North Carolina state budget
- 1 Federal Aid to State Budget
- 2 Fiscal Year 2014 State Budget
- 3 Fiscal Year 2013 State Budget
- 4 Fiscal Year 2012 State Budget
- 5 Budget transparency
- 6 Budget background
- 7 Accounting principles
- 8 Stimulus
- 9 Public Employees
- 10 External links
- 11 Additional reading
- 12 References
|North Carolina state budget|
[[File:Flag of North Carolina.png budgetcal = Biennial|100px]]
|Date signed:||June 15, 2011|
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North Carolina operates on a biennium budget schedule, budgeting for two fiscal years at a time. While the General Assembly draws up a budget every two years, it then adjusts the budget prior to the state of the second fiscal year of the budget which begins on July 1.
The Assembly passed the $19.7 billion FY2012-13 state budget on June 5, 2011 budget. Gov. Bev Perdue vetoed the bill on June 12, 2011, the first time in state history that the governor has vetoed a budget. Lawmakers voted to override the veto on June 15, 2011, and the budget took effect. The legislature proposed changes to that budget for the second year, FY2013. Their $20.2 billion budget took effect after the legislature overrode the governor's veto.
As of FY2012, North Carolina had a total state debt of approximately $94,982,155,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap. The FY2013 state debt total is down from the FY2012 state debt total of $97,376,318,000. North Carolina's total state debt per capita was $9,836.19.
Federal Aid to State Budget
The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):
|North Carolina||29.92% (#26)||34.9% (#19)||35.63% (#30)||35.00% (#29)|
- Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.
Fiscal Year 2014 State Budget
Fiscal Year 2013 State Budget
Gov. Perdue vetoed the $20.2 billion FY2013 state budget the legislature sent to her, but both chambers of the legislature overrode her veto. At issue was funding for education and the state's reserves, with the governor wanting to use $100 million from the reserves on K-12 schools, probation officers and other items.
The revised budget that became law when the legislature overrode the governor's veto can be found online.
Highlights of the budget for FY2013 include:
- Raises of 1.2 percent raises for teachers and state employees and 1 percent cost-of-living increases for state retirees.
- $212.5 million for growth in Medicaid program.
- $39.7 million in monthly stipends to adult care homes for residents who do not qualify for personal care services paid by Medicaid, but whose community placements are not arranged.
- Capping the state gas tax.
- Reduces by $143.3 million the amount local school districts must return to the state. Schools will have $190 million less to spend this year.
Legislative Proposed Budget
The Senate tentatively approved on June 13, 2012 the $20.1 billion budget that was drafted by Republicans. It spends $127 million less than spending plan approved by the House and $758 million less than what Gov. Perdue proposed. The biggest difference among the plans is Republicans won't raise the state sales tax by three-quarters of a cent, as Perdue wants, to generate more revenue. The Senate's proposed budget also changes funidng for Medicaid and public education and would require 2 percent cuts elsewhere in state government. The Senate plan does not completely replace $259 million in federal funds that school districts will not receive next school year.
The Senate's proposed budget spends $466 million more than the state spent in FY2012.
Governor's Proposed Budget
Gov. Perdue said her spending proposal for FY2013 would include a temporary sales tax increase of three-quarters of a penny, the revenues from which would be dedicated to public education. That would raise the sales tax consumer in most counties pay from 6.75 percent to 7.5 percent.
The administration told several House subcommittees to find reductions equal to 1.5 percent of what the two-year budget directs them to spend in FY2013.
The governor's proposed budget spends $1.2 billion more than the state spent in FY2012.
Fiscal Year 2012 State Budget
- See past state budgets
As of the end of April, lawmakers learned that the state would have a revenue surplus of about $233 million for FY2012, but they expected a $150 million shortfall for the state's Medicaid program to take up a large portion of that surplus.
The House passed a $19.7 billion budget by a vote of 73-45 on June 11, 2011, matching a similar Senate plan. Gov. Perdue vetoed the bill on June 12, 2011. Lawmakers voted to override the veto on June 15, 2011, and the budget took effect. Gov. Perdue said she vetoed the budget in pat because it cuts education spending. The budget ends the expiring three quarters of a cent sales tax, eliminating $800 million in revenue Governor Perdue has relied upon to fund teachers' jobs and protect education. Democrats said that the budget cuts roughly 13,000 education jobs statewide, including nearly 9,300 in public schools. Republicans have said those numbers are exaggerated and don't take into account usual employment attrition and more than $250 million in unused federal money. Republicans also say that the budget spends almost $7.5 billion on the public schools next year, or nearly as much as Perdue's proposal in February. The budget also cuts funding to higher education, directing the University of North Carolina system to find $414 million in cuts.
The legislature considered a bill that made mover than 35 changes to the budget the week after it was passed, and the legislature typically passes a technical corrections bill after every budget that serves as a kind of clean-up bill. This bill would do a variety of things, from allowing the Lieutenant Governor to keep to his cell phone to specifying that certain prisons could not be among those closed as part of the closures called for in the budget. 
Gov. Perdue said she did not intend to raise taxes and said that she does not intend to extend a temporary 1-cent sales tax increase approved a year ago to help close a deep fiscal hole. The state sales tax would revert to 6.75%. Responding from a request from Gov. Perdue regarding the FY2012 budget, administrators from the public schools and university system told a General Assembly oversight committee how they would be affected by spending cuts of 5% or 10% to a General Assembly oversight committee.
The 342 page budget can be found online.
State government reorganization
North Carolina state government underwent a large reorganization to streamline it and make it more efficient, and the centerpiece was the creation of a 25,000-employee criminal justice super agency. The state did not know just how much money would be saved by the reorganization.
As of December 2011, the state had a projected shortfall of $139 million in Medicaid funding and the governor and legislature have not reached an agreement on how to close the funding gap.
Legislators spent about $258 million less on public education than Perdue proposed, or about 2.3 percent less. The budget does provide additional funds to hire more than 1,100 teachers in early grades and the framework to create a merit pay plan for teachers starting in the 2012-13 school year.
State education officials said the budget would lead to the elimination to 13,000 public education jobs, of which 3,200 comes from the University of North Carolina system. Republicans did not agree with those numbers, saying that they fail to account for more than $250 million in federal funds for preserving education positions that the local districts have not spent.
The budget limited enrollment in the NC Pre-Kindergarten program. Superior Court Judge Howard Manning ruled on July 18, 2011, that changes that limit enrollment in the service violate a landmark state Supreme Court ruling, the so-called Leandro II ruling, that every child has a constitutional right to an equal education.
Expiration of Taxes
The FY2012 budget permited temporary taxes expire, meaning the base sales tax consumers pay will decrease from 7.75 percent to 6.75 percent. Other taxes for the highest wage earners and corporations, approved in 2009 by Democrats, also won't be renewed.
The budget made many other cuts, including educe spending in the Department of Environment and Natural Resources by more than 12 percent, reducing the number of agency employees by about 160. It also gives The Clean Water Management True Fund $11.3 million, although the fund is supposed to receive $100 million annually.
Funding for more than 1,250 full-time positions would be eliminated in the courts, local prosecutor offices and prisons.
On May 5, 2011, the House approved a $19.3 billion budget bill by a vote of 72-47, with some Democrats supporting the Republican proposal. The bill will go to the Senate, which will create its own budget version, and then the House and Senate also will take votes on a final compromise budget before it goes to Gov. Perdue.
The budget approved by the House cuts more than $360 million for teacher assistants, janitors, clerical workers, assistant principals, and programs. IT also includes a provision that makes the State Board of Education, not local boards, responsible for setting policy on how impending school layoffs will be handled. The plan spends $650 million less than Perdue proposed for the coming year in the public schools, the University of North Carolina system and community college system and 11 percent less than what was required to keep services running at current levels.
The House budget included the expiration of a pair of temporary tax increases -- an extra penny on the sales tax and higher income tax bills for top wage earners. Republicans ran on doing away with the taxes during the fall campaign and allowing them to expire means the state will have $1.3 billion in lost revenues.
The House plan also increased many fees, including:
- High school students would pay up to $75 for driver education classes that were previously free.
- Criminal defendants will would pay up to $70 more in court fees, and pay $10 for each night they spend instead of the prior $5/night fee.
- Community college classes would cost more, and so will a variety of state licenses and inspection fees.
- Commuters who travel to work on two busy coastal river ferries, now free, would have to pay tolls or buy passes that could cost up to $100 a month.
- Drivers with speeding tickets and other defendants would pay $24 more in costs for District Court, and $52 more for Superior Court.
- parties in civil suits would be charged $20 to file motions, and $150 to $200 to file counter-claims, which could lead to the courts' collecting an additional $57 million in new or increased fees for the state, and $35 million more for counties.
The U.S. Labor Department notified state officials at the beginning of August that it would stop paying from the extended benefits program by April 16 because the state's recent three-month average unemployment rate had improved statistically from the depressed rates of prior years.
On April 16, 2011, the legislature passed a bill linking the state budget and state unemployment benefits, extending the benefits but forcing the Democratic governor to accept a 13 percent cut in the $19.9 billion state budget she presented in February. Gov. Perdue vetoed the bill, meaning that 37,000 state residents would lose unemployment benefits. On June 3, 2011, the governor issued an executive order to restore the benefit payments.
North Carolina became more transparent in 2009 after the launch of NC Open Book spending transparency.
Prior to the launch of NC Open Book, the Office of the State Auditor established a searchable database that reports on private organizations receiving state funds. The database is available online
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State Database||Searchability||Grants||Contracts||Line Item Expenditures||Dept/Agency Budgets||Public Employee Salary|
|NC Open Book|
Limitations and Suggestions
NC Open Book does not list state employee salaries, nor does it provide line-item expenditures.
Multi-Measure Budget Transparency Profile
The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for North Carolina, which measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.
The North Carolina Constitution requires that the budget enacted by the general assembly be balanced. In the second year of the biennium, the Office of State Budget and Management develops the governor’s recommended adjustments to the biennial budget. The governor releases a recommended budget every other year in February but still makes an annual update, usually in May. Once both the House and the Senate review and approve the document, then the bill is submitted to the governor for final approval.
In 2007, the legislature created the Program Evaluation Division, a watchdog group to examine state programs and their efficiency. It was one of the last state legislatures to create such a group. The Legislature or the division's 18-member bipartisan oversight committee determines what the division's 10 member staff, which is separate from the legislature's regular staff, will review. The Program Evaluation Division's recent report can be found online.
North Carolina State Auditor prepares and publishes audit reports as independent evaluations of the state's financial records and public program performance. Beth A. Wood was elected State Auditor in 2008.
The Institute for Truth in Accounting (IFTA) rates North Carolina “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider North Carolina's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care. North Carolina's CAFRs are prepared and published online by the North Carolina Office of State Controller.
North Carolina received $6.26 billion in federal funding from the American Recovery and Reinvestment Act between February 2009 and June 2013.
According to 2011 Census data, the state of North Carolina and local governments in the state employed a total of 178,488 people. Of those employees, 135,171 were full-time employees receiving a net pay of $535.7 nillion per month and 43,317 were part-time employees paid $52.8 million per month.
- State Budget Solutions, North Carolina
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- John Locke Foundation
- John William Pope Civitas Institute
- Jesse Helms Center
- North Carolina Office of State Budget and Management
- North Carolina General Assembly site
- North Carolina Americans for Prosperity
- Charlotte Observer, North Carolina Government Salaries Database
- National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
- The Charlotte Observer "State budget saves 1,600 teacher jobs, cuts spending" June 29, 2010
- WCNC.com "State lawmakers pass budget; some school jobs cut" June 5, 2011
- Forbes "NC lawmakers override historic Perdue budget veto" June 16, 2011
- The Charlotte Observer "Perdue budget veto brings uncertainty" June 29, 2012
- State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
- State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
- State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
- US Census Federal Aid to State and Local Governments
- Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
- The Charlotte Observer "Next North Carolina state budget will be tight, authors say" Jan. 27, 2013
- The Charlotte Observer "Perdue budget veto brings uncertainty" June 29, 2012
- Revised FY2013 Budget
- "North Carolina House passes budget after heated debate" May 31, 2012
- Businessweek "NC Senate gives tentative approval" June 14, 2012
- CBSNews.com NC Senate spends less than House in budget changes" June 11, 2012
- necn.com "Highlights of Perdue's budget proposal for 2012-13" May 10, 2012
- Proposed FY2013 Budget
- CBSNews.com "NC gov wants higher sales tax for education" Jan. 18, 2012
- CBSNews.com "NC budget discussions beginning at Legislature" May 3, 2012
- The Charlotte Observer "Perdue vetoes state budget" June 13, 2011
- WNCT.com "Gov. Perdue:"I refuse to cut public classroom teachers" June 6, 2011
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- The Charlotte Observer "Bill makes about three dozen tweaks to state budget" June 18, 2011
- [Businessweek "NC lawmakers get grim news on school cut options" Dec. 7, 2010]
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- FY2012 Budget
- The News Observer "State government reorganizes seeking more efficiency" Dec. 30, 2011
- Businesweek "NC: Gov, lawmakers tussle over Medicaid shortfall" Dec. 7, 2011
- WRAL.com "Budget writer defends changes to NC pre-K program" July 21, 2011
- Businessweek "Final NC budget takes aim at environmental policy" June 3, 2011
- Businessweek "NC House gives final approval to its budget plan" May 5, 2011
- Forbes "NC House budget has state set school layoff policy" May 6, 2011
- Charlotte Observer "Less free time likely in state budget" May 9, 2011
- Reuters.com "About 37,000 North Carolina residents lose jobless benefits" April 16, 2011
- The Charlotte Observer "Bill linking budget, jobless benefits heads to Gov. Perdue" April 16, 2011
- The Huffington Post "N.C. Gov. Vetoes Controversial Unemployment Bill" April 18, 2011
- Forbes "Jobless benefits for 47,000 in NC start flowing" June 6, 2011
- [NC Open Book
- State Auditor Database
- Institute of Government and Public Affairs
- University of Illinois Transparency Profile for North Carolina
- [ University of Illinois 50 State Transparency Comparison
- University of Illinois State Transparency Profiles
- North Carolina Office of State Budget and Management,"About the Budget," retrieved June 5, 2009
- Businessweek "3 years in, NC Legislature watchdog making a mark" August 9, 2010
- Program Evaluation Division Efficiency Report
- North Carolina Office of the State Auditor Web site, retrieved November 4, 2009
- audit reports
- Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- [ http://www.ncosc.net/index2.html North Carolina Office of State Controller Web site, retrieved November 4, 2009]
- State of Indiana, “State Credit Ratings-as of June 24, 2009"
- Pew Stateline Infographic on State Credit Ratings. Accessed September 19, 2013
- Recovery, "Stimulus Spending by State"
- 2008 Illinois Public Employment U.S. Census Data