a)  Section 10.11 of S.L. 2005-276 is repealed.
SECTION 10.3.(b)  Use of Funds, Allocation of Costs, Other Authorizations.
(1)	Use of Funds. – Funds appropriated in this act for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy.
(2)	Allocation of Nonfederal Cost of Medicaid. – The allocation of the nonfederal cost of Medicaid shall be as provided in this act. 
(3)	Funds for Development and Acquisition of Equipment and Software. – If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, may use funds that are identified to support the cost of development and acquisition of equipment and software through contractual means to improve and enhance information systems that provide management information and claims processing. The Department of Health and Human Services shall identify adequate funds to support the implementation and first year's operational costs that exceed the currently allocated funds for the new contract for the fiscal agent for the Medicaid Management Information System.
(4)	Reports. – Unless otherwise provided, whenever the Department of Health and Human Services is required by this section to report to the General Assembly, the report shall be submitted to the House of Representatives Appropriations Subcommittee for Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division of the Legislative Services Office. Reports shall be submitted on the date provided in the reporting requirement.
SECTION 10.3.(c)  Policy. –
(1)	Volume purchase plans and single source procurement. – The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.
(2)	Cost‑containment programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost‑containment programs, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
(3)	Fraud and abuse. – 
a.	The Division of Medical Assistance, Department of Health and Human Services, may provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds.
b.	For the purposes of investigating and reducing client fraud and abuse, the Department of Health and Human Services, Division of Medical Assistance, shall, unless prohibited by federal law, include in the Medicaid enrollment process the requirement that the applicant for Medicaid consent to or authorize in writing the release of the applicant's medical records for the three years immediately preceding the application for Medicaid benefits. The Department shall obtain and use information from the applicant's medical records in a manner and form that complies with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), P.L. 104‑191, as amended, and that protects the privacy of the information as required by other applicable federal or State law. In addition to fraud and abuse detection, the Department may require the applicant's consent for other purposes permitted by HIPAA and required or authorized by other applicable federal or State law.
(4)	Medical policy. –
Unless required for compliance with federal law, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services until the Division of Medical Assistance has prepared a five‑year fiscal analysis documenting the increased cost of the proposed change in medical policy and submitted it for Departmental review. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds three million dollars ($3,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed policy change with the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement any proposed medical policy change exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year unless the source of State funding is identified and approved by the Office of State Budget and Management. The Department shall provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy changes with total requirements of less than three million dollars ($3,000,000).
SECTION 10.3.(d)  Eligibility. – Eligibility for Medicaid shall be determined in accordance with the following:
(1)	Medicaid and Work First Family Assistance, Income Eligibility Standards. – The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

Categorically Needy‑WFFA*		Medically Needy
Family		Standard		Families and Children
Size		Of Need		Income
Level		AA,AB,AD*
1	$4,344	$2,172	$2,900
2	5,664	2,832	3,900
3	6,528	3,264	4,400
4	7,128	3,564	4,800
5	7,776	3,888	5,200
6	8,376	4,188	5,600
7	8,952	4,476	6,000
8	9,256	4,680	6,300

*Work First Family Assistance (WFFA); Aid to the Aged (AA); Aid to the Blind (AB); and Aid to the Disabled (AD).
The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need.
These standards may be changed with the approval of the Director of the Budget with the advice of the Advisory Budget Commission.
(2)	The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to all elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines, as revised each April 1.
(3)	The Department of Health and Human Services shall provide Medicaid to 19 and 20‑year‑olds in accordance with federal rules and regulations.
(4)	Pregnant women and children. – The Department of Health and Human Services shall provide coverage to pregnant women and to children according to the following schedule:
a.	Pregnant women with incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
b.	Effective January 1, 2006, infants under the age of one with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
c.	Effective January 1, 2006, children aged one through five with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
d.	Children aged six through 18 with family incomes equal to or less than the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
e.	The Department of Health and Human Services shall provide Medicaid coverage for adoptive children with special or rehabilitative needs regardless of the adoptive family's income.
Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy. In order to reduce county administrative costs and to expedite the provision of medical services to pregnant women, to infants, and to children described in subparagraphs c. and d. of this subdivision, no resources test shall be applied.
(5)	The Department of Health and Human Services shall provide Medicaid coverage for family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eight‑five percent (185%) of the federal poverty level.
(6)	ICF and ICF/MR Work Incentive Allowances. – The Department of Health and Human Services may provide an incentive allowance to Medicaid‑eligible recipients of ICF and ICF/MR services, who are regularly engaged in work activities as part of their developmental plan, and for whom retention of additional income contributes to their achievement of independence. The State funds required to match the federal funds that are required by these allowances shall be provided from savings within the Medicaid budget or from other unbudgeted funds available to the Department. The incentive allowances may be as follows:
Monthly Net Wages	Monthly Incentive Allowance
$1.00 to $100.99	Up to $50.00
$101.00 to $200.99	$80.00
$201.00 to $300.99	$130.00
$301.00 and greater	$212.00
(7)	Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
(8)	For all Medicaid eligibility classifications for which the federal poverty level is used as an income limit for eligibility determination, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines.
(9)	When implementing the Supplemental Security Income (SSI) method for considering equity value of income producing property, the Department shall, to the maximum extent possible, employ procedures to mitigate the hardship to Medicaid enrollees occurring from application of the SSI method.
SECTION 10.3.(e)  Services and Payment Bases. – Funds appropriated for Medicaid services shall be expended in accordance with the following schedule of services and payment bases. All services and payments are subject to the language at the end of this subsection. Unless otherwise provided, services and payment bases will be as prescribed in the State Plan as established by the Department of Health and Human Services and may be changed with the approval of the Director of the Budget.
(1)	Hospital inpatient.
(2)	Hospital outpatient. – Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Health and Human Services.
(3)	Nursing facilities. – Nursing facilities providing services to Medicaid recipients who also qualify for Medicare must be enrolled in the Medicare program as a condition of participation in the Medicaid program. State facilities are not subject to the requirement to enroll in the Medicare program. Residents of nursing facilities who are eligible for Medicare coverage of nursing facility services must be placed in a Medicare‑certified bed. Medicaid shall cover facility services only after the appropriate services have been billed to Medicare. The Division of Medical Assistance shall allow nursing facility providers sufficient time from the effective date of this act to certify additional Medicare beds if necessary. In determining the date that the requirements of this subdivision become effective, the Division of Medical Assistance shall consider the regulations governing certification of Medicare beds and the length of time required for this process to be completed.
(4)	Physicians, certified nurse midwife services, nurse practitioners. – Fee schedules as development by the Department of Health and Human Services.
(5)	Community Alternative Program, EPSDT Screens. – Payments in accordance with rate schedule developed by the Department of Health and Human Services.
(6)	Home health and related services, durable medical equipment. – Payments according to reimbursement plans developed by the Department of Health and Human Services.
(7)	Hearing aids. – Wholesale cost plus dispensing fee to provider.
(8)	Rural health clinical services. – Provider‑based, reasonable cost; non‑provider‑based, single–cost reimbursement rate per clinic visit.
(9)	Family planning. – Negotiated rate for local health departments. For other providers see specific services, e.g. hospitals, physicians.
(10)	Independent laboratory and X‑ray services. – Uniform fee schedules as developed by the Department of Health and Human Services.
(11)	Ambulatory surgical centers.
(12)	Private duty nursing, clinic services, prepaid health plans.
(13)	Intermediate care facilities for the mentally retarded.
(14)	Chiropractors, podiatrists, optometrists, dentists.
(15)	Limitations on Dental Coverage. – Dental services shall be provided on a restricted basis in accordance with criteria adopted by the Department to implement this subsection. 
(16)	Medicare Buy‑In. – Social Security Administration premium.
(17)	Ambulance services. – Uniform fee schedules as developed by the Department of Health and Human Services. Public ambulance providers will be reimbursed at cost.
(18)	Optical supplies. – Payment for materials is made to a contractor in accordance with 42 C.F.R. § 431.54(d). Fees paid to dispensing providers are negotiated fees established by the State agency based on industry charges.
(19)	Medicare crossover claims. – The Department shall apply Medicaid medical policy to Medicare claims for dually eligible recipients. The Department shall pay an amount up to the actual coinsurance or deductible or both, in accordance with the State Plan, as approved by the Department of Health and Human Services.
(20)	Physical therapy and speech therapy. – Services limited to EPSDT‑eligible children. Payments are to be made only to qualified providers at rates negotiated by the Department of Health and Human Services. Physical therapy (including occupational therapy) and speech therapy services are subject to prior approval and utilization review.
(21)	Personal care services.
(22)	Case management services. – Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.
(23)	Hospice.
(24)	Medically necessary prosthetics or orthotics. – In order to be eligible for reimbursement, providers must be Board certified. Medically necessary prosthetics and orthotics are subject to prior approval and utilization review.
(25)	Health insurance premiums.
(26)	Medical care/other remedial care. – Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals; and services to meet federal EPSDT mandates.
(27)	Pregnancy‑related services. – Covered services for pregnant women shall include nutritional counseling, psychosocial counseling, and predelivery and postpartum home visits by maternity care coordinators and public health nurses.
(28)	Drugs. – Reimbursements. Reimbursements shall be available for prescription drugs as allowed by federal regulations plus a professional services fee per month, excluding refills for the same drug or generic equivalent during the same month. Payments for drugs are subject to the provisions of this subdivision or in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. The professional services fee shall be five dollars and sixty cents ($5.60) per prescription for generic drugs and four dollars ($4.00) per prescription for brand‑name drugs. Adjustments to the professional services fee shall be established by the General Assembly. In addition to the professional services fee, the Department may pay an enhanced fee for pharmacy services.
Limitations on quantity. – The Department of Health and Human Services may establish authorizations, limitations, and reviews for specific drugs, drug classes, brands, or quantities in order to manage effectively the Medicaid pharmacy program, except that the Department shall not impose limitations on brand‑name medications for which there is a generic equivalent in cases where the prescriber has determined, at the time the drug is prescribed, that the brand‑name drug is medically necessary and has written on the prescription order the phrase "medically necessary". In addition to the entities listed in subsection (a) of this section, the Department shall report to the Joint Legislative Commission on Governmental Operations on authorizations, limitations, and reviews established under this subparagraph, including limitations on monthly brand‑name and generic prescriptions as well as restrictions on the total number of medications. The Department shall submit the report not later than May 1, 2006.
Dispensing of generic drugs. – Notwithstanding G.S. 90‑85.27 through G.S. 90‑85.31, or any other law to the contrary, under the Medical Assistance Program (Title XIX of the Social Security Act), and except as otherwise provided in this subsection for atypical antipsychotic drugs and drugs listed in the narrow therapeutic index, a prescription order for a drug designated by a trade or brand name shall be considered to be an order for the drug by its established or generic name, except when the prescriber has determined, at the time the drug is prescribed, that the brand‑name drug is medically necessary and has written on the prescription order the phrase "medically necessary". An initial prescription order for an atypical antipsychotic drug or a drug listed in the narrow therapeutic drug index that does not contain the phrase "medically necessary" shall be considered an order for the drug by its established or generic name, except that a pharmacy shall not substitute a generic or established name prescription drug for subsequent brand or trade name prescription orders of the same prescription drug without explicit oral or written approval of the prescriber given at the time the order is filled. Generic drugs shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand‑name drugs. As used in this subsection, "brand name" means the proprietary name the manufacturer places upon a drug product or on its container, label, or wrapping at the time of packaging; and "established name" has the same meaning as in section 502(e)(3) of the Federal Food, Drug, and Cosmetic Act as amended, 21 U.S.C. § 352(e)(3).
Prior authorization. – The Department of Health and Human Services shall not impose prior authorization requirements or other restrictions under the State Medical Assistance Program on medications prescribed for Medicaid recipients for the treatment of: (i) mental illness, including, but not limited to, medications for schizophrenia, bipolar disorder, and major depressive disorder, or (ii) HIV/AIDS.
(29)	Other mental health services. – Unless otherwise covered by this section, coverage is limited to:
a.	Services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) when provided in agencies meeting the requirements of the rules established by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services and reimbursement is made in accordance with a State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations, and
b.	For children eligible for EPSDT services provided by:
1.	Licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, certified clinical addictions specialists, and certified clinical supervisors, when Medicaid‑eligible children are referred by the Community Care of North Carolina primary care physician, a Medicaid‑enrolled psychiatrist, or the area mental health program or local management entity, and
2.	Institutional providers of residential services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) for children and Psychiatric Residential Treatment Facility services that meet federal and State requirements as defined by the Department.
c.	For Medicaid‑eligible adults, services provided by licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, and nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed clinical addictions specialists, and licensed clinical supervisors, Medicaid‑eligible adults may be self‑referred.
d.	Payments made for services rendered in accordance with this subdivision shall be to qualified providers in accordance with approved policies and the State Plan. Nothing in sub‑subdivision b. or c. of this subdivision shall be interpreted to modify the scope of practice of any service provider, practitioner, or licensee, nor to modify or attenuate any collaboration or supervision requirement related to the professional activities of any service provider, practitioner, or licensee. Nothing in sub‑subdivision b. or c. of this subdivision shall be interpreted to require any private health insurer or health plan to make direct third‑party reimbursements or payments to any service provider, practitioner, or licensee.
e.	The Department of Health and Human Services shall not enroll licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed clinical addiction specialists, and licensed clinical supervisors until all of the following conditions have been met:
1.	The fiscal impact of payments to these qualified providers has been projected;
2.	Funding for any projected requirements in excess of budgeted Division of Medical Assistance funding has been identified from within State funds appropriated to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to support area mental health programs or county programs, or identified from other sources; and
3.	Approval has been obtained from the Office of State Budget and Management to transfer these State or other source funds from the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to the Division of Medical Assistance. Upon approval and implementation, the Department of Health and Human Services shall, on a quarterly basis, provide a status report to the Office of State Budget and Management and the Fiscal Research Division.
Notwithstanding G.S. 150B‑21.1(a), the Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes further defining the qualifications of providers and referral procedures in order to implement this subdivision. Coverage policy for services defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services under sub‑subdivisions a. and b.2 of this subdivision shall be established by the Division of Medical Assistance.
SECTION 10.3.(f)  Limitations on payments. –
(1)	Payment is limited to Medicaid‑enrolled providers that purchase a performance bond in an amount not to exceed one hundred thousand dollars ($100,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance, or provide to the Department a validly executed letter of credit or other financial instrument issued by a financial institution or agency honoring a demand for payment in an equivalent amount. The Department may waive or limit the requirements of this paragraph for one or more classes of Medicaid‑enrolled providers based on the provider's dollar amount of monthly billings to Medicaid or the length of time the provider has been licensed in this State to provide services. In waiving or limiting requirements of this paragraph, the Department shall take into consideration the potential fiscal impact of the waiver or limitation on the State Medicaid Program. The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 as necessary to implement this provision.
(2)	Reimbursement is available for up to 24 visits per recipient per year to any one or combination of the following: physicians, clinics, hospital outpatient, optometrists, chiropractors, and podiatrists. Prenatal services, all EPSDT children, emergency rooms, and mental health services subject to independent utilization review are exempt from the visit limitations contained in this paragraph. Exceptions may be authorized by the Department of Health and Human Services where the life of the patient would be threatened without such additional care.
SECTION 10.3.(g)  Exceptions and limitations on services; authorization of co‑payments and other services.
(1)	Exceptions to Service Limitations, Eligibility Requirements, and Payments. – Service limitations, eligibility requirements, and payments bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, contracting for services, managed care plans, or community‑based services programs in accordance with plans approved by the United States Department of Health and Human Services or when the Department determines that such a waiver will result in a reduction in the total Medicaid costs for the recipient. The Department of Health and Human Services may proceed with planning and development work on the Program of All‑Inclusive Care for the Elderly.
(2)	Co‑Payment for Medicaid Services. – The Department of Health and Human Services may establish co‑payments up to the maximum permitted by federal law and regulation and required by this subsection in order to achieve reductions in the budget in fiscal years 2005‑2006 and 2006‑2007.
(3)	The Department of Health and Human Services shall provide Medicaid coverage for family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty level. Of the funds appropriated in this act to the Division of Medical Assistance, the sum of seven hundred fifty thousand dollars ($750,000) for the 2005‑2006 fiscal year shall be used to provide the State‑match for the family planning demonstration waiver approved by the federal government.
SECTION 10.3.(h)  Rules, Reports, and Other Matters. – 
(1)	Rules. – The Department of Health and Human Services may adopt temporary or emergency rules according to the procedures established in G.S. 150B‑21.1 and G.S. 150B‑21.1A when it finds that these rules are necessary to maximize receipt of federal funds within existing State appropriations, to reduce Medicaid expenditures, and to reduce fraud and abuse. Prior to the filing of these temporary or emergency rules with the Rules Review Commission and the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary or emergency rule and its effect on State appropriations and local governments.
(2)	Changes to Medicaid program; reports. – The Department shall report on any change it anticipates making in the Medicaid program that impacts the type or level of service, reimbursement methods, or waivers, any of which require a change in the State Plan or other approval by the Centers for Medicare and Medicaid Services (CMS). The reports shall be provided at the same time they are submitted to CMS for approval. In addition to the entities listed in subsection (a)(4) of this section, the report shall be submitted to the Joint Legislative Health Care Oversight Committee.

PROCEDURES FOR CHANGES TO DHHS MEDICAL POLICY
SECTION 10.4.  Article 2 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§ 108A‑54.2.  Procedures for changing medical policy.
The Department shall develop, amend, and adopt medical coverage policy in accordance with the following:
(1)	During the development of new medical coverage policy or amendment to existing medical coverage policy, consult with and seek the advice of the Physician Advisory Group of the North Carolina Medical Society and other organizations the Secretary deems appropriate. The Secretary shall also consult with and seek the advice of officials of the professional societies or associations representing providers who are affected by the new medical coverage policy or amendments to existing medical coverage policy.
(2)	At least 45 days prior to the adoption of new or amended medical coverage policy, the Department shall:
a.	Publish the proposed new or amended medical coverage policy on the Department's Web site;
b.	Notify all Medicaid providers of the proposed, new, or amended policy; and
c.	Upon request, provide persons copies of the proposed medical coverage policy.
(3)	During the 45‑day period immediately following publication of the proposed new or amended medical coverage policy, accept oral and written comments on the proposed new or amended policy.
(4)	If, following the comment period, the proposed new or amended medical coverage policy is modified, then the Department shall, at least 15 days prior to its adoption:
a.	Notify all Medicaid providers of the proposed policy;
b.	Upon request, provide persons notice of amendments to the proposed policy; and
c.	Accept additional oral or written comments during this 15‑day period."

MEDICAID RESERVE FUND TRANSFER
SECTION 10.7.(a)  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of fifty‑three million dollars ($53,000,000) for the 2006‑2007 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for Medicaid programs. Notwithstanding the prescription in G.S. 143‑23.2(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.
SECTION 10.7.(b)  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of five million  four thousand five hundred four dollars ($5,004,504) for the 2006‑2007 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for the implementation of the Medicaid Management Information System (MMIS).

PILOT PROJECTS TO CONTROL COST AND IMPROVE QUALITY OF CARE FOR AGED, BLIND, AND DISABLED MEDICAID RECIPIENTS
SECTION 10.7A.(a)  Section 10.17.(a) of S.L. 2005-276  reads as rewritten:
"SECTION 10.17.(a)  The Department of Health and Human Services shall expand the scope of Community Care of NC care management model to recipients of Medicaid and dually eligible individuals with a chronic condition and long‑term care needs.  In expanding the scope, the Department shall focus on the Aged, Blind, and Disabled, and CAP‑DA populations for improvement in management, cost‑effectiveness, and local coordination of services through Community Care of NC and in collaboration with local providers of care.  The Department shall target personal care services, private duty nursing, home health, durable medical equipment, ancillary professional services, specialty care, residential services, including skilled nursing facilities, home infusion therapy, pharmacy, and other services determined target‑worthy by the Department.  The Department shall pilot communitywide initiatives and shall expand statewide successful models. The initiatives may include one or more pilot projects to control costs and improve quality of care for the aged, blind, and disabled recipients of Medicaid."
SECTION 10.7A.(b)  Section 10.14 of S.L. 2005-276 reads as rewritten:
"SECTION 10.14.  The Department of Health and Human Services may use not more than three million dollars ($3,000,000) in the 2005‑2006 fiscal year and not more than three million dollars ($3,000,000) in the 2006‑2007 fiscal year in Medicaid funds budgeted for program services to support the cost of administrative activities when cost‑effectiveness and savings are demonstrated.  The funds shall be used to support activities that will contain the cost of the Medicaid Program, including contracting for services, hiring additional staff, or providing grants through the Office of Rural Health and Community Care to plan, develop, and implement cost‑containment programs.
Medicaid cost‑containment activities may include prospective reimbursement methods, incentive‑based reimbursement methods, service limits, prior authorization of services, periodic medical necessity reviews, revised medical necessity criteria, service provision in the least costly settings, plastic magnetic stripped Medicaid identification cards for issuance to Medicaid enrollees, fraud detection software or other fraud detection activities, technology that improves clinical decision making, credit balance recovery and data mining services, and other cost‑containment activities.  Funds may be expended under this section only after the Office of State Budget and Management has approved a proposal for the expenditure submitted by the Department. Proposals for expenditure of funds under this section shall include the cost of implementing the cost‑containment activity and documentation of the amount of savings expected to be realized from the cost‑containment activity.  The Department shall provide a copy of proposals for expenditures under this section to the Fiscal Research Division."

 TICKET TO WORK EFFECTIVE DATE CHANGE
SECTION 10.9.(a)  Section 10.18(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.18.(c)  Subsection (b) of this section becomes effective July 1, 2006. Subsection (a) of this section becomes effective July 1, 2007.
Client enrollment shall begin not later than six months from the date subsection (a) becomes effective. The remainder of this section is effective when it becomes law."
SECTION 10.9.(b)  The Department of Health and Human Services shall study and develop a plan for the implementation of the Ticket to Work Program.  The Department shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than March 1, 2007, on the results of its study.  The report shall include what system changes need to be made to implement the Ticket to Work Program, how soon the changes can be made, and an analysis of the five‑year fiscal impact of the Program.

 MEDICAID/HEALTH CHOICE  DENTAL ADMINISTRATIVE SERVICES STUDY
SECTION 10.9A.  The Department of Health and Human Services, Division of Medical Assistance, shall study the costs and benefits of implementing a carve‑out of dental administrative services provided by third‑party administrators for Medicaid and NC Health Choice recipients.  In conducting the study, the Division shall review the experiences of other states using carve‑out for administrative services and the likelihood that a carve‑out will increase the number of dentists willing to serve Medicaid and NC Health Choice recipients. The Department of Health and Human Services shall report its findings and recommendations and shall include in the report a comparison of what Medicaid and SCHIP dental programs in other states have done or are doing to increase the number of Medicaid and SCHIP recipients accessing dental care.  The Department of Health and Human Services shall submit the report to the House of Representatives Appropriations Committee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division of the Legislative Services Office not later than March 1, 2007.

EXTEND EFFECTIVE DATE ON CHANGES to liens on real property for purposes of estate recovery under medicaid
SECTION 10.9B.  Section 10.21C(c) of S.L. 2005‑276, as amended by Section 16 of S.L. 2005‑345,  reads as rewritten:
"SECTION 10.21C.(c)  This section becomes effective July 1, 2007, and applies to recipients of medical assistance on or after that date."

 PILOT PROGRAM TO EVALUATE USE OF TELEMONITORING EQUiPMENT IN HOME CARE SERVICES
SECTION 10.9C.  The Department of Health and Human Services, Division of Medical Assistance, may implement a pilot program to evaluate the use of telemonitoring equipment in home care services and community‑based long‑term care services.  The pilot program may be implemented by October 1, 2006, and shall evaluate the use of telemonitoring equipment as a tool to improve the health of home care clients and community‑based long‑term care clients through increased monitoring and responsiveness, and resulting in increased stabilization rates.  The evaluation shall include a representative number of older adults.  Not later than July 1, 2007, the Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Fiscal Research Division, and the North Carolina Study Commission on Aging on the implementation of the pilot program and its findings and recommendations on the cost‑effectiveness of telemonitoring and the benefits to individuals and health care providers.

DHHS TO DEVELOP STRATEGIES TO OFFSET THE COST TO PHARMACISTS OF PROVIDING SERVICES TO MEDICAID RECIPIENTS ENROLLED IN MEDICARE PART D.
SECTION 10.9D.  The General Assembly recognizes the critical need for pharmacy management services to Medicaid recipients enrolled in Medicare Part D. In light of the additional costs to pharmacists that provide pharmacy services to Medicaid recipients enrolled in Medicare Part D, and in light of the fact that federal law does not provide federal matching funds under the Medicaid program for these services, the Department of Health and Human Services shall develop strategies for reimbursing or otherwise assisting pharmacists in providing these services to Medicaid recipients enrolled in Medicare Part D.  In developing the strategies, the Department shall specifically address the special circumstances of pharmacists that provide pharmacy services to long-term care facilities. Among the strategies to be considered is a State‑funded subsidy program to ensure that pharmacies adversely affected by the additional costs may remain in business and thus continue to provide pharmacy services throughout the State. As part of this effort, the Department shall also determine the impact of the Deficit Reduction Act of 2005 on the payment for generic drugs under the Medicaid Program. The Department shall report its findings and recommended strategies to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than April 1, 2007.

 CAP MEDICAID COUNTY SHARE
SECTION 10.9E.(a)  Notwithstanding any other provision of law to the contrary, each county's portion of the nonfederal share of Medical Assistance Program costs, excluding administrative costs, for the 2006‑2007 fiscal year and thereafter, shall not exceed the amount paid by the county for the nonfederal share of Medical Assistance Program costs, excluding administrative costs, for the 2005‑2006 fiscal year.  The limitation on the county share shall be in effect regardless of growth in Medical Assistance Program expenditures for the 2007‑2008 fiscal year and thereafter.
SECTION 10.9E.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, the sum of eighteen million dollars ($18,000,000) in recurring funds for the 2006‑2007 fiscal year shall be used to cover the increased cost to the State resulting from the cap on county share required by this section.  

 STATE‑COUNTY SPECIAL ASSISTANCE
SECTION 10.9F.  Effective October 1, 2006, the maximum monthly rate for residents in adult care home facilities shall be one thousand one hundred forty‑eight dollars ($1,148) per month per resident.

HEALTH INFORMATION SYSTEMS (HIS) FUNDS
SECTION 10.13.(a)  The sum of nine million eight hundred thirty‑five thousand seven hundred ninety‑five dollars ($9,835,795) is appropriated from Budget Code 24430, Fund Code 2117, to the Department of Health and Human Services, Division of Public Health, for the 2006‑2007 fiscal year.  These funds shall be used for the development and implementation of the Health Information Systems (HIS), an initiative that will provide an automated means of capturing, monitoring, reporting, and billing services provided in local health departments, CDSAs, and the State Public Health Lab.  The HIS will allow for interfaces to local health departments' own vendor systems and is intended to replace the outdated Health Services Information System. Allocation of these funds is contingent upon full compliance with the reporting requirements of Section 10.59A.(b) of S.L. 2005‑276 and the identification of total estimated costs and future funding sources.
SECTION 10.13.(b)  The Department of Health and Human Services, Division of Public Health, shall report on the use of these funds to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than March 1, 2007.

EARLY INTERVENTION SERVICES REPORT
SECTION 10.15.  The Department of Health and Human Services, Division of Public Health, shall report on Early Intervention services.  The report shall include the following information for all children, ages birth to three years, entering the Early Intervention system as of July 1, 2006, through December 31, 2006:
(1)	Children served: the number of children referred and the source of referral, the number of children receiving initial evaluations, the number of children determined eligible, the number of children enrolled, and the number of IFS Plans developed.
(2)	Services provided: the number and types of evaluation services, treatment services, and other services provided and whether the service was provided by an employee of a Children's Developmental Services Agency or a private provider.
(3)	Sliding scale participation: the percentage of enrolled children whose family income falls into each of the following categories: at or below 200% of the federal poverty level, between 250% and 300% of the federal poverty level, between 350% and 400% of the federal poverty level, and over 400% of the federal poverty level. These percentages shall be reported based on gross income and net income after allowable deductions.
The Division of Public Health shall report its findings and recommendations to the Senate Appropriations Committee on Health and Human Services, the House of Representative Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than February 1, 2007.

GOLDEN LEAF FOUNDATION GRANT-IN-AID TO SUPPORT EARLY INTERVENTION PROGRAMS
SECTION 10.15A.(a)  Pursuant to Section 2(b) of S.L. 1999‑2, of the fifty percent (50%) of the annual installment payment to the North Carolina State Specific Account otherwise transferred and assigned to The Golden L.E.A.F. (Long‑Term Economic Advancement Foundation), Inc., during the 2006‑2007 fiscal year, the sum of six million three hundred thousand dollars ($6,300,000) for the 2006-2007 fiscal year is transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to supplement General Fund appropriations for early intervention programs. These funds shall be used to support early intervention programs and services in tobacco dependent regions of the State or those communities receiving impact assistance under the Tobacco Litigation Master Settlement Agreement. The Attorney General shall take all necessary actions to notify the court in the action entitled State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, and the administrators of the State Specific Account established under the Master Settlement Agreement of this action by the General Assembly redirecting this payment.
SECTION 10.15A.(b)  Of the funds transferred to the State Controller for deposit in Nontax Budget Code 19978 as provided in subsection (a) of this section, the sum of six million three hundred thousand dollars ($6,300,000) for the 2006-2007 fiscal year is appropriated to the Department of Health and Human Services, Division of Public Health, to support early intervention programs and services.

 COMMUNITY HEALTH CENTER CHANGES
SECTION 10.16.  Section 10.9(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.9.(a)  Of the funds appropriated in this act for Community Health Grants, the sum of five million dollars ($5,000,000)  for the 2006‑2007 fiscal year shall be allocated to federally qualified health centers and those health centers that meet the criteria for federally qualified health centers, State‑designated rural health centers, free clinics, public health departments, and other nonprofit organizations that provide primary and preventive medical services to uninsured or medically indigent patients to:
(1)	Increase access to preventative and primary care services by uninsured or medically indigent patients in existing or new health center locations;
(2)	Establish community health center services in counties where no such services exist;
(3)	Create new services or augment existing services provided to uninsured or medically indigent patients, including primary care and preventative medical services, dental services, pharmacy, and behavioral health; and
(4)	Increase capacity necessary to serve the uninsured by enhancing or replacing facilities, equipment, or technologies.
Grant funds may not be used to enhance or increase compensation or other benefits of personnel, administrators, directors, consultants, or any other parties. Grant funds may not be used to supplant federal funds traditionally received by federally qualified community health centers and may not be used to finance or satisfy any existing debt. In distributing funds, the Department of Health and Human Services shall consider the availability of other funds for the agency, the incidence of poverty or indigent clients served, arrangements for after-hours care, and collaboration with the applicant's community hospital and other safety net organizations."

 COMMUNITY‑FOCUSED ELIMINATING HEALTH DISPARITIES INITIATIVE
SECTION 10.18.  Of funds appropriated in this act to the Department of Health and Human Services for the 2006‑2007 fiscal year, the sum of two million dollars ($2,000,000) shall be allocated for the Community‑Focused Eliminating Health Disparities Initiative (CFEHDI) to provide grants‑in‑aid to local public health departments, American Indian tribes, and faith‑based and community‑based organizations to close the gap in the health status of African‑Americans, Hispanics/Latinos, and American Indians as compared to white persons. These grants shall focus on the use of preventive measures to support healthy lifestyles. The areas of focus on health status shall be infant mortality, HIV‑AIDS and sexually transmitted infections, cancer, diabetes, and homicides and motor vehicle deaths.

CLARIFICATION OF CERTAIN AUDIT REQUIREMENTS
SECTION 10.19.  G.S. 143B‑139.4.(b) reads as rewritten:
"(b)	A private, nonprofit organization that receives employee assistance or other appropriate services in accordance with subsection (a) of this section, shall document all contributions received, including employee time, supplies, materials, equipment, and physical space. The documentation shall also provide an estimated value of all contributions received as well as any compensation paid to or bonuses received by State employees. This documentation shall be submitted annually to the Secretary of the Department of Health and Human Services in a format approved by the Secretary. Nonprofit organizations with less than five hundred thousand dollars ($500,000) in annual income shall submit an affidavit or annual audit from the chief officer of the organization providing and attesting to the financial condition of the organization and the expenditure of funds or use of State employee services or other State services, within six months from the nonprofit's fiscal year end. The board of directors of each private, nonprofit organization with an annual income of  five hundred thousand dollars ($500,000) or more shall secure and pay for the services of the State Auditor's Office or employ a certified public accountant to conduct an annual audit of the financial accounts of the organization. The board of directors shall transmit to the Secretary of the Department a copy of the annual financial audit report of the private nonprofit organization. Nothing in this subsection shall be construed to relieve the private, nonprofit organization from other applicable reporting requirements established by law."

 funds to assist rural hospitals
SECTION 10.19A.  Of the funds appropriated in this act to the Department of Health and Human Services, Office of Rural Health and Community Care, the sum of three million dollars ($3,000,000) for the 2006‑2007 fiscal year shall be allocated to small rural hospitals in need of assistance with the operations and infrastructure maintenance of the hospital.  These funds may be used for:
(1)	Capital and operational needs of small rural hospitals. The Office of Rural Health and Community Care shall convene an advisory group to establish criteria for distribution of these funds. The criteria shall include the number of indigent patients served, the number of Medicaid recipients served, the per capita income of the area served by the hospital, and the financial needs of the hospital; and
(2)	Pilot demonstration programs that address issues critical to the long‑term survivability of rural hospitals such as: development of regional care networks for mental health services; restructuring of emergency department and outpatient services; and disease‑focused regional referral and care networks. The Office of Rural Health and Community Care shall convene an advisory group to establish criteria for the pilot demonstration projects, distribution of funds, and monitoring and evaluation of the pilot projects.
The Office of Rural Health and Community Care shall report on the allocation of funds appropriated under this section to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than April 1, 2007.

 AIDS DRUG ASSISTANCE PROGRAM
SECTION 10.21.  Section 10.59(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.59.(a)  For the 2006‑2007 fiscal year, the Department may adjust the financial eligibility criterion of the ADAP Program up to an amount not exceeding two hundred fifty percent (250%) of the federal poverty level in order to serve as many eligible North Carolinians living with HIV disease as possible within existing resources plus any new federal resources. If the Department raises the eligibility limit above one hundred twenty‑five percent (125%) of the federal poverty level and a waiting list develops as a result, the Department shall give priority on the waiting list to those individuals at or below one hundred twenty‑five percent (125%) of the federal poverty level. The Commission for Health Services shall adopt temporary rules in accordance with G.S. 150B-21.1 to implement adjustments in financial eligibility, including wait-list priorities, as soon as possible in order to access additional federal funds made available for ADAP program services."

LONG TERM CARE OMBUDSMAN AND NC SOCIAL SERVICES CONSORTIUM COOPERATE ON QUALITY IMPROVEMENT PROGRAM IMPLEMENTATION
SECTION 10.21A.  Of the positions funded in this act for the Long Term Care Ombudsman Program, a sufficient number shall be allocated to test the Quality Improvement Program in two pilot counties prior to the Quality Improvement Program's implementation statewide.  The Long Term Care Ombudsman Program shall work with the NC Social Services Consortium to implement the requirements of this section.

 Area Authority and County Program Crisis Regions
SECTION 10.26.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of five million two hundred fifty thousand dollars ($5,250,000) for the 2006‑2007 fiscal year shall be allocated on a per capita basis and shall be used by area authorities and county programs for operational start‑up, capital, or subsidies related to the development and implementation of a plan for a continuum of regional crisis facilities and local crisis services ("crisis plan"). Funds not expended during the 2006‑2007 fiscal year shall not revert to the General Fund but shall remain available for the purposes outlined in this subsection. As used in this subsection, the term "crisis" includes services for individuals with mental illnesses, developmental disabilities, and substance abuse addictions.
SECTION 10.26.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of two hundred twenty‑five thousand dollars ($225,000) for the 2006‑2007 fiscal year shall be used by the Department to hire a consultant to provide technical assistance to Local Management Entities (LMEs) to develop and implement the crisis plans required under subsection (a) of this section. As used in this subsection, the term "consultant" may refer to an individual or a business entity such as a corporation, a partnership, or a limited liability company. The roles and responsibilities of the Department, the consultant, and the LMEs are more fully explained in subsection (c) of this section. Funds not expended during the 2006‑2007 fiscal year shall not revert to the General Fund but shall remain available for the purposes outlined in this subsection.
SECTION 10.26.(c)  The Department of Health and Human Services shall hire a consultant to assist LMEs to carry out the requirements of this section. In addition to any other factors the Department determines are relevant when selecting the consultant, the Department shall take into consideration whether an applicant has prior experience evaluating crisis services at a local, regional, and statewide level, prior experience assisting State and local public agencies develop and implement crisis services, and the ability to implement its responsibilities within the time frames established under this section.
The consultant shall do all of the following:
(1)	Develop a model for a continuum of crisis services for an urban area and for a rural area. The model shall outline how an LME, or a group of LMEs, can develop over a period of time the following components:  24‑hour crisis telephone lines, walk‑in crisis services, mobile crisis outreach, crisis respite/residential services, crisis stabilization units, 23‑hour beds, regional crisis facilities, inpatient crisis and transportation. Options for voluntary admissions to a secured facility shall include at least one service appropriate to address the mental health, developmental disability, and substance abuse needs of adults, and the mental health, developmental disability, and substance abuse needs of children. Options for involuntary commitment to a secured facility shall include at least one option in addition to admission to a State facility. These models shall be the first deliverable under the consultant's contract.
(2)	Review the findings and recommendations regarding crisis services developed by the Department as part of the long‑range plan required under Section 10.24 of S.L. 2005‑276. The consultant shall use this information and any other information it determines to: identify local and regional gaps in crisis services; identify options for providing those services; assist LMEs with developing and implementing a plan to provide a continuum of crisis services; and maintain transparency and accountability for the use of funds appropriated under this section.
(3)	Designate appropriate groupings of LMEs for the development of regional crisis facilities. As used in this section, the term "regional crisis facility" means a facility‑based crisis unit that serves an area that may be larger than the catchment area of a single LME. The consultant shall consult with LMEs in determining the grouping of LMEs for regional crisis facilities. The consultant shall also take into consideration geographical factors, prior LME groupings and partnerships, and existing community facilities. Each LME shall participate in the regional grouping established by the consultant in order to be eligible to receive funding under this section.
The consultant shall work with each regional group to determine whether a facility‑based crisis center is needed in that region and whether one would be financially sustainable on a long‑term basis. If the regional group and the consultant determine that a regional crisis facility is needed and sustainable, the regional group shall attempt to secure those services through a community hospital or other community facility first.
(4)	Assist LMEs to develop a plan to implement a continuum of local crisis services. The plan shall be consistent with the models developed by the consultant under subdivision (1) of this subsection and shall address any gaps in crisis services identified by the study required under Section 10.24 of S.L. 2005‑276. The plan for a continuum of local crisis services may be combined with a plan for the implementation of a regional crisis facility.
SECTION 10.26.(d)  The Department may allocate up to three percent (3%) of the funds appropriated under subsection (a) of this section to LMEs to assist them with the cost of developing their crisis services plans. Each LME shall submit its crisis services plan to the consultant and to the Department for review no later than March 1, 2007. The plan shall take into consideration all other sources of funds in addition to the funds appropriated under this section. The consultant and the Department shall review the plans to determine whether they meet all the requirements of this section. If the plan meets all the requirements of this section, the LME shall receive funding to implement the plan.  
SECTION 10.26.(e)  LMEs shall report monthly to the consultant and to the Department regarding the use of the funds, whether there has been a reduction in the use of State psychiatric hospitals for acute admissions, and any remaining gaps in local and regional crisis services. The consultant and the Department shall report quarterly to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Fiscal Research Division, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services regarding each LME's proposed and actual use of the funds appropriated under this section. The reporting requirement under this subsection shall expire July 1, 2008.

 MH/DD/SA SERVICES CONSULTANT TASKS
SECTION 10.28.  Independent consultants hired by the Department of Health and Human Services from funds appropriated in this act for consultation purposes shall undertake the following tasks:
(1)	Assist the Department with the strategic planning necessary to develop the revised State Plan as required under G.S. 122C‑102. The State Plan shall be coordinated with local and regional crisis service plans by area authorities and county programs.
(2)	Study and make recommendations to increase the capacity of the Department to implement system reform successfully and in a manner that maintains strong management functions by area authorities and county programs at the local level.
(3)	Assist the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to work with area authorities and county programs to:
a.	Develop and implement five to ten critical performance indicators to be used to hold area authorities and county programs accountable for managing the mental health, developmental disabilities, and substance abuse services system. The performance system indicators shall be implemented no later than six months after the consultant's contract is awarded and in no event later than July 1, 2007.
b.	Standardize the utilization management functions for Medicaid and non‑Medicaid services and for the review and approval of person‑centered plans.
c.	Develop area authorities' and county programs' expertise to assume utilization management for Medicaid services. The goal shall be to have a portion of the area authorities and county programs assume that function beginning July 1, 2007, and the remainder to assume the function no later than July 1, 2009.
d.	Implement other uniform procedures for the management functions of area authorities and county programs.
(4)	Provide technical assistance and oversight to private service providers, area authorities, and county programs to ensure that best practices and new services are being delivered with fidelity to the service definition model.

INDEPENDENT‑ AND SUPPORTIVE‑LIVING APARTMENTS INITIATIVE
SECTION 10.30.  The independent and supportive living apartments for persons with disabilities constructed from funds appropriated in this act for that purpose shall be affordable to persons with incomes at the Supplemental Security Income (SSI) level. If the North Carolina Housing Finance Agency is able to finance the apartments for less than the amount appropriated under this section, any remaining funds, as well as any interest earned on the amount appropriated, may be used to finance additional apartments, group homes, and transitional housing for individuals with disabilities.

 LOCAL MANAGEMENT ENTITY ADMINISTRATIVE FUNCTIONS
SECTION 10.32.  The Department of Health and Human Services shall recalculate local management entity (LME) systems management allocations for fiscal year 2006‑2007 to include funds for each LME to implement the following:
(1)	24‑hour, seven days a week screening, triage, and referral;
(2)	Provider endorsement, monitoring, technical assistance, capacity development, and quality control;
(3)	Authorization of all State‑funded services;
(4)	Care coordination, including the direct monitoring of the effectiveness of person‑center plans;
(5)	Community collaboration and consumer affairs; and
(6)	Financial management and accountability and information management.

 DISTRIBUTION OF MENTAL HEALTH, SUBSTANCE ABUSE and crisis SERVICES FUNDS
SECTION 10.33A.(a)  Funds appropriated in this act for mental health services, substance abuse services, and crisis services shall be allocated to local management entities such that each local management entity receives a percentage of the total allocation that is equal to that local management entity's percentage of the State's total population that is below the federal poverty level.
SECTION 10.33A.(b)  Funds allocated pursuant to subsection (a) of this section for substance abuse services may  be used to replace lost federal funding for substance abuse services in drug treatment courts, provided that such funds shall be allocated only in the amount of lost funding and shall not exceed one million seven hundred thousand dollars ($1,700,000).  Before allocating these funds, the Department of Health and Human Services shall verify the loss of federal funding for substance abuse services in drug treatment courts and the amount of federal funds lost.
SECTION 10.33A.(c)  The local management entity shall consult with the local drug treatment court team and shall select a treatment provider that meets all provider qualification requirements and the drug treatment court's needs. A single treatment provider may be chosen for non‑Medicaid‑eligible participants only. A single provider may be chosen who can work with all of the non‑Medicaid‑eligible drug treatment court participants in a single group.
SECTION 10.33A.(d)  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall study whether the target population for substance abuse services needs to be expanded to include more participants of the drug treatment courts, and shall report its findings to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than April 1, 2007.

ACCESS TO PSYCHIATRIC SerVICES
SECTION 10.33G. Funds appropriated in this act to increase access to psychiatric services for the 2006‑2007 fiscal year may be used for the following purposes:
(1)	To cover non‑fee‑for‑service billable functions that psychiatrists perform, including incentives to increase the participation of psychiatrists in new best‑practice models of service such as Community Treatment Teams;
(2)	Designing graduate medical education incentives to influence the training of psychiatrists to produce more psychiatrists interested in working with public sector communities;
(3)	Designing programs for loan forgiveness and recruitment incentives for new psychiatrists serving Medicaid and other State‑funded consumers.

Psychiatric hospital debt Service
SECTION 10.33H.(a)  G.S. 143‑15.3D(c) reads as rewritten:
"(c)	Notwithstanding G.S. 143‑18, any nonrecurring savings in State appropriations realized from the closure of any State psychiatric hospitals that are in excess of the cost of operating and maintaining a new State psychiatric hospital shall not revert to the General Fund but shall be placed in the Trust Fund and shall be used for the purposes authorized in this section. Notwithstanding G.S. 143‑18, recurring savings realized from the closure of any State psychiatric hospitals shall not revert to the General Fund but shall be  credited to the Department of Health and Human Services to be used only for the purposes of subsections (b)(2) and (b)(3) of this section."
SECTION 10.33H.(b)  This section becomes effective July 1, 2007. Debt service authorized pursuant to Article 9 of Chapter 142 of the General Statutes for the construction of a new State psychiatric hospital shall be paid with funds from the General Fund. Any funds budgeted for debt service on the new psychiatric hospital before July 1, 2007, shall be redirected for purposes authorized under G.S. 143‑15.3D(b)(2) and (b)(3).

 USE OF FUNDS IN MENTAL HEALTH TRUST FUND
SECTION 10.33I.  Of the funds appropriated in this act for mental health, developmental disabilities, and substance abuse services, the sum of twenty‑four million two hundred five thousand dollars ($24,205,000) in nonrecurring funds for the fiscal year 2006‑2007 shall be deposited to the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs.  Of these funds, the sum of nine million two hundred five thousand dollars ($9,205,000) for the 2006‑2007 fiscal year shall be used as follows:
(1)	$1,500,000 for mental health services to be distributed to local management entities.
(2)	$1,500,000 for substance abuse services to be distributed to local management entities.
(3)	$3,000,000 for mental health, developmental disabilities, and substance abuse crisis services.
(4)	$2,000,000 to increase access to psychiatric services.
(5)	$1,205,000 to provide one‑time operating support for independent‑living apartments. It is the intent of the General Assembly to provide funds in future years for operating support for the 400 independent‑living and supportive‑living apartments as they are constructed and ready for occupation.

SUBSTANCE ABUSE SERVICES FUNDS FOR TASC
SECTION 10.33J.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for substance abuse services, the sum of up to three hundred thousand dollars ($300,000) shall be allocated to Treatment Accountability for Safer Communities (TASC).

CHILD CARE ALLOCATION FORMULA
SECTION 10.34.  Section 10.61(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.61.(c)  Notwithstanding subsection (a) of this section, the Department of Health and Human Services shall allocate up to twenty‑two million dollars ($22,000,000) in federal block grant funds and State funds appropriated for fiscal years 2005‑2006 and 2006‑2007 for child care services. These funds shall be allocated to prevent termination of child care services."

 Child Care Funds Matching Requirement
SECTION 10.36.  Section 10.60 of S.L. 2005‑276 reads as rewritten:
"SECTION 10.60. No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving its initial allocation of child care funds appropriated by this act unless federal law requires a match. If the Department reallocates additional funds above twenty-five thousand dollars ($25,000) to local purchasing agencies beyond their initial allocation, local purchasing agencies must provide a twenty-five percent (25%) local match to receive the reallocated funds. Matching requirements shall not apply when funds are allocated because of a disaster as defined in G.S. 166A-4(1)."

 Require Minimum of Smart Start Funds for Child Care Subsidy
SECTION 10.37.  Notwithstanding G.S. 143B‑168.15(g), of the ten million dollars ($10,000,000) appropriated in this act to the North Carolina Partnership for Children, Inc., for the 2006‑2007 fiscal year for local partnership initiatives, a minimum of thirty percent (30%) of the allocation to each local partnership shall be used for child care subsidy.  This percentage shall be in addition to the direct services allocation for the 2006‑2007 fiscal year.

PART X-A. DEPARTMENT OF AGRICULTURE and consumer services

TIMBER SALES RECEIPTS FOR CAPITAL IMPROVEMENTS
SECTION 10A.1.(a)  Section 11.2 of S.L. 2005‑276 reads as rewritten:
"SECTION 11.2. The sum of three hundred sixty‑nine thousand six hundred dollars ($369,600) shall be transferred from the Department of Agriculture and Consumer Services' timber sales capital improvement account in the Department of Agriculture and Consumer Services as such funds become available  during the 2006‑2007 fiscal year and used by the Department for 
		 
	 land acquisition and development at the Tidewater Research Station."
SECTION 10A.1.(b)  Section 11.3 of S.L. 2005‑276 reads as rewritten:
"SECTION 11.3. From funds  that are deposited with the State Treasurer pursuant to G.S. 146‑30 to the credit of the Department of Agriculture and Consumer Services in a capital improvement account, the sum of thirty thousand dollars ($30,000) for the 2006‑2007 fiscal year shall be transferred to the Department of Agriculture and Consumer Services to be used, notwithstanding G.S. 146‑30, by the Department for its plant conservation program under Article 19B of Chapter 106 of the General Statutes for costs incidental to the acquisition of land, such as land appraisals, land surveys, title searches, and environmental studies and for the management of plant conservation program preserves owned by the Department."
SECTION 10A.1.(c)  Funds shall be transferred from the Department of Agriculture and Consumer Services' timber sales capital improvement account in the Department of Agriculture and Consumer Services as such funds become available and shall be used by the Department for capital improvements to the grounds and facilities at the Eastern North Carolina Agricultural Center at Williamston.

PART XI. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

CONSERVATION RESERVE ENHANCEMENT PROGRAM
SECTION 11.1.  Funds appropriated to the Department of Environment and Natural Resources for the 2006‑2007 fiscal year for the Division of Soil and Water Conservation for the Conservation Reserve Enhancement Program for acquiring conservation easements and leases or for contracts under the Program shall not revert, but shall remain available for these purposes.

GRASSROOTS SCIENCE PROGRAM
SECTION 11.3.(a)  Section 12.5 of S.L. 2005‑276, as amended by Section 23 of S.L. 2005‑345, reads as rewritten:
"SECTION 12.5.(a) Of the funds appropriated in this act to the Department of Environment and Natural Resources for the Grassroots Science Program, the sum of three million one hundred ninety‑seven thousand seven hundred sixty‑two dollars ($3,197,762) for the 2005‑2006 fiscal year and the sum of three million one hundred ninety‑seven thousand seven hundred sixty dollars ($3,197,760) for the 2006‑2007 fiscal year is allocated as grants‑in‑aid  as follows:
	2005‑2006	2006‑2007

Aurora Fossil Museum	$59,057	$59,444
Cape Fear Museum	$161,007	$159,444
Carolina Raptor Center	$112,174	$107,658
Catawba Science Center	$133,429	$148,588
Colburn Earth Science
 Museum, Inc.	$74,545	$74,642
Discovery Place	$662,865	$646,907
Eastern NC Regional Science Center	$50,000	$50,820
	
Fascinate‑U	$80,742	$81,792
Granville County Museum Commission,
Inc.–Harris Gallery	$56,422	$56,059
Greensboro Children's Museum	$135,076	$119,418
The Health Adventure Museum of Pack
Place Education, Arts and
Science Center, Inc.	$134,499	$158,058
Highlands Nature Center	$79,268	$75,370
Imagination Station	$86,034	$84,129
The Iredell Museums, Inc.		$61,568
Kidsenses	$50,000	$82,007Museum of Coastal Carolina	$74,192	$72,655
The Natural Science Center of Greensboro, Inc.	$186,354	$176,051
North Carolina Museum of Life
and Science	$379,826	$337,062
Port Discover: Northeastern North Carolina's
Center for Hands‑On Science, Inc.	$50,000	$50,087
Rocky Mount Children's Museum	$72,254	$68,696
Schiele Museum of Natural History
and Planetarium, Inc.	$229,547	$210,764
Sci Works Science Center and
Environmental Park of Forsyth County	$146,499	$145,914
Western North Carolina Nature Center	$112,879	$104,809
Wilmington Children's Museum	$71,093	$65,820

Total	$3,197,762	$3,197,760
SECTION 12.5.(b)  No later than March 1, 2006, the Department of Environment and Natural Resources shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The operating budget for the 2004‑2005 fiscal year.
(2)	The operating budget for the 2005‑2006 fiscal year.
(3)	The total attendance at the museum during the 2005 calendar year.
SECTION 12.5.(c)  No later than March 1, 2007, the Department of Environment and Natural Resources shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The operating budget for the 2005‑2006 fiscal year.
(2)	The operating budget for the 2006‑2007 fiscal year.
(3)	The total attendance at the museum during the 2006 calendar year."
SECTION 11.3.(b)  The Department of Environment and Natural Resources, in consultation with the Fiscal Research Division, shall study the current formula used to calculate the allocations for members of the Grassroots collaborative and shall report no later than January 15, 2007, its findings and any recommendations for revising this formula to be used for the 2007‑2009 fiscal biennium to the Appropriations Subcommittees on Natural and Economic Resources in both the Senate and the House of Representatives.

Coastal recreational fishing Licenses receipts 
SECTION 11.5.  As reimbursement for the funds appropriated under this act to the Division of Marine Fisheries of the Department of Environment and Natural Resources for the 2006‑2007 fiscal year to establish and support two positions in the Division of Marine Fisheries to implement the coastal recreational fishing license provisions of S.L. 2005‑455, which become effective January 1, 2007, the Marine Fisheries Commission and the Wildlife Resources Commission shall disburse from the Marine Resources Fund to the General Fund the sum of three hundred seventy‑five thousand dollars ($375,000) from receipts from license fees collected during the 2006‑2007 fiscal year.

Emergency Drinking Water Fund Established
SECTION 11.6.  Article 21 of Chapter 143 of the General Statutes is amended by adding a new Part to read:
"Part 11. Private Drinking Water Wells.
"§ 143-215.74M. Emergency Drinking Water Fund.
The Emergency Drinking Water Fund is established within the Department. The Fund shall be a nonreverting, interest‑bearing fund consisting of monies appropriated to the Fund by the General Assembly and investment interest credited to the Fund. The Fund may be used to pay for notification, to the extent practicable, of persons who reside in the same dwelling unit or who work at the same business at which drinking water is supplied from a private drinking water well that is located within 1,500 feet of known groundwater contamination, to cover the costs of testing private drinking water wells for contamination, and for the provision of alternative drinking water supplies to persons whose drinking water well is contaminated. The Department shall disburse monies from the Fund based on financial need and on the risk to public health posed by groundwater contamination and shall give priority to the provision of services under this section to instances when an alternative source of funds is not available. The funds shall not be used for remediation of groundwater contamination. Nothing in this section expands, contracts, or modifies the obligation of responsible parties under Article 9 or 10 of Chapter 130A of the General Statutes, this Article, or Article 21A of this Chapter to assess contamination, identify receptors, or remediate groundwater or soil contamination. The Department shall establish criteria by which the Department is to evaluate applications and disburse funds from this Fund and may adopt any rules necessary to implement this section."

PART XII. DEPARTMENT OF COMMERCE

EMPLOYMENT SECURITY FUNDS
SECTION 12.1.  Section 13.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.4.(a)  Funds from the Employment Security Commission Reserve Fund shall be available to the Employment Security Commission to use as collateral to secure federal funds and to pay the administrative costs associated with the collection of the Employment Security Commission Reserve Fund surcharge. The total administrative costs paid with funds from the Reserve shall not exceed the total administrative costs paid in fiscal year 2005‑2006.
SECTION 13.4.(b)  There is appropriated from the Employment Security Commission Reserve Fund to the Employment Security Commission of North Carolina the sum of six million three hundred thousand dollars ($6,300,000) for the 2006‑2007 fiscal year to be used for the following purposes:
(1)	Six million dollars ($6,000,000) for the operation and support of local offices.
(2)	Two hundred thousand dollars ($200,000) for the State Occupational Information Coordinating Committee to develop and operate an interagency system to track former participants in State education and training programs.
(3)	One hundred thousand dollars ($100,000) to maintain compliance with Chapter 96 of the General Statutes, which directs the Commission to employ the Common Follow‑Up Management Information System to evaluate the effectiveness of the State's job training, education, and placement programs."

ONE NORTH CAROLINA FUND
SECTION 12.2.  Section 13.6 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.6.(a)  Of the funds appropriated in this act to the One North Carolina Fund, the Department of Commerce may use up to three hundred thousand dollars ($300,000) to cover its expenses in administering the One North Carolina Fund and other economic development incentive grant programs in the 2006‑2007 fiscal year.
SECTION 13.6.(b)  Notwithstanding the provisions of G.S. 143B‑437.71, of the funds appropriated in this act to the One North Carolina Fund, the Department of Commerce shall allocate one million dollars ($1,000,000) for the 2006-2007 fiscal year to Johnson and Wales University in Charlotte for the purpose of providing financial assistance to the University."

EXTEND E‑NC AUTHORITY SUNSET
SECTION 12.3.  Section 4 of S.L. 2003‑425 reads as rewritten:
"SECTION 4. Sections 1 and 2 of this act become effective December 31, 2003, with the e‑NC Authority hereby designated as the successor entity of the Rural Internet Access Authority that will dissolve on that date, as provided by Section 5 of S.L. 2000‑149. The remainder of this act is effective when it becomes law. The e‑NC Authority created in this act is dissolved effective  December 31, 2011. This act is repealed effective December 31, 2011. Part 2F of Article 10 of Chapter 143B of the General Statutes and G.S. 120‑123(77), as enacted by this act, are repealed effective December 31, 2011."

COUNCIL OF GOVERNMENT FUNDS/ELECTRONIC TRANSFER
SECTION 12.4.  Section 13.2(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 13.2.(c)  Funds appropriated by this section shall be paid by electronic transfer in two equal installments, the first no later than September 1, 2006, and the second subsequent to acceptable submission of the annual report due to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division by January 15, 2007, as specified in subdivision (e)(2) of this section."

ADVANCED VEHICLE RESEARCH CENTER /FUNDS SHALL NOT REVERT
SECTION 12.5.  Section 13.8A of S.L. 2005‑276 reads as rewritten:
"SECTION 13.8A.(a)  There is established in the Office of the State Budget and Management a reserve to be known as the Advanced Vehicle Research Center Reserve. Funds from the Reserve shall not be expended or transferred except in accordance with the provisions of this section.
SECTION 13.8A.(b)  Of the funds appropriated by this act to the Advanced Vehicle Research Center Reserve, and the funds available in the Reserve on June 30, 2006, as provided in subsections (g) and (h) of this section,  the Office of State Budget and Management may transfer in up to four installments the sum of fifteen million dollars ($15,000,000) for the 2006-2007 fiscal year to the Department of Commerce to be allocated to the Advanced Vehicle Research Center of North Carolina, Inc., (Center) when the Office of State Budget and Management, in consultation with the Department of Commerce, determines the Center has completed goals and projects consistent with the Center's business plan. The goals and projects shall include the following:
(1)	The Center has obtained legal title to the property on which the Advanced Vehicle Research Center will be built.
(2)	The Center has determined and provided for the critical infrastructure needed to support the Advanced Vehicle Research Center.
(3)	The Center has entered into a contract for the use and operation of a testing facility that will create new private sector jobs in Tier 1 or Tier 2 counties.
SECTION 13.8A.(c)  The Center shall file with the Office of State Budget and Management and the Department of Commerce a copy of the Center's policy addressing conflicts of interest that may arise involving the Center's management employees and the members of its board of directors or other governing body before funds may be allocated to the Center. The policy shall address situations in which any of these individuals may directly or indirectly benefit, except as the Center's employees or members of the board or other governing body, from the Center's disbursing of State funds, and shall include actions to be taken by the entity or the individual, or both, to avoid conflicts of interest and the appearance of impropriety.
SECTION 13.8A.(d)  By December 31, 2006, and April 30, 2007, the Center shall report to the Governor, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division the following information: (i) fiscal year 2006‑2007 projects, objectives, and accomplishments; and (ii) fiscal year 2005‑2006 itemized expenditures and fund sources. The April 30, 2007, report shall also contain the following: (i) fiscal year 2007‑2008 planned projects, objectives, and accomplishments; and (ii) fiscal year 2006‑2007 estimated expenditures and fund sources.
SECTION 13.8A.(e)  The Center shall provide to the Governor, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division: (i) a copy of the Center's annual audited financial statement within 30 days of issuance of the statement; and (ii) a copy of the Center's IRS Form 990.
SECTION 13.8A.(f)  The Center shall provide a report containing detailed budget information to the Office of State Budget and Management in the same manner as State departments and agencies in preparation for biennium budget requests. Specific salary information will be provided upon written request by the Chairmen of the Joint Legislative Commission on Governmental Operations or the Chairmen of the House Appropriations Committee on Environment, Health, and Natural Resources and the Chairman of the Senate Appropriations Committee on Natural and Economic Resources. 
SECTION 13.8A.(g)  Funds appropriated to the Advanced Vehicle Research Center Reserve for the 2005‑2006 fiscal year for the Advanced Vehicle Research Center of North Carolina, Inc., that are unexpended and unencumbered as of  June 30, 2006, shall not revert to the General Fund on June 30, 2006, but shall remain available in the Reserve.
SECTION 13.8A.(h)  Subsection (g) of this section becomes effective June 30, 2006."

WANCHESE SEAFOOD INDUSTRIAL PARK/OREGON INLET FUNDS
SECTION 12.6.  Section 13.1 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.1.(a)  Funds appropriated to the Department of Commerce for the 2005‑2006 fiscal year for the Wanchese Seafood Industrial Park that are unexpended and unencumbered as of June 30, 2006, shall not revert to the General Fund on June 30, 2006, but shall remain available to the Department to be expended by the Wanchese Seafood Industrial Park for operations, maintenance, repair, and capital improvements in accordance with Article 23C of Chapter 113 of the General Statutes. 
SECTION 13.1.(b)  Funds appropriated to the Department of Commerce for the 2005‑2006 fiscal year for the Oregon Inlet Project that are unexpended and unencumbered as of June 30, 2006, shall not revert to the General Fund on June 30, 2006.
SECTION 13.1.(c)  This section becomes effective June 30, 2006."

DEPARTMENT OF COMMERCE/REPORT ON AGRIBUSINESS FUNDS
SECTION 12.7.(a)  The Department of Commerce (Department) shall report on all funds available for companies or organizations designed to promote agribusiness in North Carolina. The report shall include the following:  (i) information on all Department economic incentive funds, including Commerce State Aid funds; and (ii) information on the number of agribusinesses and organizations that applied for State funds through the Department or other organizations, including the number of requests for funds, the amount of funds requested, and whether the requests were awarded or denied.
SECTION 12.7.(b)  In the report, the Department shall make recommendations for the development of economic incentive programs designed specifically for agribusinesses. The report shall include a plan to implement the programs recommended and the estimated cost of the programs.  In determining the estimated cost of the programs, the Department shall consider and include all sources of funding, including federal, State, local, and grant funds.
SECTION 12.7.(c) The Department shall collaborate with the Department of Agriculture and Consumer Services, the Rural Economic Development Center, Inc., and the University System, in preparing the report.
SECTION 12.7.(d)  The Department shall submit the report to the House Appropriations Committee on Environment, Health, and Natural Resources, the Senate Appropriations Committee on Natural and Economic Resources, and the Fiscal Research Division no later than May 1, 2007.

PART XIII. RESERVED

PART XIV. JUDICIAL DEPARTMENT

COLLECTION OF WORTHLESS CHECK FUNDS
SECTION 14.1.  Notwithstanding the provisions of G.S. 7A‑308(c), the Judicial Department may use any balance remaining in the Collection of Worthless Checks Fund on June 30, 2006, for the purchase or repair of office or information technology equipment during the 2006‑2007 fiscal year.  Prior to using any funds under this section, the Judicial Department shall report to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the equipment to be purchased or repaired and the reasons for the purchases.

GRANT FUNDS
SECTION 14.2.  The Judicial Department may use up to the sum of one million two hundred fifty thousand dollars ($1,250,000) from funds available to the Department to provide the State match needed in order to receive grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

PROVIDE ADDITIONAL ASSISTANT DISTRICT ATTORNEYS
SECTION 14.3.(a)  Effective October 1, 2006, G.S. 7A‑60(a1) reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:
		No. of Full‑Time
		Prosecutorial		Asst. District
		District	Counties	Attorneys
	1	Camden, Chowan, Currituck,	 11
		Dare, Gates, Pasquotank,
		Perquimans
	2	Beaufort, Hyde, Martin,	 7
		Tyrrell, Washington
	3A	Pitt	 11	3B	Carteret, Craven, Pamlico	 11
	4	Duplin, Jones, Onslow,	 16
		Sampson
	5	New Hanover, Pender	 16
	6A	Halifax	 5
	6B	Bertie, Hertford,	 5
		Northampton
	7	Edgecombe, Nash, Wilson	 18
	8	Greene, Lenoir, Wayne	 13
	9	Franklin, Granville,	 12
		Vance, Warren
	9A	Person, Caswell	 5
	10	Wake	 38
	11	Harnett, Johnston, Lee	 16
	12	Cumberland	 21
	13	Bladen, Brunswick, Columbus	 12
	14	Durham	 15
	15A	Alamance	 10
	15B	Orange, Chatham	 9
	16A	Scotland, Hoke	 6
	16B	Robeson	 13
	17A	Rockingham	 6	17B	Stokes, Surry	 7
	18	Guilford	 30
	19A	Cabarrus	 8
	19B	Montgomery, Moore, Randolph	 12	19C	Rowan	 7
	20	Anson, Richmond,	 18
		Stanly, Union
	21	Forsyth	 20
	22	Alexander, Davidson, Davie,	 20
		Iredell
	23	Alleghany, Ashe, Wilkes,	 7
		Yadkin
	24	Avery, Madison, Mitchell,	 6		Watauga, Yancey
	25	Burke, Caldwell, Catawba	 18
	26	Mecklenburg	 49	27A	Gaston	 14
	27B	Cleveland,	 10
		Lincoln
	28	Buncombe	 13
	29	Henderson, McDowell, Polk,	 13
		Rutherford, Transylvania
	30	Cherokee, Clay, Graham,	 11
		Haywood, Jackson, Macon,
		Swain."
SECTION 14.3.(b)  Effective January 1, 2007, G.S. 7A‑60(a1), as amended by subsection (a) of this section and by Section 14.2(l) of S.L. 2005-276, reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:
		No. of Full‑Time
		Prosecutorial		Asst. District
		District	Counties	Attorneys
	1	Camden, Chowan, Currituck,	11
		Dare, Gates, Pasquotank,
		Perquimans
	2	Beaufort, Hyde, Martin,	7
		Tyrrell, Washington
	3A	Pitt	11
	3B	Carteret, Craven, Pamlico	11
	4	Duplin, Jones, Onslow,	16
		Sampson
	5	New Hanover, Pender	16
	6A	Halifax	5
	6B	Bertie, Hertford,	5
		Northampton
	7	Edgecombe, Nash, Wilson	18
	8	Greene, Lenoir, Wayne	13
	9	Franklin, Granville,	12
		Vance, Warren
	9A	Person, Caswell	5
	10	Wake	38
	11	Harnett, Johnston, Lee	16
	12	Cumberland	21
	13	Bladen, Brunswick, Columbus	12
	14	Durham	15
	15A	Alamance	10
	15B	Orange, Chatham	9
	16A	Scotland, Hoke	6
	16B	Robeson	13
	17A	Rockingham	6
	17B	Stokes, Surry	7
	18	Guilford	30
	19A	Cabarrus	8
	19B	Montgomery, Moore, Randolph	12
	19C	Rowan	7
	20A	Anson, Richmond,	 10
		Stanly
	20B	Union	 8
	21	Forsyth	20
	22	Alexander, Davidson, Davie,	20
		Iredell
	23	Alleghany, Ashe, Wilkes,	7
		Yadkin
	24	Avery, Madison, Mitchell,	6
		Watauga, Yancey
	25	Burke, Caldwell, Catawba	18
	26	Mecklenburg	49
	27A	Gaston	14
	27B	Cleveland,	10
		Lincoln
	28	Buncombe	13
	29A	McDowell, Rutherford	 6	29B	Henderson, Polk, Transylvania	 7
	30	Cherokee, Clay, Graham,	11
		Haywood, Jackson, Macon,
		Swain."

ADDITIONAL DISTRICT COURT JUDGESHIPS
SECTION 14.4.(a)  G.S. 7A‑133(a) reads as rewritten:
"(a)	Each district court district shall have the numbers of judges as set forth in the following table:
District	Judges	County
1	5	Camden
		Chowan
		Currituck
		Dare
		Gates
		Pasquotank
		Perquimans
2	4	Martin
		Beaufort
		Tyrrell
		Hyde
		Washington
3A	5	Pitt
3B	 6	Craven
		Pamlico
		Carteret
4	8	Sampson
		Duplin
		Jones
		Onslow
5	8	New Hanover
		Pender
6A	2	Halifax
6B	3	Northampton
		Bertie
		Hertford
7	7	Nash 
		Edgecombe
		Wilson
8	6	Wayne 
		Greene
		Lenoir
9	4	Granville
		(part of Vance
		see subsection (b))
		Franklin
9A	2	Person 
		Caswell
9B	2	Warren
		(part of Vance
		see subsection (b))
10	 16	Wake
11	 9	Harnett
		Johnston
		Lee
12	9	Cumberland
13	6	Bladen
		Brunswick
		Columbus
14	 7	Durham
15A	4	Alamance
15B	 5	Orange 
		Chatham
16A	3	Scotland
		Hoke
16B	5	Robeson
17A	 3	Rockingham
17B	4	Stokes 
		Surry
18	12	Guilford
19A	4	Cabarrus
19B	 7	Montgomery
		Moore
		Randolph
19C	 5	Rowan
20A	4	Stanly
		Anson
		Richmond
20B	 4	Union
21	9	Forsyth
22	9	Alexander
		Davidson
		Davie
		Iredell
23	4	Alleghany
		Ashe
		Wilkes
		Yadkin
24	4	Avery
		Madison
		Mitchell
		Watauga
		Yancey
25	 9	Burke 
		Caldwell
		Catawba
26	 18	Mecklenburg
27A	7	Gaston
27B	 5	Cleveland
		Lincoln
28	7	Buncombe
29A	3	McDowell
		Rutherford
29B	4	Henderson
		Polk
		Transylvania
30	 6	Cherokee
		Clay
		Graham
		Haywood
		Jackson
		Macon
		Swain."
SECTION 14.4.(b)  The Governor shall appoint the additional district court judges for Districts 3B, 10, 11, 14, 15B, 17A, 19B, 19C, 20B, 25, 26, 27B, and 30 authorized by this act, and those judges' successors shall be elected in the 2008 election for four‑year terms commencing on January 1, 2009.
SECTION 14.4.(c)  This section becomes effective January 15, 2007, except that as to any district court district subject to section 5 of the Voting Rights Act of 1965, it becomes effective January 15, 2007, or the date upon which subsection (a) of this section is approved under section 5 of the Voting Rights Act of 1965, whichever is later.

PROVIDE ADDITIONAL MAGISTRATES/ELIMINATE MAXIMUM ALLOCATION OF MAGISTRATES
SECTION 14.5.  G.S. 7A‑133(c) reads as rewritten:
"(c)	Each county shall have the numbers of magistrates and additional seats of district court, as set forth in the following table:
			Additional
	Magistrates	Seats of
County	Min.	Court
Camden	1		
Chowan	2		
Currituck	1		
Dare	3		
Gates	2		
Pasquotank	3		
Perquimans	2		
Martin	4		
Beaufort	4		
Tyrrell	1		
Hyde	2		
Washington	3		
Pitt	10		Farmville
			Ayden
Craven	7		Havelock
Pamlico	2		
Carteret	 6		
Sampson	6		
Duplin	8		
Jones	2		
Onslow	8		
New Hanover	6		
Pender	4		
Halifax	9		Roanoke
			Rapids,
			Scotland Neck
Northampton	5		
Bertie	4		
Hertford	5		
Nash	7		Rocky Mount
Edgecombe	4		Rocky Mount
Wilson	4		
Wayne	5		Mount Olive
Greene	 3		
Lenoir	4		La Grange
Granville	3		
Vance	3		
Warren	3		
Franklin	3		
Person	3		
Caswell	2		
Wake	12		Apex,
			Wendell,
			Fuquay‑
			Varina,
			Wake Forest
Harnett	7		Dunn
Johnston	10		Benson,
			Clayton,
			Selma
Lee	4		
Cumberland	10		
Bladen	4		
Brunswick	4		
Columbus	6		Tabor City
Durham	8		
Alamance	 8		Burlington
Orange	4		Chapel Hill
Chatham	3		Siler City
Scotland	3		
Hoke	4		
Robeson	 9		Fairmont,
			Maxton,
			Pembroke,
			Red Springs,
			Rowland,
			St. Pauls
Rockingham	4		Reidsville,
			Eden,
			Madison
Stokes	2		
Surry	5		Mt. Airy
Guilford	20		High Point
Cabarrus	5		Kannapolis
Montgomery	 3		
Randolph	5		Liberty
Rowan	5		
Stanly	5		
Union	4		
Anson	4		
Richmond	5		Hamlet
Moore	5		Southern
			Pines
Forsyth	3		Kernersville
Alexander	2		
Davidson	7		Thomasville
Davie	2		
Iredell	4		Mooresville
Alleghany	1		
Ashe	3		
Wilkes	4		
Yadkin	3		
Avery	3		
Madison	4		
Mitchell	3		
Watauga	4		
Yancey	2		
Burke	4		
Caldwell	4		
Catawba	6		Hickory
Mecklenburg	15		
Gaston	 12		
Cleveland	5		
Lincoln	4		
Buncombe	6		
Henderson	4		
McDowell	3		
Polk	3		
Rutherford	6		
Transylvania	2		
Cherokee	3		
Clay	1		
Graham	2		
Haywood	5		Canton
Jackson	3		
Macon	3		
Swain	2	."

COURT INTERPRETERS
SECTION 14.11.  The Director of the Administrative Office of the Courts shall develop (i) proposed policies and procedures for the appointment and payment of foreign language interpreters to be applied uniformly throughout the General Court of Justice and (ii) recommendations regarding the conversion of contractual foreign language interpreter positions to permanent State positions, including whether permanent interpreter positions are more efficient and cost‑effective than contractual positions. On or before February 1, 2007, the Director shall report to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the proposed policies and recommendations required by this section.

MONITORING OF COMMUNITY MEDIATION CENTERS
SECTION 14.12.  G.S. 7A‑38.6(a) reads as rewritten:
"(a)	All community mediation centers currently receiving State funds shall report annually to the Mediation Network of North Carolina on the program's funding and activities, including:
(1)	Types of dispute settlement services provided;
(2)	Clients receiving each type of dispute settlement service;
(3)	Number and type of referrals received, cases actually mediated (identified by docket number), cases resolved in mediation, and total clients served in the cases mediated;
(4)	Total program funding and funding sources;
(5)	Itemization of the use of funds, including operating expenses and personnel;
(6)	Itemization of the use of State funds appropriated to the center;
(7)	Level of volunteer activity; and
(8)	Identification of future service demands and budget requirements.
The Mediation Network of North Carolina shall compile and summarize the information provided pursuant to this subsection and shall provide the information to the Chairs of the House of Representatives and Senate Appropriations Committees and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety by February 1 of each year.
The Mediation Network of North Carolina shall also submit a copy of its report to the Administrative Office of the Courts. The receipt and review of this report by the Administrative Office of the Courts shall satisfy any program monitoring, evaluation, and contracting requirements imposed on the Administrative Office of the Courts by G.S. 143‑6.2 and any rules adopted under that section."

INDIGENT DEFENSE SERVICES/STATE MATCH FOR GRANTS
SECTION 14.14.  The Office of Indigent Defense Services may use a sum up to fifty thousand dollars ($50,000) from funds available to provide the State matching funds needed to receive grant funds.  Prior to using funds for this purpose, the Office shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

OFFICE OF INDIGENT DEFENSE SERVICES EXPANSION FUNDS
SECTION 14.15.  Section 14.11 of S.L. 2005‑276, as amended by Section 28 of S.L. 2005‑345, reads as rewritten:
"SECTION 14.11. The Judicial Department, Office of Indigent Defense Services, may use up to the sum of two million one hundred eighteen thousand five hundred eighty dollars ($2,118,580) in appropriated funds during the 2006‑2007 fiscal year (i) for the expansion of existing offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services by creating up to 20 new attorney positions and 10 new support staff positions; and (ii) to create up to two new assistant public defender positions and one new support staff position in the First Defender District and up to one new assistant public defender position in Defender District 3A, for the purpose of representing indigent persons eligible for the appointment of counsel in Superior Court District 2 and District Court District 2. These funds may be used for salaries, benefits, equipment, and related expenses. Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the Chairs of the House and the Senate Appropriations Subcommittees on Justice and Public Safety on the proposed expansion."

REVIEW OF OFFICE OF INDIGENT DEFENSE SERVICES
SECTION 14.16.  The State Auditor shall conduct an analysis of the fee payment practices of the Office of Indigent Defense Services and make recommendations for process improvements in payment of fee applications, including recommendations regarding automation. The State Auditor shall report the results of this analysis and the recommendations resulting from it to the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety by March 1, 2007.

INCREASE THE UNIFORM FEES PAID TO JURORS
SECTION 14.17.  G.S. 7A‑312 reads as rewritten:
"§ 7A‑312.  Uniform fees for jurors; meals.
A juror in the General Court of Justice including a petit juror, or a coroner's juror, but excluding a grand juror, shall receive twelve dollars ($12.00)  for the first day of service and twenty dollars ($20.00) per day afterwards, except that if any person serves as a juror for more than five days in any 24‑month period, the juror shall receive  forty dollars ($40.00) per day for each day of service in excess of five days. A grand juror shall receive  twenty dollars ($20.00) per day. A juror required to remain overnight at the site of the trial shall be furnished adequate accommodations and subsistence. If required by the presiding judge to remain in a body during the trial of a case, meals shall be furnished the jurors during the period of sequestration. Jurors from out of the county summoned to sit on a special venire shall receive mileage at the same rate as State employees."

funding to increase mileage reimbursement
SECTION 14.18.  In view of the increase in fuel prices and the limits on travel funds in the Judicial Department, the Administrative Office of the Courts may use up to five hundred thousand dollars ($500,000) in funds available during the 2006‑2007 fiscal year to allow for an increase in the mileage reimbursement rate paid to Judicial Department employees from the current rate of thirty‑seven cents (37¢) per mile to the maximum allowable under G.S. 138‑6(a)(1).

DIVIDE PROSECUTORIAL DISTRICT 19B into districts 19B and 19D
SECTION 14.19.(a)  Effective January 15, 2007, G.S. 7A‑60(a1), as amended by Section 14.3 of this act, reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:
		No. of Full‑Time
		Prosecutorial		Asst. District
		District	Counties	Attorneys
	1	Camden, Chowan, Currituck,	11
		Dare, Gates, Pasquotank,
		Perquimans
	2	Beaufort, Hyde, Martin,	7
		Tyrrell, Washington
	3A	Pitt	11
	3B	Carteret, Craven, Pamlico	11
	4	Duplin, Jones, Onslow,	16
		Sampson
	5	New Hanover, Pender	16
	6A	Halifax	5
	6B	Bertie, Hertford,	5
		Northampton
	7	Edgecombe, Nash, Wilson	18
	8	Greene, Lenoir, Wayne	13
	9	Franklin, Granville,	12
		Vance, Warren
	9A	Person, Caswell	5
	10	Wake	38
	11	Harnett, Johnston, Lee	16
	12	Cumberland	21
	13	Bladen, Brunswick, Columbus	12
	14	Durham	15
	15A	Alamance	10
	15B	Orange, Chatham	9
	16A	Scotland, Hoke	6
	16B	Robeson	13
	17A	Rockingham	6
	17B	Stokes, Surry	7
	18	Guilford	30
	19A	Cabarrus	8
	19B	Montgomery,  Randolph	 8
	19C	Rowan	7
	19D	Moore	4
	20A	Anson, Richmond,	10
		Stanly
	20B	Union	 8
	21	Forsyth	20
	22	Alexander, Davidson, Davie,	20
		Iredell
	23	Alleghany, Ashe, Wilkes,	7
		Yadkin
	24	Avery, Madison, Mitchell,	6
		Watauga, Yancey
	25	Burke, Caldwell, Catawba	18
	26	Mecklenburg	49
	27A	Gaston	14
	27B	Cleveland,	10
		Lincoln
	28	Buncombe	13
	29A	McDowell, Rutherford	6
	29B	Henderson, Polk, Transylvania	7
	30	Cherokee, Clay, Graham,	11
		Haywood, Jackson, Macon,
		Swain."
SECTION 14.19.(b)  The district attorney position established for District 19B by subsection (a) of this section shall be filled by the district attorney currently serving District 19B who resides in Randolph County. The district attorney position established for District 19D by subsection (a) of this section shall be filled by appointment of the Governor for the remainder of the term expiring January 1, 2009. A district attorney for District 19D shall be elected in 2008 for a four‑year term commencing January 1, 2009.
SECTION 14.19.(c)  The eight assistant district attorney positions for District 19B under subsection (a) of this section shall be filled by eight assistant district attorneys currently serving Montgomery and Randolph Counties in District 19B. The four assistant district attorney positions for District 19D under subsection (a) of this section shall be filled by four assistant district attorneys currently serving Moore County in District 19B.
SECTION 14.19.(d)  This section becomes effective January 15, 2007.

PART XV. DEPARTMENT OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION

REPORTS ON CERTAIN PROGRAMS
SECTION 15.1.  Section 16.3 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.3.(a)  Project Challenge North Carolina, Inc., shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee by April 1 each year on the operation and the effectiveness of its program in providing alternative dispositions and services to juveniles who have been adjudicated delinquent or undisciplined. The report shall include information on:
(1)	The source of referrals for juveniles.
(2)	The types of offenses committed by juveniles participating in the program.
(3)	The amount of time those juveniles spend in the program.
(4)	The number of juveniles who successfully complete the program.
(5)	The number of juveniles who commit additional offenses after completing the program.
(6)	The program's budget and expenditures, including all funding sources.
SECTION 16.3.(b)  The Juvenile Assessment Center shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the effectiveness of the Center by April 1 each year. The report shall include information on the number of juveniles served and an evaluation of the effectiveness of juvenile assessment plans and services provided as a result of these plans. In addition, the report shall include information on the Center's budget and expenditures, including all funding sources.
SECTION 16.3.(c)  Communities in Schools shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety, the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee, and the Joint Legislative Education Oversight Committee by April 1 each year on the operation and effectiveness of its program. The report shall include information on:
(1)	The number of children served.
(2)	The number of volunteers used.
(3)	The impact on children who have received services from Communities in Schools.
(4)	The program's budget and expenditures, including all funding sources."

STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS
SECTION 15.2.  Section 16.5 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.5. Funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention for the 2006‑2007 fiscal year may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants, or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Juvenile Justice and Delinquency Prevention shall report to the Appropriations Committees of the Senate and House of Representatives and the Joint Legislative Commission on Governmental Operations prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the  2006‑2007 fiscal year, the amount of funds anticipated for the 2007‑2008 fiscal year, and the allocation of funds by program and purpose."

ANNUAL EVALUATION OF COMMUNITY PROGRAMS
SECTION 15.4.  Section 16.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.4. The Department of Juvenile Justice and Delinquency Prevention shall conduct an evaluation of the Eckerd and Camp Woodson wilderness camp programs, the teen court programs, the program that grants funds to the local organizations of the Boys and Girls Clubs established pursuant to Section 21.10 of S.L. 1999‑237, the Save Our Students program, the Governor's One‑on‑One Programs, and multipurpose group homes. The teen court report shall include statistical information on the number of juveniles served, the number and type of offenses considered by teen courts, referral sources for teen courts, and the number of juveniles that become court‑involved after participation in teen courts. The report on the Boys and Girls Clubs program shall include information on:
(1)	The expenditure of State appropriations on the program;
(2)	The operations and the effectiveness of the program; and
(3)	The number of juveniles served under the program.
In conducting the evaluation of each of these programs, the Department shall consider whether participation in each program results in a reduction of court involvement among juveniles. The Department shall also identify whether the programs are achieving the goals and objectives of the Juvenile Justice Act, S.L. 1998‑202. The Department shall report the results of the evaluation to the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee, the Chairs of the House of Representatives and Senate Appropriations Committees, and the Chairs of the Subcommittees on Justice and Public Safety of the House of Representatives and Senate Appropriations Committees by March 1 of each year."

ALTERNATIVES TO JUVENILE COMMITMENT/JUVENILE CRIME PREVENTION COUNCILS
SECTION 15.5.  Section 16.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.11.(a)  Of the funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention, the sum of two hundred fifty thousand dollars ($250,000) shall be used to expand  Juvenile Crime Prevention Councils demonstration projects designed to reduce commitments to youth development centers. Specifically, the funds shall be awarded to Juvenile Crime Prevention Councils to provide residential and/or community‑based intensive services to juveniles who have been adjudicated delinquent with a level 2 or 3 disposition or who are reentering the community after serving time in a youth development center. The Department shall develop a competitive grant award process to allocate the funds to county Juvenile Crime Prevention Councils. The programs must initiate services to the targeted population no later than March 1, 2006. On June 30, 2006, any funds not awarded for demonstration projects pursuant to this section by the Department shall revert to the General Fund. The Department may award up to four grants to Juvenile Crime Prevention Councils, and no individual grant may exceed one hundred thousand dollars ($100,000).
SECTION 16.11.(b)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee no later than March 1, 2006, on the implementation and award process. The report shall provide a detailed description of the services to be provided by each program, the number and types of juveniles to be served, and the amount awarded to each program.
SECTION 16.11.(c)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety no later than March 1, 2006, and annually thereafter, on the results of the alternatives to commitment demonstration programs funded by Section 16.7 of S.L. 2004‑124. The 2007 report and all annual reports thereafter shall also include projects funded by this section for the 2005‑2006 fiscal year. Specifically, the report shall provide a detailed description of each of the demonstration programs, including the numbers of juveniles served, their adjudication status at the time of service, the services/treatments provided, the length of service, the total cost per juvenile, and the six‑ and 12‑month recidivism rates for the juveniles after the termination of program services.
SECTION 16.11.(d)  The requirements of this section apply to all future allocations by the Department of Juvenile Justice and Delinquency Prevention of the funds appropriated to the Department by Section 16.11 of S.L. 2005‑276 and Section 16.7 of S.L. 2004‑124."

REPORTS ON YOUTH DEVELOPMENT CENTERS
SECTION 15.6.(a)  Section 16.6 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.6.(a)  The Department of Juvenile Justice and Delinquency Prevention shall report December 31, 2005, and quarterly thereafter during the 2005‑2007 biennium to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and to the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee on the treatment staffing model being piloted at Samarkand and Stonewall Jackson Youth Development Centers. The report shall include a list of total positions at each facility by job class, whether the position is vacant or filled, whether positions were filled from internal employees or new employees, and the training and certification status of each position. The report shall also describe the nature of the treatment program, the criteria for evaluating the program, and how the program is performing in comparison to these criteria. The report shall also describe the training approach to be used to train staff in using treatment methods in youth development centers and provide information on current staff training and staff training planned for the next quarter. The Department shall also develop indicators for evaluating staff performance once the model has been implemented.
SECTION 16.6.(b)  The Department of Juvenile Justice and Delinquency Prevention shall report December 31, 2005, and quarterly thereafter during the 2005‑2007 biennium to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee on the implementation of the treatment staffing model at Dobbs, Dillon, and Juvenile Evaluation Center Youth Development Centers. The Department shall identify the number of positions reallocated to the new treatment job classes and the source of funding for those positions.
SECTION 16.6.(c)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee by November 10, 2006, on the final recommended staffing plan for youth development centers for the 2007‑2008 fiscal year. The report shall include:
(1)	The latest results of the evaluation of the pilot treatment staffing models at the Samarkand and Stonewall Jackson Youth Development Centers and the progress in implementing the model at other youth development centers.
(2)	The total recommended staffing by position classification for each youth development center. Staffing by shift shall be provided for each housing unit as well as justification for the level and type of staff on each shift.
(3)	The total cost and cost per bed for each youth development center to implement the staffing model.
(4)	The primary basis for the number of staff at each youth development center by classification.
(5)	An identification of other states that have implemented a treatment based staffing model, how the staffing patterns compare to the Department of Juvenile Justice and Delinquency Prevention proposal, and any research on the benefits and outcomes of using the treatment based approach in these states."
SECTION 15.6.(b)  It is the intent of the General Assembly to consider appropriating funds for new treatment positions at youth development centers only when the report required by subsection (a) of this section is received by the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety.

PART XVI. DEPARTMENT OF CORRECTION

INMATE COSTS/MEDICAL BUDGET FOR PRESCRIPTION DRUGS AND INMATE LAUNDRY SERVICES
SECTION 16.1.  Section 17.6 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.6.(a)  If the cost of providing food and health care to inmates housed in the Division of Prisons is anticipated to exceed the continuation budget amounts provided for that purpose in this act, the Department of Correction shall report the reasons for the anticipated cost increase and the source of funds the Department intends to use to cover those additional needs to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House of Representatives Appropriations Committees, and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety.
SECTION 17.6.(b)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the  2005‑2007 biennium for the purchase of prescription drugs for inmates if expenditures are projected to exceed the Department's inmate medical continuation budget for prescription drugs. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount.
SECTION 17.6.(c)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the  2005‑2007 biennium for the purchase of  laundry services for inmates if expenditures are projected to exceed the Department's budget for clothing and laundry services. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount."

CONVERSION OF CONTRACTED MEDICAL POSITIONS
SECTION 16.2.  Section 17.7 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.7.(a)  The Department of Correction may convert contract medical positions to permanent State medical positions if the Department can document in each request submitted to the Office of State Budget and Management that the total savings generated will exceed the total cost of the new  positions. 
SECTION 17.7.(b)  The Department of Correction shall report by April of each year to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on all conversions made pursuant to this section, by type of position and location, and on the savings generated."

COMPUTER/DATA PROCESSING SERVICES FUNDS
SECTION 16.3.  Section 17.10. of S.L. 2005‑276 reads as rewritten:
"SECTION 17.10. Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the 2005‑2007 biennium for expenses for computer/data processing services if expenditures exceed the Department's continuation budget amount for those services. The Department shall report to the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount."

REPORTS ON NONPROFIT PROGRAMS
SECTION 16.4.  Section 17.22 of Session Laws 2005‑276 reads as rewritten:
"SECTION 17.22.(a)  Funds appropriated in this act to the Department of Correction to support the programs of Harriet's House may be used for program operating costs, the purchase of equipment, and the rental of real property to serve women released from prison with children in their custody. Harriet's House shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who successfully complete the Harriet's House program, and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts.
SECTION 17.22.(b)  Summit House shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked, the number of clients who successfully complete the program while housed at Summit House, Inc., and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts.
SECTION 17.22.(c)  Women at Risk shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the expenditure of State funds and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked, the number of clients who have successfully completed the program, and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts.
SECTION 17.22.(d)  Our Children's Place shall report by February 1, 2007, to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the status of the planning, design, and construction of Our Children's Place, the proposed program components and evaluation measures, and on the projected number of inmates and their children to be served. The report shall also provide financial data, including the expenditure of State funds and all funding sources and amounts."

PAROLE ELIGIBILITY REPORT
SECTION 16.5.  Section 17.28 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.28.(a)  The Post‑Release Supervision and Parole Commission shall, with the assistance of the North Carolina Sentencing and Policy Advisory Commission and the Department of Correction, analyze the amount of time each inmate who is eligible for parole on or before July 1, 2007, has served compared to the time served by offenders under Structured Sentencing for comparable crimes. The Commission shall determine if the person has served more time in custody than the person would have served if sentenced to the maximum sentence under the provisions of Article 81B of Chapter 15A of the General Statutes. The "maximum sentence", for the purposes of this section, shall be calculated as set forth in subsection (b) of this section.
SECTION 17.28.(b)  For the purposes of this section, the following rules apply for the calculation of the maximum sentence:
(1)	The offense upon which the person was convicted shall be classified as the same felony class as the offense would have been classified if committed after the effective date of Article 81B of Chapter 15A of the General Statutes.
(2)	The minimum sentence shall be the maximum number of months in the presumptive range of minimum durations in Prior Record Level VI of G.S. 15A‑1340.17(c) for the felony class determined under subdivision (1) of this subsection. The maximum sentence shall be calculated using G.S. 15A‑1340.17(d), (e), or (e1).
(3)	If a person is serving sentences for two or more offenses that are concurrent in any respect, then the offense with the greater classification shall be used to determine a single maximum sentence for the concurrent offenses. The fact that the person has been convicted of multiple offenses may be considered by the Commission in making its determinations under subsection (a) of this section.
SECTION 17.28.(c)  The Commission shall report to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee  and to the Chairs of the Senate and House of Representatives Appropriations Committees, and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety by April 1, 2007. The report shall include the following:  the class of the offense for which each parole‑eligible inmate was convicted and whether an inmate had multiple criminal convictions. The Commission shall reinitiate the parole review process for each offender who has served more time than that person would have under Structured Sentencing as provided by subsections (a) and (b) of this section.
The Commission shall also report  on the number of parole‑eligible inmates reconsidered in compliance with this section and the number who were actually paroled."

Proposal for Joint Use of Swannanoa Property/adult female correctional facility and juvenile youth development center
SECTION 16.8.  The Department of Correction and the Department of Juvenile Justice and Delinquency Prevention shall prepare a joint report regarding the proposed joint use by both departments of the Swannanoa property currently used to operate the Swannanoa Valley Youth Development Center.  The report shall evaluate the feasibility of using that property for both of the following:  (i) to establish an adult female correctional center and (ii) to continue to operate a juvenile youth development center.
The report shall be submitted to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee by November 10, 2006. The report shall include all of the following:  the total costs for the project over a five‑year period, including operating costs, repair and renovation costs, and the anticipated source of funding for those costs; the number and type of positions to be transferred from the Department of Juvenile Justice and Delinquency Prevention to the Department of Correction for the project; and the plan to employ existing Swannanoa Valley Youth Development Center employees by the Department of Correction. The Department of Correction shall also report on the plan for transferring employees from the Black Mountain Correctional Center to the proposed new correctional center at Swannanoa.
There shall be no transfer of any property or positions between agencies until the report is submitted in accordance with this section.

Federal Grant Matching Funds
SECTION 16.9.  Section 17.9 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.9. Notwithstanding the provisions of G.S. 148‑2, the Department of Correction may use up to the sum of one million dollars ($1,000,000) during the 2006-2007 fiscal year from funds available to the Department to provide the State match needed in order to receive federal grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds."

Gang Prevention Initiative
SECTION 16.10.  The Department of Correction shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety regarding the Security Threat Group Unit Program at Foothills Correctional Center.  The report shall include information on the number of inmates in the program during fiscal years 2005‑2006 and 2006‑2007 compared to program capacity, describe the major program components, provide information on the measures being used to evaluate the program, and analyze program performance in relation to these measures.  The Department of Correction shall submit the report as required by this section no later than March 15, 2007.

PART XVI-A. DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY

Grants to Prevent Gang Violence
SECTION 16A.1.(a)  Of the funds appropriated in this act to the Governor's Crime Commission within the Department of Crime Control and Public Safety, the sum of one million five hundred thousand dollars ($1,500,000) for the 2006‑2007 fiscal year shall be used to provide two‑year grants for community street gang violence prevention and intervention programs.  The Governor's Crime Commission shall allocate the funds using a competitive grant award process that includes a matching requirement of twenty‑five percent (25%), one‑half of which may be in in‑kind contributions, and the presentation of a written plan for the services to be provided by the funds.
No individual grant awarded under this section may exceed one hundred thousand dollars ($100,000).
SECTION 16A.1.(b)  The Governor's Crime Commission shall report to the Chairs of the House of Representatives and Senate Appropriations Committees and the Chairs of the Appropriations Subcommittees on Justice and Public Safety of the House of Representatives and the Senate on the total number of grants awarded, a description of each grantee's program, and the amount awarded to each grantee.  The Commission shall submit its report by April 1, 2007.

PART XVII. DEPARTMENT OF ADMINISTRATION

EXAMINE FEASIBILITY OF COMBINING FUNDING SOURCES/NC COUNCIL FOR WOMEN AND DOMESTIC VIOLENCE COMMISSION
SECTION 17.1.  The North Carolina Council for Women and the Domestic Violence Commission, within the Department of Administration, shall examine the feasibility of combining the funding sources to distribute domestic violence grants and sexual assault grants. The North Carolina Council for Women and the Domestic Violence Commission shall report their findings to the Chairs of the House and Senate Appropriations Subcommittees on General Government by February 1, 2007.

Energy Division Needs Assessment
SECTION 17.2. The Energy Division in the Department of Administration will deplete all its funding sources on June 30, 2007. It has received federal funds which will no longer be available, and it has no other funding source. The Energy Division and the Office of State Budget and Management shall jointly conduct a needs assessment to determine what functions currently being performed by the Energy Division need to be performed in the 2007‑2008 fiscal year. As part of this assessment, the mission statement of the division shall be examined to clarify what existing needs the division should continue in the future. In conducting the needs assessment, the two agencies shall note any differences in the findings and recommendations that each may have related to the needs assessment.
The needs assessment shall be completed and presented to the Chairs of the House and Senate Appropriations Subcommittees on General Government no later than February 1, 2007.

HUB Contractor Academy Program Space
SECTION 17.3.  For the 2006‑2007 fiscal year the Department of Administration shall work in conjunction with The University of North Carolina System for the continued provision of space for the HUB Contractor Academy Program to conduct training sessions.  The Department of Administration shall determine whether the HUB academies should continue to hold training sessions in facilities provided by The University of North Carolina System or seek other sites for this purpose for the 2007‑2008 fiscal year and future years.

Old Revenue Building
SECTION 17.4.  The Department of Administration shall examine the feasibility of redesigning the Old Revenue Building to address security concerns and the unused and underutilized space issues identified in the Space Utilization Study, which was complete on June 5, 2006. The Department shall report its findings and recommendations to the Joint Legislative Commission on Governmental Operations by November 1, 2006.

Commission on State Property Funds
SECTION 17.5.  Of the funds appropriated to the Department of Administration for the 2006‑2007 fiscal year, the Director of the Budget shall transfer two hundred fifty thousand dollars ($250,000) to the Commission on State Property established in Article 78 of Chapter 143 of the General Statutes.

PART XVIII. Office of Administrative hearings

CODIFIER'S AUTHORITY OVER THE REGISTER
SECTION 18.1.  G.S. 150B‑21.17 reads as rewritten:
"§ 150B‑21.17.  North Carolina Register.
(a)	Content. – The Codifier of Rules must publish the North Carolina Register. The North Carolina Register must be published at least two times a month and must contain the following:
(1)	Temporary rules entered in the North Carolina Administrative Code.
(1a)	The text of proposed rules and the text of permanent rules approved by the Commission.
(1b)	Emergency rules entered into the North Carolina Administrative Code.
(2)	Notices of receipt of a petition for municipal incorporation, as required by G.S. 120‑165.
(3)	Executive orders of the Governor.
(4)	Final decision letters from the United States Attorney General concerning changes in laws that affect voting in a jurisdiction subject to section 5 of the Voting Rights Act of 1965, as required by G.S. 120‑30.9H.
(5)	Orders of the Tax Review Board issued under G.S. 105‑241.2.
(6)	Other information the Codifier determines to be helpful to the public.
(b)	Form. – When an agency publishes notice in the North Carolina Register of the proposed text of a new rule, the Codifier of Rules must publish the complete text of the proposed new rule. In publishing the text of a proposed new rule, the Codifier must indicate the rule is new by underlining the proposed text of the rule.
When an agency publishes notice in the North Carolina Register of the proposed text of an amendment to an existing rule, the Codifier must publish the complete text of the rule that is being amended unless the Codifier determines that publication of the complete text of the rule being amended is not necessary to enable the reader to understand the proposed amendment. In publishing the text of a proposed amendment to a rule, the Codifier must indicate deleted text with overstrikes and added text with underlines.
When an agency publishes notice in the North Carolina Register of the proposed repeal of an existing rule, the Codifier must publish the complete text of the rule the agency proposes to repeal unless the Codifier determines that publication of the complete text is impractical. In publishing the text of a rule the agency proposes to repeal, the Codifier must indicate the rule is to be repealed.
(c)	The Codifier may authorize and license nonprofit, private indexing, marketing, sales, reproduction, and distribution of the Register."

PART XIX. DEPARTMENT OF REVENUE

REVISED MAXIMUMS FOR COLLECTION ASSISTANCE FEES
SECTION 19.2.  G.S. 105‑243.1(e) reads as rewritten:
"(e)	Use. – The fee is a receipt of the Department and must be applied to the costs of collecting overdue tax debts. The proceeds of the fee must be credited to a special account within the Department and may be expended only as provided in this subsection. The proceeds of the fee may not be used for any purpose that is not directly and primarily related to collecting overdue tax debts. The Department may apply the proceeds of the fee for the purposes listed in this subsection. The remaining proceeds of the fee may be spent only pursuant to appropriation by the General Assembly. The fee proceeds do not revert but remain in the special account until spent for the costs of collecting overdue tax debts. The Department and the Office of State Budget and Management must account for all expenditures using accounting procedures that clearly distinguish costs allocable to collecting overdue tax debts from costs allocable to other purposes and must demonstrate that none of the fee proceeds are used for any purpose other than collecting overdue tax debts.
The Department may apply the fee proceeds for the following purposes:
(1)	To pay contractors for collecting overdue tax debts under subsection (b) of this section.
(2)	To pay the fee the United States Department of the Treasury charges for setoff to recover tax owed to North Carolina.
(3)	To pay for taxpayer locater services, not to exceed one hundred fifty thousand dollars ($150,000) a year.
(4)	To pay for postage or other delivery charges for correspondence directly and primarily relating to collecting overdue tax debts, not to exceed three hundred fifty‑three thousand dollars ($353,000) a year.
(5)	To pay for operating expenses for Project Collection Tax and the Taxpayer Assistance Call Center.
(6)	To pay for expenses of the Examination and Collection Division directly and primarily relating to collecting overdue tax debts."

CONSOLIDATE TAX PROJECTS REPORTS
SECTION 19.3.(a)  G.S. 105‑243.1(f) reads as rewritten:
"(f)	Reports. – The report of Department activities required by G.S. 105‑256 contains information on the Department's efforts to collect tax debts and its use of the proceeds of the collection assistance fee."
SECTION 19.3.(b)  G.S. 105‑256(a) reads as rewritten:
"(a)	Reports. – The Secretary shall prepare and publish the following:
…
(6)	On an annual basis, a report on the quality of services provided to taxpayers through the Taxpayer Assistance Call Center, walk‑in assistance, and taxpayer education. The report must be submitted to the Joint Legislative Commission on Governmental Operations.
…
(8)	By January 1 and July 1 of each year, a semiannual report on the Department's activities listed in this subdivision. The report must be submitted to the Joint Legislative Commission on Governmental Operations and to the Revenue Laws Study Committee. 
a.	Its efforts to increase compliance with the tax laws. The report must describe the Department's existing initiatives in this area as of July 1, 2006, and must estimate, by tax type and amount, the revenue expected in the fiscal year by the initiative. The report must describe any new initiative implemented since July 1, 2006, and estimate, by tax type and amount, the revenue expected in the fiscal year by the initiative. 
b.	Its efforts to identify and address fraud and other abuses of the voluntary tax compliance system that result in unreported and underreported tax. The report must describe the Department's long‑term plan for achieving greater voluntary compliance and must summarize the steps taken since the last report and their results. 
c.	Its efforts to collect tax debts. The report must include a breakdown of the amount and age of tax debts collected through warning letters and by other means, must itemize collections by type of tax, must describe the Department's long‑term collection plan, and must summarize the steps taken since the last report and their results. 
d.	Its use of the proceeds of the collection assistance fee imposed by G.S. 105‑243.1.
SECTION 19.3.(c)  The first report required under G.S. 105‑256(a)(8), as enacted by this section, is due by January 1, 2007.

PAYMENT OF USUB PENALTIES TO CIVIL PENALTY AND FORFEITURE FUND
SECTION 19.4.  Notwithstanding G.S. 143‑18, the Department of Revenue shall be allowed to expend up to two million four hundred thirty‑four thousand two hundred seventy dollars and seventy‑one cents ($2,434,270.71) of unencumbered maintenance appropriations as of June 30, 2006, for the purpose of paying the Civil Penalty and Forfeiture Fund.  The amount to be expended represents Unauthorized Substance Tax penalty collections that were paid to local law enforcement agencies for the period of July 1, 2005, through December 31, 2005.  The source of the unencumbered funds shall come entirely from the Department of Revenue.  If unencumbered funds are not sufficient at June 30, 2006, the Department shall use anticipated unencumbered funds as of July 1, 2006.

PART XX.  RESERVED

Part XX – A.  RESERVED

PART XXI. DEPARTMENT OF TRANSPORTATION

ONLINE DEALER REGISTRATION FUNDS
SECTION 21.2.(a)  Notwithstanding the provisions of Section 28.22(b) of S.L. 2005‑276, for fiscal year 2006‑2007, the Division of Motor Vehicles is prohibited from spending any funds appropriated to it for Online Dealer Registration enhancements.
SECTION 21.2.(b)  This section becomes effective June 30, 2006.

CASH FLOW HIGHWAY FUNDS AND HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 21.4.(a)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 2007‑2008	$1,798.0 million
For Fiscal Year 2008‑2009	$1,836.2 million
For Fiscal Year 2009‑2010	$1,859.2 million
For Fiscal Year 2010‑2011	$1,872.6 million
SECTION 21.4.(b)  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 2007‑2008	$1,128.9 million
For Fiscal Year 2008‑2009	$1,167.8 million
For Fiscal Year 2009‑2010	$1,203.0 million
For Fiscal Year 2010‑2011	$1,235.0 million

FUNDS FOR ECONOMIC DEVELOPMENT, SPOT SAFETY, AND TRANSPORTATION IMPROVEMENT PROGRAM PROJECTS
SECTION 21.6.  Of the funds appropriated by this act to the Department of Transportation in fiscal year 2006‑2007, twenty‑eight million dollars ($28,000,000) shall be allocated equally among the 14 Highway Divisions for economic development transportation projects recommended by the member of the Board of Transportation representing the Division in which the project is to be constructed in consultation with the Division Engineer and approved by the Board of Transportation. Funds in each Division not needed for economic development projects shall be used on spot safety needs to enhance safety, reduce congestion, improve traffic flow, reduce accidents, and for system preservation. Any remaining funds in each Division shall be used on Transportation Improvement Program projects. The Secretary of Transportation shall not prevent or delay the implementation of any projects approved by the Board of Transportation pursuant to this section.

CHANGE SUNSET OF OPEN CONTAINER LAW
SECTION 21.7.  Section 21 of S.L. 2000‑155, as amended by Section 1 of S.L. 2002‑25, reads as rewritten:
"SECTION 21. Section 4 of this act is effective September 1, 2000. Sections 19 and 20 of this act are effective when those sections become law. The remainder of this act becomes effective September 1, 2000, and applies to offenses committed on or after that date."

VIPER RADIO PROGRAM
SECTION 21.9.  The State Highway Patrol shall issue a request for a proposal for the maintenance of the Voice Interoperability Plan for Emergency Responders (VIPER). The bid shall be for the current system in place and shall not include installation of the system.
The Criminal Justice Information Network (CJIN) shall prepare a cost allocation plan for the continued construction and operation or the leasing of the VIPER system that shall include proposed shared costs for installation and use by all government users, including, but not limited to, the Department of Health and Human Services, the State Emergency Management Division, the Wildlife Resources Commission, the State Bureau of Investigation, the State Highway Patrol, and Alcohol Law Enforcement, and local agencies. This plan shall include the assessment of service contracts to ensure functionality and technological updates of the Viper System.
The CJIN shall report to the Legislative Transportation Oversight Committee, the Chairs of both the Appropriations Subcommittees for Transportation and Justice and Public Safety, and the Fiscal Research Division by October 1, 2006.

CONFORM SEAT BELT LAW TO FEDERAL LAW TO PREVENT A LOSS OF FEDERAL HIGHWAY FUNDS
SECTION 21.11.  G.S. 20‑135.2A.(c) reads as rewritten:
"(c)	This section shall not apply to any of the following:
(1)	A driver or occupant of a noncommercial motor vehicle with a medical or physical condition that prevents appropriate restraint by a safety belt or with a professionally certified mental phobia against the wearing of vehicle restraints;
(2)	A motor vehicle operated by a rural letter carrier of the United States Postal Service while performing duties as a rural letter carrier and a motor vehicle operated by a newspaper delivery person while actually engaged in delivery of newspapers along the person's specified route;
(3)	A driver or passenger frequently stopping and leaving the vehicle or delivering property from the vehicle if the speed of the vehicle between stops does not exceed 20 miles per hour;
(4)	Any vehicle registered and licensed as a property‑carrying vehicle in accordance with G.S. 20‑88, while being used for agricultural purposes in intrastate commerce; or
(5)	A motor vehicle not required to be equipped with seat safety belts under federal law."

UTILIZATION OF SMALL BUSINESS ENTERPRISES IN DEPARTMENT PROJECTS OR THE USE OF FULLY OPERATED RENTAL EQUIPMENT
SECTION 21.12.  From funds available to the Department of Transportation, a goal of fifty million dollars ($50,000,000) per year is established for the utilization of small business enterprises through contracts or the use of fully operated rental equipment.

PART XXII. SALARIES AND EMPLOYEE BENEFITS

GOVERNOR AND COUNCIL OF STATE/SALARY INCREASES
SECTION 22.1.(a)  Effective July 1, 2006, G.S. 147‑11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred thirty thousand ten dollars ($130,010) annually, payable monthly."
SECTION 22.1.(b)  Section 29.1(b) of S.L. 2005‑276 reads as rewritten:
"SECTION 29.1.(b)  Effective July 1, 2006, the annual salaries for the members of the Council of State, payable monthly, for the 2006‑2007 fiscal year are:

	Council of State	Annual Salary
	Lieutenant Governor	$114,743
	Attorney General	114,743
	Secretary of State	114,743
	State Treasurer	114,743
	State Auditor	114,743
	Superintendent of Public Instruction	114,743
	Agriculture Commissioner	114,743
	Insurance Commissioner	114,743
	Labor Commissioner	114,743"

NONELECTED DEPARTMENT HEADS/SALARY INCREASES
SECTION 22.2.  Section 29.2 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.2. In accordance with G.S. 143B‑9, the maximum annual salaries, payable monthly, for the nonelected heads of the principal State departments for the 2006‑2007 fiscal year are:

	Nonelected Department Heads	Annual Salary
	Secretary of Administration	$112,103
	Secretary of Correction	112,103
	Secretary of Crime Control and Public Safety	112,103
	Secretary of Cultural Resources	112,103
	Secretary of Commerce	112,103
	Secretary of Environment and Natural Resources	112,103
	Secretary of Health and Human Services	112,103
	Secretary of Juvenile Justice and Delinquency	112,103
	Secretary of Revenue	112,103
	Secretary of Transportation	112,103"

CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
SECTION 22.3. Section 29.3 of Section of S.L. 2005‑276 reads as rewritten:
"SECTION 29.3. The annual salaries, payable monthly, for the 2006‑2007 fiscal year for the following executive branch officials are:

	Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission	$	102,034
	State Controller		142,797
	Commissioner of Motor Vehicles		102,034
	Commissioner of Banks		114,743
	Chairman, Employment Security Commission	133,161
	State Personnel Director		112,103
	Chairman, Parole Commission		93,170
	Members of the Parole Commission		43,008
	Chairman, Utilities Commission		127,786
	Members of the Utilities Commission		114,743
	Executive Director, Agency for 
Public Telecommunications		86,017
	Director, Museum of Art		104,552
	Executive Director, North Carolina Agricultural
Finance Authority		99,316
	State Chief Information Officer		142,711"

JUDICIAL BRANCH OFFICIALS/SALARY INCREASES
SECTION 22.4.  Section 29.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.4.(a)  The annual salaries, payable monthly, for specified Judicial Branch officials for the 2006‑2007 fiscal year are:

	Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court	$130,010
	Associate Justice, Supreme Court	126,612
	Chief Judge, Court of Appeals	123,446
	Judge, Court of Appeals	121,337
	Judge, Senior Regular Resident Superior Court	118,040
	Judge, Superior Court	114,743
	Chief Judge, District Court	104,193
	Judge, District Court	100,896
	Administrative Officer of the Courts	118,040
	Assistant Administrative Officer of the Courts	107,818"
SECTION 29.4.(b)  The district attorney or public defender of a judicial district, with the approval of the Administrative Officer of the Courts or the Commission on Indigent Defense Services, respectively, shall set the salaries of assistant district attorneys or assistant public defenders, respectively, in that district such that the average salaries of assistant district attorneys or assistant public defenders in that district do not exceed sixty‑six thousand seventy‑seven dollars ($66,077), and the minimum salary of any assistant district attorney or assistant public defender is at least thirty‑four thousand five hundred twenty‑nine dollars ($34,529) effective July 1, 2006.
SECTION 29.4.(c)  Effective July 1, 2005, the annual salaries of permanent, full‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by the greater of eight hundred fifty dollars ($850.00) or two percent (2%). Effective July 1, 2006, the annual salaries of permanent full‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by five percent (5%).
SECTION 29.4.(d)  Effective July 1, 2005, the annual salaries of permanent, part‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by pro rata amounts of eight hundred fifty dollars ($850.00) or two percent (2%), whichever is greater. Effective July 1, 2006 the annual salaries of permanent, part‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by five percent (5%)."

CLERK OF SUPERIOR COURT/SALARY INCREASES
SECTION 22.5.  Effective July 1, 2006, G.S. 7A‑101(a) reads as rewritten:
"(a)	The clerk of superior court is a full‑time employee of the State and shall receive an annual salary, payable in equal monthly installments, based on the population of the county as determined in subsection (a1) of this section, according to the following schedule:
Population	Annual Salary
Less than 100,000		$76,747
100,000 to 149,999		86,122
150,000 to 249,999		95,500
250,000 and above		104,878.
The salary schedule in this subsection is intended to represent the following approximate percentage of the salary of a chief district court judge:
Population	Annual Salary
Less than 100,000	73%
100,000 to 149,999	82%
150,000 to 249,999	91%
250,000 and above	100%.
When a county changes from one population group to another, the salary of the clerk shall be changed, on July 1 of the fiscal year for which the change is reported, to the salary appropriate for the new population group, except that the salary of an incumbent clerk shall not be decreased by any change in population group during his continuance in office."

ASSISTANT AND DEPUTY CLERKS OF COURT/SALARY INCREASES
SECTION 22.6.  Effective July 1, 2006, G.S. 7A‑102(c1) reads as rewritten:
"(c1)	A full‑time assistant clerk or a full‑time deputy clerk, and up to one full‑time deputy clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the following minimum and maximum rates:
Assistant Clerks and Head Bookkeeper	Annual Salary
Minimum		$29,783
Maximum		51,008

Deputy Clerks	Annual Salary
Minimum		$25,636
Maximum		39,673."

MAGISTRATES' SALARY INCREASES
SECTION 22.7.(a)  Effective July 1, 2006, G.S. 7A‑171.1(a) reads as rewritten:
"(a)	The Administrative Officer of the Courts, after consultation with the chief district judge and pursuant to the following provisions, shall set an annual salary for each magistrate.
(1)	A full‑time magistrate shall be paid the annual salary indicated in the table set out in this subdivision. A full‑time magistrate is a magistrate who is assigned to work an average of not less than 40 hours a week during the term of office. The Administrative Officer of the Courts shall designate whether a magistrate is full‑time. Initial appointment shall be at the entry rate. A magistrate's salary shall increase to the next step every two years on the anniversary of the date the magistrate was originally appointed for increases to Steps 1 through 3, and every four years on the anniversary of the date the magistrate was originally appointed for increases to Steps 4 through 6.

Table of Salaries of Full‑Time Magistrates

Step Level	Annual Salary
Entry Rate		$30,176
Step 1		32,944
Step 2		35,955
Step 3		39,242
Step 4		42,842
Step 5		46,898
Step 6		51,447.
(2)	A part‑time magistrate is a magistrate who is assigned to work an average of less than 40 hours of work a week during the term, except that no magistrate shall be assigned an average of less than 10 hours of work a week during the term. A part‑time magistrate is included, in accordance with G.S. 7A‑170, under the provisions of G.S. 135‑1(10) and G.S. 135‑40.2(a). The Administrative Officer of the Courts designates whether a magistrate is a part‑time magistrate. A part‑time magistrate shall receive an annual salary based on the following formula: The average number of hours a week that a part‑time magistrate is assigned work during the term shall be multiplied by the annual salary payable to a full‑time magistrate who has the same number of years of service prior to the beginning of that term as does the part‑time magistrate and the product of that multiplication shall be divided by the number 40. The quotient shall be the annual salary payable to that part‑time magistrate.
(3)	Notwithstanding any other provision of this subsection, a magistrate who is licensed to practice law in North Carolina or any other state shall receive the annual salary provided in the Table in subdivision (1) of this subsection for Step 4."
SECTION 22.7.(b)  Effective July 1, 2006, G.S. 7A‑171.1(a1) reads as rewritten:
"(a1)	Notwithstanding subsection (a) of this section, the following salary provisions apply to individuals who were serving as magistrates on June 30, 1994:
(1)	The salaries of magistrates who on June 30, 1994, were paid at a salary level of less than five years of service under the table in effect that date shall be as follows: 
Less than 1 year of service	$24,334
1 or more but less than 3 years of service		25,451
3 or more but less than 5 years of service		27,699.
Upon completion of five years of service, those magistrates shall receive the salary set as the Entry Rate in the table in subsection (a).
(2)	The salaries of magistrates who on June 30, 1994, were paid at a salary level of five or more years of service shall be based on the rates set out in subsection (a) as follows: 
Salary Level	Salary Level
on June 30, 1994	on July 1, 1994
5 or more but less than 7 years of service	Entry Rate
7 or more but less than 9 years of service	Step 1
9 or more but less than 11 years of service	Step 2
11 or more years of service	Step 3
Thereafter, their salaries shall be set in accordance with the provisions in subsection (a).
(3)	The salaries of magistrates who are licensed to practice law in North Carolina shall be adjusted to the annual salary provided in the table in subsection (a) as Step 4, and, thereafter, their salaries shall be set in accordance with the provisions in subsection (a).
(4)	The salaries of "part‑time magistrates" shall be set under the formula set out in subdivision (2) of subsection (a) but according to the rates set out in this subsection."

GENERAL ASSEMBLY PRINCIPAL CLERKS/SALARY INCREASES
SECTION 22.8.  Effective July 1, 2006, G.S. 120‑37(c) reads as rewritten:
"(c)	The principal clerks shall be full‑time officers. Each principal clerk shall be entitled to other benefits available to permanent legislative employees and shall be paid an annual salary of ninety‑six thousand nine hundred forty dollars ($96,940) payable monthly. Each principal clerk shall also receive such additional compensation as approved by the Speaker of the House of Representatives or the President Pro Tempore of the Senate, respectively, for additional employment duties beyond those provided by the rules of their House. The Legislative Services Commission shall review the salary of the principal clerks prior to submission of the proposed operating budget of the General Assembly to the Governor and Advisory Budget Commission and shall make appropriate recommendations for changes in those salaries. Any changes enacted by the General Assembly shall be by amendment to this paragraph."

SERGEANTS‑AT‑ARMS AND READING CLERKS
SECTION 22.9.  Effective July 1, 2006, G.S. 120‑37(b) reads as rewritten:
"(b)	The sergeant‑at‑arms and the reading clerk in each house shall be paid a salary of three hundred forty‑three dollars ($343.00) per week plus subsistence at the same daily rate provided for members of the General Assembly, plus mileage at the rate provided for members of the General Assembly for one round trip only from their homes to Raleigh and return. The sergeants‑at‑arms shall serve during sessions of the General Assembly and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions as may be authorized by the Legislative Services Commission. The reading clerks shall serve during sessions only."

LEGISLATIVE EMPLOYEES
SECTION 22.10.  Effective July 1, 2006, the Legislative Services Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 2005‑2006 by five percent (5%).  Nothing in this act limits any of the provisions of G.S. 120‑32.

COMMUNITY COLLEGE PERSONNEL/SALARY INCREASES
SECTION 22.11.  Section 29.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.11. The Director of the Budget shall transfer from the Reserve for Compensation Increases, created in this act for fiscal years 2005‑2006 and 2006‑2007, funds to the North Carolina Community Colleges System Office necessary to provide an annual salary increase of the greater of eight hundred fifty dollars ($850.00) or two percent (2%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, for all community college employees supported by State funds. The Director of the Budget shall transfer from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, funds to the North Carolina Community Colleges System Office necessary to provide:
(1)	An annual salary increase for faculty and professional staff of six percent (6%), plus a one‑time, lump-sum compensation bonus in the amount of six hundred dollars ($600.00), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all community college employees supported by State funds. The one‑time, lump-sum compensation bonus authorized by this section shall be made in accordance with rules adopted by the State Board of Community Colleges.
(2)	An annual increase of five percent (5%), including funds for employer's retirement and social security contributions, commencing July 1, 2006, for all other community college employees supported by State funds."

UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA COMPENSATION
SECTION 22.12.  Section 29.12 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.12.(a)   For the 2005‑2006 fiscal year, the Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal years 2005‑2006 and 2006‑2007, to provide an annual salary increase of the greater of eight hundred fifty dollars ($850.00) or two percent (2%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, for all employees of The University of North Carolina, as well as employees other than teachers of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). The flat dollar increase of eight hundred fifty dollars ($850.00) shall be made to all employees whose annual salary is less than or equal to forty‑two thousand five hundred dollars ($42,500). The percentage annual salary increase of two percent (2%) authorized by this section shall be made on an aggregated average basis, and these funds shall be allocated to individuals whose annual salary is greater than forty‑two thousand five hundred dollars ($42,500), according to the rules adopted by the Board of Governors of The University of North Carolina or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 29.12.(a1)  For the 2006‑2007 fiscal year, the Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, to provide an annual salary increase of six percent (6%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all employees of The University of North Carolina, as well as employees other than teachers of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). The percentage annual salary increase of six percent (6%) authorized by this section shall be made on an aggregated average basis, according to the rules adopted by the Board of Governors of The University of North Carolina or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 29.12.(b)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal years 2005‑2006 and 2006‑2007, to provide an average annual salary increase of two and twenty‑four hundredths percent (2.24%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, for all teaching employees of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 29.12.(b1)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, to provide an average annual salary increase of eight percent (8%), but at least an annual increase of two thousand two hundred fifty dollars ($2,250) including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all teaching employees of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section."

MOST STATE EMPLOYEES/SALARY INCREASES
SECTION 22.13.  Section 29.13 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.13.(a)  The salaries in effect June 30, 2005, of all permanent full‑time State employees whose salaries are set in accordance with the State Personnel Act and who are paid from the General Fund or the Highway Fund shall be increased, effective July 1, 2005, by the greater of eight hundred fifty dollars ($850.00) or two percent (2%), unless otherwise provided by this act. Effective July 1, 2006, the salaries in effect June 30, 2006, of all permanent full‑time State employees whose salaries are set in accordance with the State Personnel Act, and who are paid from the General Fund or Highway Funds shall be increased by five percent (5%).
SECTION 29.13.(b)  Except as otherwise provided in this act, the fiscal year 2005‑2006 salaries for permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by the greater of eight hundred fifty dollars ($850.00) or two percent (2%), effective July 1, 2005, unless otherwise provided by this act. Effective July 1, 2006, the compensation of permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by five percent (5%).
SECTION 29.13.(c)  The salaries in effect for fiscal year 2005‑2006 for all permanent part‑time State employees shall be increased, effective July 1, 2005, by pro rata amounts of eight hundred fifty dollars ($850.00) or two percent (2%), whichever is greater. Effective July 1, 2006, the salaries of all permanent part‑time State employees shall be increased by five percent (5%).
SECTION 29.13.(d)  The Director of the Budget may allocate out of special operating funds or from other sources of the employing agency, except tax revenues, sufficient funds to allow salary increases, in accordance with subsection (a), (b), or (c) of this section, including funds for the employer's retirement and social security contributions, for the permanent full‑time and part‑time employees of the agency, provided the employing agency elects to make available the necessary funds.
SECTION 29.13.(e)  For the 2005‑2006 fiscal year, within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by pro rata amounts of the greater of the eight hundred fifty dollar ($850.00) or two percent (2%) increase provided for permanent full‑time employees covered by the provisions of subsection (a) of this section, commencing July 1, 2005. For the 2006‑2007 fiscal year, within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by the five percent (5%) increase provided for permanent full‑time employees covered by the provisions of subsection (a) of this section, commencing July 1, 2006."

ALL STATE‑SUPPORTED PERSONNEL/SALARY INCREASES
SECTION 22.14.  Section 29.14 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.14.(a)  Salaries and related benefits for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund shall be increased from the General Fund or Highway Fund appropriation only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund.
SECTION 29.14.(b)  The granting of the salary increases under this act does not affect the status of eligibility for salary increments for which employees may be eligible unless otherwise required by this act.
SECTION 29.14.(c)  The fiscal year 2005‑2006 salary increases provided in this act are to be effective July 1, 2005, and do not apply to persons separated from State service due to resignation, dismissal, reduction in force, death, or retirement, or whose last workday is prior to July 1, 2005. The fiscal year 2006‑2007 salary increases provided in this act are to be effective July 1, 2006, and do not apply to persons separated from State service due to resignation, dismissal, reduction in force, death, or retirement, or whose last workday is prior to July 1, 2006.
Payroll checks issued to employees  which represent payment of services provided prior to these increases shall not be eligible for salary increases provided for in this act. This subsection shall apply to all employees, subject to or exempt from the State Personnel Act, paid from State funds, including public schools, community colleges, and The University of North Carolina.
SECTION 29.14.(d)  The Director of the Budget shall transfer from the Reserve for Compensation Increases in this act for fiscal year 2005‑2006 and fiscal year 2006‑2007 all funds necessary for the salary increases provided by this act, including funds for the employer's retirement and social security contributions.
SECTION 29.14.(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
SECTION 29.14.(f)  For the 2005‑2006 fiscal year, permanent full‑time employees who work a nine‑, ten‑, or eleven‑month work year schedule shall receive the eight hundred fifty dollars ($850.00) or two percent (2%) annual increase provided by this act, whichever is greater. For the 2006‑2007 fiscal year, permanent full‑time employees who work a nine‑, ten‑, or eleven‑month work year schedule shall receive the five percent (5%) annual increase provided by this act."

Compensation Bonus For Fiscal Year 2006‑2007
SECTION 22.14A.(a)  Except as provided by subsection (b) of this section, any person (i) whose salary is set pursuant to the State Personnel Act or under this act and (ii) who is employed in a State‑funded position on June 30, 2006, and who is in service on August 1, 2006, shall be awarded a one‑time, lump‑sum compensation bonus for the 2006‑2007 fiscal year in the amount of three hundred dollars ($300.00), payable in August 2006. The compensation bonus shall be adjusted pro rata for permanent part‑time employees and employees working on a schedule requiring less than 12 months' service per year.
SECTION 22.14A.(b)  The following persons shall not be eligible for the three hundred dollar ($300.00) compensation bonus authorized by subsection (a) of this section:
(1)	Any person whose salary is set under Sections 29.11(1) or 29.12 of S.L. 2005‑276, as amended by Sections 22.11 and 22.12 of this act.
(2)	Any public school employee or State employee paid on the Teacher Salary Schedule or the School Based Administrator Salary Schedule.
SECTION 22.14A.(c)  The Director of the Budget shall transfer sufficient funds from the Reserve for Compensation Increases provided in this act to implement this section. The compensation bonus awarded by this section shall not be administered under G.S. 126‑7. The compensation bonus shall be awarded to eligible employees without regard to an employee's placement within the salary range, including employees at the top of the salary range.

SALARY ADJUSTMENT FUND
SECTION 22.15.  Section 29.15 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.15.(a)  Any remaining appropriations in the General Fund Reserve for Compensation Increases authorized for employee salary increases not required for that purpose may be used to supplement the General Fund Salary Adjustment  Fund to support salary adjustments for positions supported by the General Fund. Any remaining appropriations in the Highway Fund Reserves and Transfers authorized for employee salary increases not required for that purpose may be used to supplement the Highway Fund Salary Adjustment Fund to support salary adjustments for positions supported by the Highway Fund.
SECTION 29.15.(b)  Funds appropriated or otherwise transferred to the General Fund Salary Adjustment Fund or to the Highway Fund Salary Adjustment Fund by this act or any other provision of law shall be used to fund agency requests for the following purposes:
(1)	Salary range revisions, including special minimum rate adjustments, to provide competitive salary rates for affected job classifications in response to changes in labor market salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
(2)	Reallocation of positions to higher‑level job classifications to compensate employees for more difficult duties at competitive salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
The terms 'salary range revision' and 'reallocation' as used in this section shall conform to the definitions of those terms as previously contained in the State Personnel Manual and adopted by the State Personnel Commission effective immediately prior to November 1, 2005. Funding shall be given only to those salary range revisions previously approved by the State Personnel Commission and reallocations previously approved by the Office of State Personnel or  designee on or before May 1, 2006, and shall not be used for other purposes including, but not limited to, in‑range adjustments, career banding adjustments (whether by grade to band transfer adjustments, career progression adjustments, or other similar methods), geographic differentials, or other adjustments as these terms may be defined by State Personnel Policy.
SECTION 29.15.(c)  The Director of the Budget shall consult with the Joint Legislative Commission on Governmental Operations prior to transferring any salary adjustment funds for any State agency.
SECTION 29.15.(d)  The Director of the Budget may:
(1)	Transfer to General Fund budget codes from the General Fund Salary Adjustment Fund amounts required to support salary adjustments authorized by this  section, not to exceed the sum of eighteen million nine hundred thousand dollars ($18,900,000), with the oldest of the pending adjustments to be funded first.
(2)	Transfer to Highway Fund budget codes from the Highway Fund Salary Adjustment Fund amounts required to support salary adjustments authorized by this section.
SECTION 29.15.(e)  The Judicial Department is eligible for the funding authorized in subsection (a) of this section."

suspend Career Banding initiative
SECTION 22.15A.  Notwithstanding any other provision of law, the State Personnel Commission, the Office of State Personnel, and each State department, agency, and institution shall suspend further implementation of career banding pending subsequent action by the General Assembly after its review of the State Personnel Act, including the traditional graded classification system and career banding.

SALARY‑RELATED CONTRIBUTIONS/EMPLOYER
SECTION 22.17.  Section 29.24(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 29.24.(c)  Effective July 1, 2006, the State's employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for the 2006‑2007 fiscal year are:  (i)  seven and seventeen hundredths percent (7.17%) – Teachers and State Employees; (ii)  twelve and seventeen hundredths percent (12.17%) – State Law Enforcement Officers; (iii) eleven and sixteen hundredths percent (11.16%) – University Employees' Optional Retirement System; (iv) eleven and sixteen hundredths percent (11.16%) – Community College Optional Retirement Program; (v) sixteen and thirty‑nine hundredths percent (16.39%) – Consolidated Judicial Retirement System; and (vi) three and eight‑tenths percent (3.8%) – Legislative Retirement System. Each of the foregoing contribution rates includes three and eight‑tenths percent (3.8%) for hospital and medical benefits. The rate for Teachers and State Employees, State Law Enforcement Officers, Community College Optional Retirement Program, and for the University Employees' Optional Retirement Program includes fifty‑two hundredths percent (0.52%) for the Disability Income Plan. The rates for Teachers and State Employees and State Law Enforcement Officers include sixteen hundredths percent (0.16%) for the Death Benefits Plan. The rate for State Law Enforcement Officers includes five percent (5%) for Supplemental Retirement Income."

PROVIDE COST‑OF‑LIVING INCREASES FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
SECTION 22.18.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(ooo)	From and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2005, shall be increased by three and one-tenth percent (3.1%) of the allowance payable on June 1, 2006, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2005, but before June 30, 2006, shall be increased by a prorated amount of three and one-tenth percent (3.1%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2005, and June 30, 2006."
SECTION 22.18.(b)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(u)	In accordance with subsection (a) of this section, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 2006, shall be increased by three and one-tenth percent (3.1%) of the allowance payable on June 1, 2006. Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 2006, but before June 30, 2006, shall be increased by a prorated amount of three and one-tenth percent (3.1%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between January 1, 2006, and June 30, 2006."
SECTION 22.18.(c)  G.S. 135‑65 is amended by adding a new subsection to read:
"(aa)	From and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2005, shall be increased by three and one-tenth percent (3.1%) of the allowance payable on June 1, 2006. Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2005, but before June 30, 2006, shall be increased by a prorated amount of three and one-tenth percent (3.1%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2005, and June 30, 2006."

INCREASE THE MONTHLY PENSION FOR MEMBERS OF THE FIREMEN'S AND RESCUE SQUAD WORKERS' PENSION FUND
SECTION 22.19.  G.S. 58‑86‑55 reads as rewritten:
"§ 58‑86‑55.  Monthly pensions upon retirement.
Any member who has served 20 years as an "eligible fireman" or "eligible rescue squad worker" in the State of North Carolina, as provided in G.S. 58‑86‑25 and G.S. 58‑86‑30, and who has attained the age of 55 years is entitled to be paid a monthly pension from this fund. The monthly pension shall be in the amount of  one hundred sixty‑five dollars ($165.00) per month. Any retired fireman receiving a pension shall, effective  July 1, 2006, receive a pension of  one hundred sixty‑five dollars ($165.00) per month.
Members shall pay ten dollars ($10.00) per month as required by G.S. 58‑86‑35 and G.S. 58‑86‑40 for a period of no longer than 20 years. No "eligible rescue squad member" shall receive a pension prior to July 1, 1983. No member shall be entitled to a pension hereunder until the member's official duties as a fireman or rescue squad worker for which the member is paid compensation shall have been terminated and the member shall have retired as such according to standards or rules fixed by the board of trustees.
A member who is totally and permanently disabled while in the discharge of the member's official duties as a result of bodily injuries sustained or as a result of extreme exercise or extreme activity experienced in the course and scope of those official duties and who leaves the fire or rescue squad service because of this disability shall be entitled to be paid from the fund a monthly benefit in an amount of  one hundred sixty‑five dollars ($165.00) per month beginning the first month after the member's fifty‑fifth birthday. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application, and annually thereafter. Any disabled member shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58‑86‑35 and G.S. 58‑86‑40.
A member who is totally and permanently disabled for any cause, other than line of duty, who leaves the fire or rescue squad service because of this disability and who has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member shall upon attaining the age of 55 years be entitled to receive a pension as provided by this section. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application and annually thereafter.
A member who, because his residence is annexed by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose department is closed because of an annexation by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose volunteer department is taken over by a city or county, and because of such annexation or takeover is unable to perform as a fireman or rescue squad worker of any status, and if the member has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member upon attaining the age of 55 years and completion of such contributions shall be entitled to receive a pension as provided by this section. Any application to make monthly contributions under this section shall be subject to a finding of eligibility by the Board of Trustees upon application of the member.
The pensions provided shall be in addition to all other pensions or benefits under any other statutes of the State of North Carolina or the United States, notwithstanding any exclusionary provisions of other pensions or retirement systems provided by law."

INCREASE THE MAXIMUM MONTHLY PENSION BENEFITS FOR RETIRED MEMBERS OF THE NORTH CAROLINA NATIONAL GUARD
SECTION 22.20.  G.S. 127A‑40(a) reads as rewritten:
"(a)	Every member and former member of the North Carolina national guard who meets the requirements hereinafter set forth shall receive, commencing at age 60, a pension of  eighty dollars ($80.00) per month for 20 years' creditable military service with an additional  eight dollars ($8.00) per month for each additional year of such service; provided, however, that the total pension shall not exceed  one hundred sixty dollars ($160.00) per month. The requirements for such pension are that each member shall:
(1)	Have served and qualified for at least 20 years' creditable military service, including national guard, reserve and active duty, under the same requirement specified for entitlement to retired pay for nonregular service under Chapter 67, Title 10, United States Code.
(2)	Have at least 15 years of the aforementioned service as a member of the North Carolina national guard.
(3)	Have received an honorable discharge from the North Carolina national guard."

PART XXIII. CAPITAL APPROPRIATIONS

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 23.1.  There is appropriated from the General Fund for the 2006‑2007 fiscal year the following amounts for capital improvements:

Capital Improvements – General Fund	2006‑2007
	
Department of Administration
	Veterans Affairs Nursing Home	$8,773,300

Department of Agriculture and Consumer Services
	Veterinary Laboratory System Study and Planning Funds	1,250,000
	Rollins Laboratory – Bio Security Level 2 Lab Conversion	250,000
	Oxford Complex Planning and Design Funds	1,000,000

Department of Commerce
	NC Ports Authority Container Cranes	7,500,000

Department of Correction
	Regional Medical Center and Mental Health Center	20,000,000 

Department of Crime Control and Public Safety	
	Emergency Management Operations Center 	8,500,000
	Marion Transportation Center Motor Fleet Lot	222,700

Department of Cultural Resources
	North Carolina History Education Center Planning Funds	3,000,000
	Palmer Memorial Institute State Historic Site Renovations	2,800,000

Department of Environment and Natural Resources	
	Water Resources Development Projects	20,000,000
	NC Zoo Storage Shed	452,800
	Forest Resources District 9 Headquarters	2,164,500

Office of State Budget and Management
	State Facilities Master Plan	1,000,000

University of North Carolina System	
	University of North Carolina at Wilmington – 
		School of Nursing 	27,000,000

	Appalachian State University College of Education 
		Building Planning Funds	1,820,000

	Elizabeth City State University Parking Lots and
		Street Repair	1,900,000

	Fayetteville State University Science and Technology
		Complex Planning Funds	1,144,000

	North Carolina Agricultural and Technical State
		University General Classroom Facility Planning Funds	1,040,000

	North Carolina Central University 
		Biomanufacturing Research Institute and Technology
		Enterprise (BRITE)	2,300,000
		Repairs to Steam Lines	6,400,000

	North Carolina School of the Arts Library Planning Funds	1,258,400

	North Carolina State University 
		Engineering Complex III Planning and Design Funds	5,280,303
		Veterinary Hospital Planning Funds	7,000,000

	University of North Carolina at Asheville Rhodes Hall
		Renovation Planning Funds	416,000

	University of North Carolina at Chapel Hill Genomics
		Science Building Planning and Design Funds	10,313,988

	University of North Carolina at Charlotte Center City 
		Classroom Building Planning and Design Funds	3,392,100

	University of North Carolina at Greensboro Academic
		Classroom and Office Building Planning Funds	2,279,028

	University of North Carolina at Pembroke Residence
		Hall Planning Funds	1,040,000

	Western Carolina University School of Health and 
		Gerontological Building Planning Funds	2,402,661

	Winston Salem State University Student Activities Center
		Planning Funds	768,225

	Dental Schools Study, Planning, and Design Funds	7,000,000

TOTAL CAPITAL IMPROVEMENTS – GENERAL FUND	$159,668,005

WATER RESOURCES DEVELOPMENT PROJECT FUNDS
SECTION 23.2.(a)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose costs are as indicated:
Name of Project	2006‑2007
	(1)		Wilmington Harbor Deepening	$  5,275,000
	(2)		Morehead City Harbor Sand Management	1,200,000
	(3)		Manteo (Shallowbag) Bay Channel Maintenance	‑
	(4)		Wilmington Harbor Maintenance Dredging	‑
	(5)		Morehead City Harbor Maintenance Dredging	0
	(6)		Carolina Beach Renourishment	1,125,000
	(7)		Carolina Beach Renourishment (Kure Beach)	681,000
	(8)		Brunswick County Beaches Study	0
	(9)		Ocean Isle Beach Renourishment (Brunswick County)	435,000
	(10)	Beaufort Harbor Maintenance Dredging	300,000
	(11)	B. Everett Jordan Reservoir Water Supply Storage	100,000
	(12)	Aquatic Weed Control – Lake Gaston and Statewide	400,000
	(13)	Waterway Connecting Pamlico Sound to Beaufort Harbor (Carteret)	400,000
	(14)	John H. Kerr Reservoir Operations Evaluation	188,000
	(15)	Currituck Sound Water Management Study	386,000
	(16)	Surf City / North Topsail Beach Protection Study	‑
	(17)	West Onslow Beach (Topsail) Study (Pender County)	85,000
	(18)	Hurricane Stream Restoration – Western NC (Phase II)	2,000,000
	(19)	Hurricane Isabel Emergency Management
Stream Cleanup (Phase III)	850,000
	(20)	Bogue Banks Shore Protection Study (Carteret County)	‑
	(21)	Neuse River Basin Study	280,000
	(22)	Beach and Inlet Management Study	500,000
	(23)	Dredging Contingency Fund	2,295,000
	(24)	Topsail Beach Renourishment	500,000
	(25)	State – Local Projects	3,000,000
			TOTALS	$ 20,000,000
SECTION 23.2.(b)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed. If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2006‑2007 fiscal year, or if the projects funded under subsection (a) of this section are accomplished at a lower cost, the Department may use the resulting fund availability to fund any of the following:
(1)	U.S. Army Corps of Engineers project feasibility studies.
(2)	U.S. Army Corps of Engineers projects whose schedules have advanced and require State‑matching funds in fiscal year 2006‑2007.
(3)	State‑local water resources development projects.
Funds not expended or encumbered for these purposes shall revert to the General Fund at the end of the 2007‑2008 fiscal year.
SECTION 23.2.(c)  The Department shall make semiannual reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management. Each report shall include all of the following:
(1)	All projects listed in this section.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The semiannual reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.

REPAIRS AND RENOVATIONS RESERVE ALLOCATION
SECTION 23.3.  Of the funds in the Reserve for Repairs and Renovations for the 2006‑2007 fiscal year, forty‑six percent (46%) shall be allocated to the Board of Governors of The University of North Carolina for repairs and renovations pursuant to G.S. 143‑15.3A, in accordance with guidelines developed in The University of North Carolina Funding Allocation Model for Reserve for Repairs and Renovations, as approved by the Board of Governors of The University of North Carolina, and fifty‑four percent (54%) shall be allocated to the Office of State Budget and Management for repairs and renovations pursuant to G.S. 143‑15.3A.
Notwithstanding G.S. 143‑15.3A, the Board of Governors may allocate funds for the repair and renovation of facilities not supported from the General Fund if the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the Board's submission to the Joint Legislative Commission on Governmental Operations on the proposed allocation of funds.
The Board of Governors and the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to the allocation or reallocation of these funds.

State Facilities Master Plan
SECTION 23.10.(a)  Of the funds appropriated to the Office of State Budget and Management, up to one million dollars ($1,000,000) shall be used to contract with a consultant for the development of a new master plan for State facilities.  In developing this master plan, the consultant shall address the following as it relates to State operations in Wake County:
(1)	Inventory existing State real property, including land, buildings, and land allocations to State agencies.
(2)	Inventory lease space occupied by State agencies.
(3)	Survey State agencies capital improvement needs, including the State's Six‑Year Capital Improvement Plan.
(4)	Project the growth in personnel needed to support State operations.
(5)	Analyze State agencies' existing facilities and requested capital improvements against program missions, goals, and operations.
(6)	Recommend a facilities master plan for State operations that meets the facilities needs of State agencies and makes efficient use of State land and buildings.
(7)	Recommend State agency operations that should be relocated from the City of Raleigh to achieve subsection (a)(6) of this section.
(8)	Recommend a transit plan for State operations that may include the use of parking structures, public transit, and park and ride facilities.
(9)	Recommend an implementation plan for the facilities master plan. The implementation plan shall include the sequencing of proposed capital improvement projects and a proposal for financing the facilities master plan. The implementation plan shall be consistent with capital planning efforts in the Office of State Budget and Management.
SECTION 23.10.(b)  If funds authorized in subsection (a) of this section are sufficient, the Office of State Budget and Management shall expand the scope of the facilities master plan to include State operations outside of Wake County.
SECTION 23.10.(c)  The Office of State Budget and Management shall deliver the facilities master plan to the Joint Legislative Oversight Committee on Capital Improvements by October 1, 2007.

UNC‑CH/ECU Dental Schools
SECTION 23.11.(a)  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2006‑2007 fiscal year the sum of seven million dollars ($7,000,000) shall be used as follows:  (i) to complete the plan and design for expanding the School of Dentistry at the University of North Carolina at Chapel Hill, (ii) to conduct a study regarding the feasibility of establishing a School of Dentistry at East Carolina University and the impact that the School would have on the other dental programs provided by The University of North Carolina, and (iii) if the Board of Governors determines that it is appropriate to establish a School of Dentistry at East Carolina University based on the findings and recommendations of the feasibility study, to provide advance planning funds to East Carolina University for the capital improvements needed to establish a new dental school.  The funds allocated by this section to East Carolina University shall be held in reserve by the Board of Governors and shall be allocated to East Carolina University only if the Board of Governors decides that it is appropriate to establish a School of Dentistry at that University.
SECTION 23.11.(b)  The Board of Governors may contract with a private consultant to conduct the feasibility study required by subsection (a) of this section.

PART XXIV.  Tax Reductions

Reduce Sales Tax Rate Early
SECTION 24.1.(a)  Section 34.13(c) of S.L. 2001‑424, as amended by Section 38.1 of S.L. 2003‑284, Section 9.1 of S.L. 2005‑144, and Section 33.1 of S.L. 2005‑276, reads as rewritten:
"SECTION 34.13.(c)  This section becomes effective October 16, 2001, and applies to sales made on or after that date. This section does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this section before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal."
SECTION 24.1.(b)  G.S. 105‑164.4(a), as amended by subsection (a) of this section, reads as rewritten:
"(a)	A privilege tax is imposed on a retailer at the following percentage rates of the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is four and one‑quarter percent (4.25%).
…"
SECTION 24.1.(c)  G.S. 105‑164.4(a), as amended by subsections (a) and (b) of this section, reads as rewritten:
"(a)	A privilege tax is imposed on a retailer at the following percentage rates of the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is four percent (4%).
…"
SECTION 24.1.(d)  G.S. 105‑164.44F (a) reads as rewritten:
"(a)	Amount. – The Secretary must distribute to the cities part of the taxes imposed by G.S. 105‑164.4(a)(4c) on telecommunications service. The Secretary must make the distribution within 75 days after the end of each calendar quarter. The amount the Secretary must distribute is  eighteen and seventy one‑hundredths percent (18.70%) of the net proceeds of the taxes collected during the quarter, minus two million six hundred twenty thousand nine hundred forty‑eight dollars ($2,620,948). This deduction is one‑fourth of the annual amount by which the distribution to cities of the gross receipts franchise tax on telephone companies, imposed by former G.S. 105‑120, was required to be reduced beginning in fiscal year 1995‑96 as a result of the "freeze deduction." The Secretary must distribute the specified percentage of the proceeds, less the "freeze deduction" among the cities in accordance with this section."
SECTION 24.1.(e)  G.S. 105‑164.44F(a), as amended by subsection (d) of this section, reads as rewritten:
"(a)	Amount. – The Secretary must distribute to the cities part of the taxes imposed by G.S. 105‑164.4(a)(4c) on telecommunications service. The Secretary must make the distribution within 75 days after the end of each calendar quarter. The amount the Secretary must distribute is nineteen and forty‑two one‑hundredths percent (19.42%) of the net proceeds of the taxes collected during the quarter, minus two million six hundred twenty thousand nine hundred forty‑eight dollars ($2,620,948). This deduction is one‑fourth of the annual amount by which the distribution to cities of the gross receipts franchise tax on telephone companies, imposed by former G.S. 105‑120, was required to be reduced beginning in fiscal year 1995‑96 as a result of the "freeze deduction." The Secretary must distribute the specified percentage of the proceeds, less the "freeze deduction" among the cities in accordance with this section."
SECTION 24.1.(f)  Subsection (b) of this section becomes effective January 1, 2007, and applies to sales made on or after that date. Subsection (d) of this section becomes effective January 1, 2007, and applies to taxes collected on or after that date. Subsection (c) of this section becomes effective July 1, 2007, and applies to sales made on or after that date. Subsection (e) of this section becomes effective July 1, 2007, and applies to taxes collected on or after that date.  The remainder of this section is effective when it becomes law.

reduce individual upper Income Tax rate early
SECTION 24.2.(a)  Section 39.1 of S.L. 2003‑284, as amended by Section 36.1(a) of S.L. 2005‑276, is repealed.
SECTION 24.2.(b)  G.S. 105‑134.2(a), as amended by subsection (a) of this section, reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105‑152 and for surviving spouses, as defined in section 2(a) of the Code:

	Over	Up To	Rate
	0	$21,250	6%
	$21,250	$100,000	7%
	$100,000	$200,000	7.75%
	$200,000	NA	8.125%

(2)	For heads of households, as defined in section 2(b) of the Code:

	Over	Up To	Rate
	0	$17,000	6%
	$17,000	$80,000	7%
	$80,000	$160,000	7.75%
	$160,000	NA	8.125%

(3)	For unmarried individuals other than surviving spouses and heads of households:

	Over	Up To	Rate
	0	$12,750	6%
	$12,750	$60,000	7%
	$60,000	$120,000	7.75%
	$120,000	NA	8.125%

(4)	For married individuals who do not file a joint return under G.S. 105‑152:

	Over	Up To	Rate
	0	$10,625	6%
	$10,625	$50,000	7%
	$50,000	$100,000	7.75%
	$100,000	NA	8.125%".
SECTION 24.2.(c)  G.S. 105‑134.2(a), as amended by subsections (a) and (b) of this section, reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105‑152 and for surviving spouses, as defined in section 2(a) of the Code:

	Over	Up To	Rate
	0	$21,250	6%
	$21,250	$100,000	7%
	$100,000	NA	7.75%

(2)	For heads of households, as defined in section 2(b) of the Code:

	Over	Up To	Rate
	0	$17,000	6%
	$17,000	$80,000	7%
	$80,000	NA	7.75%

(3)	For unmarried individuals other than surviving spouses and heads of households:

	Over	Up To	Rate
	0	$12,750	6%
	$12,750	$60,000	7%
	$60,000	NA	7.75%

(4)	For married individuals who do not file a joint return under G.S. 105‑152:

	Over	Up To	Rate
	0	$10,625	6%
	$10,625	$50,000	7%
	$50,000	NA	7.75%
			."
SECTION 24.2.(d)  Subsection (b) of this section is effective for taxable years beginning on or after January 1, 2007. Subsection (c) of this section is effective for taxable years beginning on or after January 1, 2008. The remainder of this section is effective when it becomes law.
SECTION 24.3.  Reserved.
Small Business health Insurance Tax Credit
SECTION 24.4.(a)  Article 3B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑129.16E.  Credit for small business employee health benefits.
(a)	Credit. – A small business that provides health benefits for all of its eligible employees during the taxable year is allowed a credit to offset its costs in providing health benefits for its eligible employees. For the purposes of this subsection, a taxpayer provides health benefits if it pays at least fifty percent (50%) of the premiums for health care coverage that equals or exceeds the minimum provisions of the basic health care plan of coverage recommended by the Small Employer Carrier Committee pursuant to G.S. 58‑50‑125.
The credit is equal to a dollar amount per eligible employee, not to exceed the taxpayer's costs of providing health benefits for its eligible employees during the taxable year. For each eligible employee for whom the taxpayer provides health benefits, the amount is two hundred dollars ($200.00).
(b)	Allocation. – If the taxpayer is an individual who is a nonresident or a part‑year resident, the taxpayer must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105‑134.5(b) or (c), as appropriate. If the taxpayer is not an individual and is required to apportion its multistate business income to this State, the taxpayer must reduce the amount of the credit by multiplying it by the apportionment fraction used to apportion its business income to this State.
(c)	Definitions. – The following definitions apply in this section:
(1)	Eligible employee. – Defined in G.S. 58‑50‑110.
(2)	Small business. – A taxpayer that employs no more than 25 eligible employees throughout the taxable year.
(d)	No Double Benefit. – A taxpayer may not claim a credit under this section for costs for which it claimed a deduction under the Code. A taxpayer that claims a credit provided under this section must adjust taxable income as provided in G.S. 105‑130.5(a)(19) or G.S. 105‑134.6(c)(11), as applicable.
(e)	Sunset. – This section expires for taxable years beginning on or after January 1, 2010."
SECTION 24.4.(b)  G.S. 105‑130.5(a) is amended by adding a new subdivision to read:
"(a)	The following additions to federal taxable income shall be made in determining State net income:
…
(19)	To the extent not included in federal taxable income, the costs of providing employee health benefits for which the taxpayer claims a credit under G.S. 105‑129.16E."
SECTION 24.4.(c)  G.S. 105‑134.6(c) is amended by adding a new subdivision to read:
"(c)	Additions. – The following additions to taxable income shall be made in calculating North Carolina taxable income, to the extent each item is not included in taxable income:
…
(11)	The costs of providing employee health benefits for which the taxpayer claims a credit under G.S. 105‑129.16E."
SECTION 24.4.(d)  This section is effective for taxable years beginning on or after January 1, 2007.

Expand definition of development zone
SECTION 24.5.(a)  G.S. 105-129.3A(a) reads as rewritten:
"(a)	Development Zone Defined. – A development zone is an area comprised of either an economic development and training district as defined by G.S. 153A‑317.12 or one or more contiguous census tracts, census block groups, or both in the most recent federal decennial census that meets all of the following conditions:
(1)	Every census tract and census block group in the zone is located in whole or in part within the primary corporate limits of a city with a population of more than 5,000 according to the most recent annual population estimates certified by the State Budget Officer.
(2)	It has a population of 1,000 or more according to the most recent annual population estimates certified by the State Budget Officer.
(3)	More than twenty percent (20%) of its population is below the poverty level according to the most recent federal decennial census.
(4)	Every census tract and census block group in the zone meets at least one of the following conditions:
a.	More than ten percent (10%) of its population is below the poverty level according to the most recent federal decennial census.
b.	It is immediately adjacent to another census tract or census block group that is in the same zone and has more than twenty percent (20%) of its population below the poverty level according to the most recent federal decennial census.
(5)	None of the census tracts or census block groups in the zone is located in another development zone designated by the Secretary of Commerce."
SECTION 24.5.(b)  This section is effective for taxable years beginning on or after January 1, 2004.

Extend Sunset on sales and use tax refund for aviation fuel for motorsports racing teams
SECTION 24.6.(a)  G.S. 105‑164.14(l) reads as rewritten:
"(l)	Aviation Fuel for Motorsports Events. – A motorsports racing team or a motorsports sanctioning body is allowed a refund of the sales and use tax paid by it in this State on aviation fuel that is used to travel to or from a motorsports event in this State, to travel to a motorsports event in another state from a location in this State, or to travel to this State from a motorsports event in another state. For the purposes of this subsection, a "motorsports event" includes a motorsports race, a motorsports sponsor event, and motor sports testing. A request for a refund must be in writing and must include any information and documentation the Secretary requires. A request for a refund is due within six months after the end of the State's fiscal year. Refunds applied for after the due date are barred. This subsection is repealed for purchases made on or after January 1, 2009."
SECTION 24.6.(b)  Section 62 of S.L. 2005‑435 reads as rewritten:
"SECTION 62.  This part becomes effective January 1, 2005, and applies to purchases made on or after that date. Section 61 is repealed effective for purchases made on or after January 1, 2007. This part does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this part before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal."
SECTION 24.6.(c)  This section is effective when it becomes law.

Ethyl Alcohol tax credit and sales tax refund
SECTION 24.7.(a)  G.S. 105‑129.16D is recodified as G.S. 105‑129.71.
SECTION 24.7.(b)  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 3H.
"Tax Incentives for Renewable Fuel.
"§ 105‑129.70.  Definitions.
The following definitions apply in this Article:
(1)	Cost. – In the case of property owned by the taxpayer, cost is determined pursuant to regulations adopted under section 1012 of the Code, subject to the limitation on cost provided in section 179 of the Code. In the case of property the taxpayer leases from another, cost is value as determined pursuant to G.S. 105‑130.4(j)(2).
(2)	Renewable fuel. – Either of the following:
a.	Biodiesel, as defined in G.S. 105‑449.60.
b.	Ethanol either unmixed or in mixtures with gasoline that are seventy percent (70%) or more ethanol by volume.
"§ 105‑129.71.  Credit for constructing renewable fuel facilities.
(a)	Dispensing Credit. – A taxpayer that constructs and installs and places in service in this State a qualified commercial facility for dispensing renewable fuel is allowed a credit equal to fifteen percent (15%) of the cost to the taxpayer of constructing and installing the part of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing renewable fuel. A facility is qualified if the equipment used to store or dispense renewable fuel is labeled for this purpose and clearly identified as associated with renewable fuel.
The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the portion of the facility directly and exclusively used for dispensing or storing renewable fuel is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.72.
(b)	Twenty-five Percent Production Credit. – A taxpayer that constructs and places in service in this State a commercial facility for processing renewable fuel and that invests at least one hundred fifty million dollars ($150,000,000) in the facility is allowed a credit equal to twenty‑five percent (25%) of the cost to the taxpayer of constructing and equipping the facility. The taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest within a three-year period at least one hundred fifty million ($150,000,000) in the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.72.
(b1)	Thirty-five Percent Production Credit. – A taxpayer that constructs and places in service in this State three or more commercial facilities for processing renewable fuel and that invests a total amount of at least four hundred million dollars ($400,000,000) in the facilities is allowed a credit equal to thirty-five percent (35%) of the cost to the taxpayer of constructing and equipping the facilities.  The taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest within a five-year period a total amount of at least four hundred million ($400,000,000) in three or more facilities. The credit must be taken in seven equal annual installments beginning with the taxable year in which the first facility is placed in service.  If, in one of the years in which the installment of credit accrues, a facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of credit.  The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.72.
(c)	No Double Credit. – A taxpayer may take the thirty-five percent (35%) credit allowed under this section or the twenty-five percent (25%) credit allowed under this section during a taxable year with respect to a facility, but may not take both credits with respect to the same facility. A taxpayer that claims any other credit allowed under this Chapter with respect to the costs of constructing and installing a facility may not take a credit allowed in this section with respect to the same costs.

"§ 105‑129.72.  Allocation; cap; carryforward.
(a)	Allocation. – The credit allowed by this Article may be taken against the franchise tax levied under Article 3 of this Chapter and the income taxes levied under Article 4 of this Chapter. When the taxpayer claims an installment of a credit under this Article, the taxpayer must elect the percentage of the installment to be applied against the tax levied under Article 3 of this Chapter with any remaining percentage to be applied against the tax levied under Article 4 of this Chapter. This election is not binding for the year in which it is made or for any carryforwards of that installment. A taxpayer may elect a different allocation for each year in which the taxpayer claims an installment of a credit.
(b)	Cap. – The amount of credit claimed in a taxable year under this Article may not exceed the total amount of tax imposed under Articles 3 and 4 of this Chapter combined.
(c)	Carryforward. – Any unused portion of a credit allowed under this Article may be carried forward for the next succeeding 25 years. A successor in business may take the credits of a predecessor as if they were carryforwards of a credit allowed to the successor in business.
"§ 105-129.73. Forfeiture.
A taxpayer forfeits the twenty-five percent (25%) production credit under G.S. 105-129.71(b), if the taxpayer fails to meet the level of investment required under that subsection within the required period.  A taxpayer that claimed a thirty-five percent (35%) production credit under G.S. 105-129.71(b1) and fails to make the level of investment required under that subsection within the required period, but does make the level of investment required under subsection (b) of that section within the required period with respect to one or more facilities forfeits the amount of credit claimed under G.S.105‑129.71(b1) in excess of the amount that would have been allowed under G.S. 105-129.71(b). A taxpayer that claimed a thirty‑five percent (35%) production credit un G.S. 105-129.71(b1) and fails to make the level of investment required under that subsection and fails to make the level of investment required under G.S. 105‑129.71(b) with respect to any facility forfeits the entire credit.  A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105-241.1(i), computed from the date the taxes would have been due if the credit had not been allowed.  The past taxes and interest are due 30 days after the date the credit is forfeited.  A taxpayer that fails to pay the past taxes and interest by the due date is subject to penalties provided in G.S. 105-236.
"§ 105‑129.74.  Substantiation.
To claim a credit allowed by this Article, the taxpayer shall provide any information required by the Secretary of Revenue. Every taxpayer claiming a credit under this Article shall maintain and make available for inspection by the Secretary of Revenue any records the Secretary considers necessary to determine and verify the amount of the credit to which the taxpayer is entitled. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection.
"§ 105‑129.75.  Reports.
The Department of Revenue must publish by May 1 of each year the following information, itemized by taxpayer, for the 12‑month period ending the preceding December 31:
(1)	The number of taxpayers that took the credits allowed in this Article.
(2)	The cost of renewable fuel facilities with respect to which credits were taken.
(3)	The total cost to the General Fund of the credits taken.
"§ 105-129.76.  Sunset.
This article is repealed effective for facilities placed in service on or after January 1, 2011."
SECTION 24.7.(c)  G.S. 105‑164.14(j)(3) reads as rewritten:
"(j)	Certain Industrial Facilities. – The owner of an eligible facility is allowed an annual refund of sales and use taxes as provided in this subsection.
…
(3)	Industries. – This subsection applies to the following industries:
…
h.	Nonpotable ethyl alcohol manufacturing.
…"
SECTION 24.7.(d)  Subsections (a) and (b) of this section are effective for taxable years beginning on or after January 1, 2006.  Subsection (c) of this section becomes effective January 1, 2006, and applies to purchases made on or after that date.  The remainder of this section is effective when it becomes law.

Tax credit for biodiesel providers
SECTION 24.8.(a)  Part 4 of Article 36C of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-449.103.  Credit for biodiesel providers.
(a)	Credit. – A biodiesel provider or refiner who imports or produces biodiesel is allowed a credit against the tax imposed by this Article on that portion of the biodiesel that is derived in whole from agricultural products or animal fats or wastes from these products or fats.  The credit is equal to the amount of taxes paid under this Article on the applicable portion.  In order to be eligible for the credit allowed by this section, the taxpayer shall be licensed as required by G.S. 105-446.65 and shall file a return reporting fuel movement information as required by G.S. 105‑449.96.
(b)	Transfer from General Fund. – The Secretary shall withhold from the net collections under Article 5 of this Chapter on a monthly basis an amount equal to the total amount of credits claimed under this section.  The Secretary shall allocate the funds withheld under this subsection in the same manner as under G.S. 105-449.125.
(c)	Sunset. – The section is repealed January 1, 2011."
SECTION 24.8(b)  This section becomes effective January 1, 2008.

Sales and use tax rate Reduction on research and development equipment
SECTION 24.9.(a)  G.S. 105‑187.51B reads as rewritten:
"§ 105‑187.51B.   Tax imposed on  certain recyclers and research and development companies.
(a)	Tax. – A privilege tax is imposed on the following:
(1)	A major recycling facility that purchases any of the following tangible personal property for use in connection with the facility:
a.	Cranes, structural steel crane support systems, and foundations related to the cranes and support systems.
b.	Port and dock facilities.
c.	Rail equipment.
d.	Material handling equipment.
(2)	An eligible research and development company that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:a.	Is capitalized by the company for tax purposes under the Code.
b.	Is used by the company in the research and development of tangible personal property.
c.	Would be considered mill machinery under G.S. 105‑187.51 if it were purchased by a manufacturing industry or plant and used in the research and development of tangible personal property manufactured by the industry or plant.
(b)	Rate. – The tax is one percent (1%) of the sales price of the equipment or other tangible personal property. The maximum tax is eighty dollars ($80.00) per article."
SECTION 24.9.(b)  G.S 105-187.50 reads as rewritten:
"§ 105‑187.50.  Definitions.
The definitions in G.S 105‑164.3 apply in this Article.  In addition, the following definitions apply in this Article:
(1)	NAICS. – Defined in G.S. 105‑129.2.
(2)	Eligible research and development company. – A company that performs research and development and is in one of the following NAICS industry classifications:
a.	Internet service providers, Web search portals, and data processing subsector 518 as defined by NAICS.
b.	Software publishers industry group 5112 as defined by NAICS.
c.	Computer systems design and related services industry group 5415 as defined by NAICS.
d.	Research and development in the physical, engineering, and life sciences industry 54171 as defined by NAICS."
SECTION 24.9.(c)  This section becomes effective January 1, 2007, and applies to purchases made on or after that date.

Part XXIV-A.  Sales Tax Change

No sales tax refund for alcohol purchases
SECTION 24A.1.(a) G.S. 105‑164.14 is amended by adding a new subsection to read:
"(d1)	Alcoholic Beverages. – The refunds authorized by this section do not apply to purchases of alcoholic beverages, as defined in G.S. 18B‑101."
SECTION 24A.1.(b)  This section becomes effective July 1, 2006, and applies to purchases made on or after that date.

Part XXV.  Reserved

Part XXVI.  Set Regulatory Fees

Set Utilities REGULATORY FEE
SECTION 26.1.(a)  The percentage rate to be used in calculating the public utility fee under G.S. 62‑302(b)(2) is twelve‑hundredths of one percent (0.12%) for each public utility's North Carolina jurisdictional revenues earned during each quarter that begins on or after July 1, 2006.
SECTION 26.1.(b).  The electric membership corporation regulatory fee imposed under G.S. 62‑302(b1) for the 2006‑2007 fiscal year is two hundred thousand dollars ($200,000).

Set INSURANCE REGULATORY Fee
SECTION 26.2.  The percentage rate to be used in calculating the insurance regulatory charge under G.S. 58‑6‑25 is five and one‑half percent (5.5%) for the 2006 calendar year.

Part XXVII.  Reserved

PART XXVII-A. HEALTH AND HUMAN SERVICES FEES

PRIVATE WELL‑WATER TESTING FEE
SECTION 27A.1.(a)  G.S. 130A‑5 is amended by adding the following new subdivision to read:
"§ 130A‑5.  Duties of the Secretary.
The Secretary shall have the authority:
…
(16)	To charge a fee of up to fifty‑five dollars ($55.00) for analyzing private well‑water samples sent to the State Laboratory of Public Health by local health departments. The fee shall be imposed only for analyzing samples from newly constructed wells. The fee shall be computed annually by the Director of the State Laboratory of Public Health by analyzing the previous year's testing at the State Laboratory of Public Health, and applying the amount of the total cost of the private well‑water testing , minus State appropriations that support this effort. The fee includes the charge for the private well‑water panel test kit."
SECTION 27A.1.(b)  The Department of Health and Human Services, Division of Public Health, shall use funds available for the 2006‑2007 fiscal year to pay for positions for the private well water safety program authorized in the Current Operations and Capital Improvements Appropriations Act of 2006.  Funds realized from fees collected during the 2006‑2007 fiscal year shall be used to replace available funds authorized under this subsection and allocated for positions authorized for the private well water safety program for the 2006‑2007 fiscal year.
SECTION 27A.1.(c)  This section becomes effective July 1, 2006.

CLARIFICATION OF FEES FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICE FACILITIES
SECTION 27A.2.(a)  G.S. 122C‑23(h) reads as rewritten:
"(h)	The Department shall charge facilities licensed under this Chapter a nonrefundable annual base license fee plus a nonrefundable annual per‑bed fee as follows:
Type of Facility	Number of Beds	Base Fee	Per‑Bed Fee
Facilities (non ICF/MR):	0 beds	$175.00	$0

	1 to 6 beds	$250.00	$0
	More than 6 beds	$350.00	$12.50
ICF/MR Only: 	
	1 to 6 beds	$650.00	$0
	More than 6 beds	$650.00	$12.50"
SECTION 27A.2.(b)  This section becomes effective July 1, 2006.

TECHNICAL CORRECTION TO LICENSURE FEE LIMITS
SECTION 27A.3.(a)  G.S. 131E‑267 reads as rewritten:
"§ 131E‑267.  Fees for departmental review of health care facility construction projects.
The Department of Health and Human Services shall charge a fee for the review of each health care facility construction project to ensure that project plans and construction are in compliance with State law. The fee shall be charged on a one‑time, per‑project basis, as follows, and shall not exceed twenty‑five thousand dollars ($25,000) for any single project:

Institutional Project	Project Fee
Hospitals	$ 300.00 plus $0.20/square foot of project space
Nursing Homes	$ 250.00 plus $0.16/square foot of project space
Ambulatory Surgical Facility	$ 200.00 plus $0.16/square foot of project space
Psychiatric Hospital	$ 200.00 plus $0.16/square foot of project space
Adult Care Home
7 or more beds	$ 175.00 plus $0.10/square foot of project space

Residential Project 	Project Fee
Family Care Homes	$ 175.00 flat fee
ICF/MR Group Homes	$ 275.00 flat fee
Group Homes: 1‑3 beds	$ 100.00 flat fee
Group Homes: 4‑6 beds	$ 175.00 flat fee
Group Homes: 7‑9 beds	$ 225.00 flat fee
Other residential:
More than 9 beds	$ 225.00 plus $0.075/square foot of project space."
SECTION 27A.3.(b)  This section becomes effective July 1, 2006.

PART XXVII-B. NATURAL AND ECONOMIC RESOURCES FEES

REPEAL FEE FOR MINE SAFETY EDUCATION/TRAINING PROGRAMS
SECTION 27B.1.(a)  G.S. 74‑24.16(d) is repealed.
SECTION 27B.1.(b)  This section becomes effective July 1, 2006.

Increase CERTAIN Public Water Systems Annual Operating Permit Fees/impose fees for REVIEW OF ENGINEERING PLANS AND SPECIFICATIONS FOR THE CONSTRUCTION OR ALTERATION OF PUBLIC WATER SYSTEMS
SECTION 27B.2.(a)  G.S. 130A‑328 reads as rewritten:
"§ 130A‑328.  Public water system operating permit and permit fee.
(a)	No person shall operate a community or non transient non‑community water system who has not been issued an operating permit by the Department. A community or non transient non‑community water system operating permit shall be valid from January 1 through December 31 of each year unless suspended or revoked by the Department for cause. The Commission shall adopt rules concerning permit issuance and renewal and permit suspension and revocation. The annual fees in subsection (b) shall be prorated on a monthly basis for permits obtained after January 1 of each year.
(b)	The following fees are imposed for the issuance or renewal of a permit to operate a community or non transient non‑community water system; the fees are based on the number of persons served by the system:

	Fee
							Non Community Water Systems:
Base Fee:
Non transient non‑community	$150
Community Water Systems:
Number of Persons Served
50 or fewer	$255
More than 50 but no more than 100	$270
More than 100 but no more than 200	$330
More than 200 but no more than 300	$350
More than 300 but no more than 400	$385
More than 400 but no more than 500	$420
More than 500 but no more than 750	$780
More than 750 but no more than 1000	$810
More than 1000 but no more than 2000	$840
More than 2000 but no more than 3000	$870
More than 3000 but no more than 4000	$1350
More than 4000 but no more than 5000	$1460
More than 5000 but no more than 7500	$1925
More than 7500 but no more than 10,000	$2065
More than 10,000 but no more than 25,000	$2600
More than 25,000 but no more than 50,000	$2925
More than 50,000 but no more than 75,000	$4250
More than 75,000 but no more than 100,000	$4675
More than 100,000 but no more than 250,000	$5100
More than 250,000 but no more than 500,000	$5525
More than 500,000	$5950
(c)	The following fees are imposed for the review of plans, specifications, and other information submitted to the Department for approval of construction or alteration of a public water system. The fees are based on the type of constructions or alteration proposed:
Distribution system:	Fee
Construction of water lines, less than 5000 linear feet	$150
Construction of water lines, 5000 linear feet or more	$200
Other construction or alteration to a distribution system	$75

Ground water system:
Construction of a new ground water system or adding a new well	$200
Alteration to an existing ground water system	$100

Surface Water system:
Construction of a new surface water treatment facility	$250
Alteration to an existing surface water treatment facility	$150
Water System Management Plan review	$75
Miscellaneous changes or maintenance not covered above	$50
(d)	The Department may charge an administrative fee of up to one hundred fifty dollars ($150.00) for failure to pay the permit fee by January 31 of each year.
(e)	All fees collected under this section shall be applied to the costs of administering and enforcing this Article."
SECTION 27B.2.(b)  The Department of Environment and Natural Resources may create a schedule for phasing in the new fees added to G.S. 130A‑328, as amended by subsection (a) of this section, over multiple operating permit cycles.
SECTION 27B.2.(c)  This section becomes effective January 1, 2007.

PART XXVIII. MISCELLANEOUS PROVISIONS

EXECUTIVE BUDGET ACT APPLIES
SECTION 28.1.  The provisions of the Executive Budget Act, Chapter 143, Article 1 of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

COMMITTEE REPORT
SECTION 28.2.(a)  The House Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets, dated June 13, 2006, shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in G.S. 143‑15 of the Executive Budget Act, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
SECTION 28.2.(b)  The budget enacted by the General Assembly for the maintenance of the various departments, institutions, and other spending agencies of the State for the 2006‑2007 fiscal year is a line‑item budget, in accordance with the Budget Code Structure and the State Accounting System Uniform Chart of Accounts set out in the Administrative Policies and Procedures Manual of the Office of the State Controller. This budget includes the appropriations made from all sources, including the General Fund, Highway Fund, special funds, cash balances, federal receipts, and departmental receipts.
The General Assembly amended the requested adjustments to the budgets submitted to the General Assembly by the Director of the Budget and the Advisory Budget Commission in accordance with the steps that follow, and the line‑item detail in the budget enacted by the General Assembly may be derived accordingly:
(1)	The base budget was adjusted in accordance with the base budget cuts and additions that were set out in the House Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets.
(2)	Transfers of funds supporting programs were made in accordance with the House Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets.
SECTION 28.2.(c)  The budget enacted by the General Assembly shall also be interpreted in accordance with the special provisions in this act and in accordance with other appropriate legislation.
In the event that there is a conflict between the line‑item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

MOST TEXT APPLIES ONLY TO 2006‑2007
SECTION 28.3.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2006‑2007 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2006‑2007 fiscal year.

APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
SECTION 28.4.(a)  Except where expressly repealed or amended by this act, the provisions of S.L. 2005‑276 and S.L. 2005‑345 remain in effect.
SECTION 28.4.(b)  Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 2006‑2007 fiscal year in S.L. 2005‑276 and S.L. 2005‑345 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

EFFECT OF HEADINGS
SECTION 28.5.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act, except for effective dates referring to a part.

SEVERABILITY CLAUSE
SECTION 28.6.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 28.7.  Except as otherwise provided, this act becomes effective July 1, 2006.