North Carolina state budget (2011-2012)

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See also: Archived North Carolina state budgets


At of the end of April 2012, lawmakers learned that the state would have a revenue surplus of about $233 million for FY 2012, but they expected a $150 million shortfall for the state's Medicaid program to take up a large portion of that surplus.[1]

FY 2012 budget

The North Carolina House of Representatives passed a $19.7 billion budget by a vote of 73-45 on June 11, 2011, matching a similar North Carolina State Senate plan. Governor Beverly Perdue vetoed the bill on June 12, 2011.[2] Lawmakers voted to override the veto on June 15, 2011, and the budget took effect. Republican lawmakers had enough votes to do so when they were joined by five House Democrats voting with House Republicans. The Senate had sufficient votes to override the veto as well.[2]

The budget eliminated a shortfall that the Office of State Management and Budget had estimated in December 2011 could be $3.7 billion.[3] Gov. Perdue said she vetoed the budget in part because it cut education spending. The budget ended the expiring three quarters of a cent sales tax, eliminating $800 million in revenue Gov. Perdue had relied on to fund teachers' jobs and protect education.[4]

The legislature considered a bill that made mover than 35 changes to the budget the week after it was passed. 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.[5]

Gov. Perdue said she did not intend to raise taxes and that she did not intend to extend a temporary one-cent sales tax increase approved a year ago to help close a deep fiscal hole. The state sales tax reverted to 6.75 percent. Responding to a request from Gov. Perdue regarding the FY 2012 budget, administrators from the public schools and university system told a General Assembly oversight committee how they would be affected by spending cuts of five percent or 10 percent.[6]

The 342 page budget can be found here.

State government reorganization

The North Carolina state government underwent a large reorganization to streamline it and make it more efficient. The centerpiece was the creation of a 25,000-employee criminal justice super agency. The state did not know how much money would be saved by the reorganization.[7]


As of December 2011, the state had a projected shortfall of $139 million in Medicaid funding, and the governor and legislature had not reached an agreement on how to close the funding gap.[8]


The budget limited enrollment in the North Carolina 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.[9]


The budget made many cuts, including reduced spending in the Department of Environment and Natural Resources by more than 12 percent, which reduced the number of agency employees by about 160. It also gave The Clean Water Management True Fund $11.3 million, although the fund was supposed to receive $100 million annually.[10]


Legislative Budget

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 went to the Senate, which created its own budget version. Then the House and Senate took votes on a final compromise budget before it went to Gov. Perdue.[11]

The budget approved by the House cut more than $360 million for teacher assistants, janitors, clerical workers, assistant principals, and programs. IT also included a provision that made the State Board of Education, not local boards, responsible for setting policy on how impending school layoffs would be handled.[12] The plan spent $650 million less than Perdue proposed for the coming year in 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.[11]

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. Allowing them to expire meant the state would lose $1.3 billion in revenue.[11]

The House plan also increased many fees, including:[13]

  • High school students would pay up to $75 for driver education classes that were previously free.
  • Criminal defendants would pay up to $70 more in court fees, and pay $10 for each night they spend instead of the prior $5 per night fee.
  • Community college classes would cost more, and so would a variety of state licenses and inspection fees.
  • Commuters who traveled 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.

Unemployment Insurance

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, 2011 because the state's recent three-month average unemployment rate had improved statistically from the depressed rates of prior years.[14]

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.[15] Gov. Perdue vetoed the bill, meaning that 37,000 state residents would lose unemployment benefits.[16][14] On June 3, 2011, the governor issued an executive order to restore the benefit payments.[17]


  1., "NC budget discussions beginning at Legislature," May 3, 2012 (dead link)
  2. 2.0 2.1 The Charlotte Observer, "Perdue vetoes state budget," June 13, 2011
  3. Bloomberg, "Perdue administration directs more NC cost savings," December 22, 2010
  4., "Gov. Perdue: I refuse to cut public classroom teachers," June 6, 2011
  5. The Charlotte Observer, "Bill makes about three dozen tweaks to state budget," June 18, 2011
  6. Businessweek, "NC lawmakers get grim news on school cut options," December 7, 2010
  7. The News Observer, "State government reorganizes seeking more efficiency," December 30, 2011
  8. Businesweek, "NC: Gov, lawmakers tussle over Medicaid shortfall," December 7, 2011
  9., "Budget writer defends changes to NC pre-K program," July 21, 2011
  10. Businessweek, "Final NC budget takes aim at environmental policy," June 3, 2011
  11. 11.0 11.1 11.2 Businessweek, "NC House gives final approval to its budget plan," May 5, 2011
  12. Forbes, "NC House budget has state set school layoff policy," May 6, 2011 (dead link)
  13. Charlotte Observer, "Less free time likely in state budget," May 9, 2011
  14. 14.0 14.1, "About 37,000 North Carolina residents lose jobless benefits," April 16, 2011
  15. The Charlotte Observer, "Bill linking budget, jobless benefits heads to Gov. Perdue," April 16, 2011
  16. The Huffington Post, "N.C. Gov. Vetoes Controversial Unemployment Bill," April 18, 2011
  17. Forbes, "Jobless benefits for 47,000 in NC start flowing," June 6, 2011 (dead link)