North Carolina state budget

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North Carolina state budget

Flag of North Carolina.png
Budget calendar:  Biennial
Current fiscal year:  2015
State credit rating:  AAA (as of 2014)
Current governor:  Pat McCrory
Financial figures
GF expenses[1]:  $20.6 billion
All funds expenses:  $51.4 billion (FY 2013 estimate)
Spending % change:  Green Arrow Up Darker.svg1.94%[2]
% from federal funding:  33.24%
State debt:  $107,580,297,000
Per capita state debt:  $11,032
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Between fiscal year 2009 and fiscal year 2013, North Carolina's total expenditures increased by approximately $2.7 billion, from $48.7 billion in 2009 to $51.4 billion in 2013. This represents a 5.25 percent increase, below the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

This page contains information about budget processes and policy issues in North Carolina, including:

  • a summary of the budget drafting process
  • trends in expenditures and revenues
  • current and past fiscal year budget developments
  • financial transparency measures

Budget process

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instruction guidelines are sent to state agencies in July.
  2. State agency budget requests are submitted in October.
  3. Agency hearings are held in October and December.
  4. The governor submits his or her proposed budget to the North Carolina State Legislature in early February.
  5. The legislature adopts a budget in June. A simply majority is required to pass a budget.
  6. The biennial budget cycle begins in July.

North Carolina is one of only six states in which the governor cannot exercise line item veto authority.[6]

The governor is constitutionally and statutorily required to submit a balanced budget. In turn, the legislature is required by statute to pass a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures**
North Carolina $20,602 $17,459 $12,543 $785 $51,389 $5,218.19
Georgia $18,303 $11,752 $10,211 $808 $41,074 $4,110.62
South Carolina $6,350 $7,792 $8,158 $0 $22,300 $4,670.31
Tennessee $12,622 $13,055 $5,394 $382 $31,453 $4,841.92
Virginia $17,691 $9,546 $16,191 $1,167 $44,595 $5,398.65
**Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in North Carolina can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
North Carolina 23.2% 9.0% 0.5% 24.7% 4.2% 9.9% 28.4%
Georgia 24.0% 18.7% 0.1% 21.5% 3.7% 5.2% 26.8%
South Carolina 15.9% 21.0% 0.4% 21.7% 2.7% 6.6% 31.7%
Tennessee 17.7% 12.8% 0.4% 30.7% 2.7% 6.4% 29.3%
Virginia 16.0% 13.1% 0.4% 16.2% 2.9% 11.3% 40.1%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Expenditure trends

From 2008 to 2012, expenditures on elementary and secondary education, corrections and transportation increased, with corrections expenditures increasing the most at 0.9 percentage points, a 27.3 percent increase in the share of the budget. During the same time period, expenditures on higher education, public assistance and Medicaid decreased, with higher education expenditures decreasing the most at 2.8 percentage points, a 23.7 percent decrease in the share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2012 23.2% 9.0% 0.5% 24.7% 4.2% 9.9% 28.4%
2011 18.3% 12.5% 0.5% 22.1% 2.8% 8.7% 35.1%
2010 19.3% 12.4% 0.5% 24.2% 2.9% 7.1% 33.5%
2009 22.5% 13.5% 0.6% 24.9% 3.6% 8.8% 26.1%
2008 22.4% 11.8% 0.6% 26.4% 3.3% 9.1% 26.3%
Change in % 0.80% -2.80% -0.10% -1.70% 0.90% 0.80% 2.10%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
North Carolina $5,309 $10,958 $1,192 $0 $3,100 $20,559 $2,087.62
Georgia $5,226 $8,486 $706 $0 $3,562 $17,980 $1,799.41
South Carolina $2,448 $2,796 $265 $0 $742 $6,251 $1,309.15
Tennessee $6,643 $126 $1,083 $0 $3,551 $11,403 $1,755.39
Virginia $3,249 $11,093 $821 $0 $1,259 $16,421 $1,987.92
**Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, North Carolina ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $5,309 $10,958 $1,192 $0 $3,100 $20,559 $2,087.62
2012 $5,258 $10,272 $1,133 $0 $2,869 $19,532 $2,003.62
2011 $5,872 $9,735 $1,014 $0 $2,536 $19,157 $1,984.90
2010 $5,565 $9,048 $1,198 $0 $1,934 $17,745 $1,856.26
2009 $4,678 $9,470 $836 $0 $1,795 $16,779 $1,788.64
Change in % 13.49% 15.71% 42.58% N/A 72.70% 22.53% 16.72%
**Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

Fiscal years 2014 and 2015

DocumentIcon.jpg See budget bill: Senate Bill 402

North Carolina state budget -- 2014
North Carolina State Legislature
Text:Senate Bill 402
Legislative history
Introduced:March 25, 2013
House:June 13, 2013
Vote (lower house):77-40
Senate:May 23, 2013
Vote (upper house):33-17
Governor:Pat McCrory
Signed:July 26, 2013

The 2014-2015 biennial budget was signed into law by Governor Pat McCrory on July 26, 2013.[14] A copy of the full appropriations bill can be found here.

McCrory announced a budget adjustment proposal on May 14, 2014. McCrory's proposal can be accessed here.[15]

Fiscal year 2013

See also: North Carolina state budget (2012-2013)

Fiscal year 2012

See also: North Carolina state budget (2011-2012)

Fiscal year 2011

See also: North Carolina state budget (2010-2011)

Fiscal year 2010

See also: North Carolina state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in North Carolina ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $20,195 43.4% $11,207 24.1% $14,513 31.2% $652 1.4% $46,567
2010-2011 $18,503 36.3% $14,220 27.9% $17,711 34.8% $473 0.9% $50,907
2009-2010 $18,513 38% $12,583 25.8% $17,163 35.2% $488 1% $48,747
Averages: $19,070.33 39% $12,670 26% $16,462.33 34% $537.667 1% $48,740.33
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, North Carolina had a state debt of over $100 billion. Its state debt per capita was $11,032. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[16][17]

Total state debt in North Carolina[18]
Type Totals U.S. rank
Total state debt $107,580,297,000 13
Per capita debt $11,032 42
State and other fund expenditures $31,402,000,000 34

Public pensions

See also: North Carolina public pensions and North Carolina public employee salaries

A 2012 report from the Pew Center on the States noted that North Carolina's pension system was funded at 96 percent at the close of fiscal year 2010, well above the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as a "solid performer."[19]

The funding ratio for the state's pension system decreased from 104.47 percent in fiscal year 2006 to 95.26 percent in fiscal year 2011, a drop of 9.21 percentage points, or 8.8 percent. Likewise, unfunded liabilities increased from a nearly $3 billion surplus in fiscal year 2006 to more than $3.8 billion in fiscal year 2011.

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This is turn results in lower interest costs, thereby lowering the cost to taxpayers.[20][21]

The table below lists the Standard and Poor's credit ratings for North Carolina and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[22]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
North Carolina AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
Georgia AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
South Carolina AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AAA
Tennessee AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA AA
Virginia AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014.

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[23]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[23]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid (in millions) National rank
North Carolina 33.24% $15,193 26
Georgia 38.06% $13,795 7
South Carolina 32.45% $6,893 29
Tennessee 41.02% $11,199 3
Virginia 23.53% $9,278 48

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, North Carolina received $6.26 billion in federal funding from the American Recovery and Reinvestment Act between February 2009 and June 2013.[24]

Budget transparency

Transparency evaluation
NC Open Book
Searchability Y
600px-Yes check.png
Grants Y
600px-Yes check.png
Contracts Y
600px-Yes check.png
Line item expenditures N
600px-Red x.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries N
600px-Red x.png
Last evaluated in 2009.
See also: Evaluation of North Carolina state website and Constitutional provisions regarding reading of bills

North Carolina became more transparent in 2009 after the launch of NC Open Book, the government spending transparency website.

Prior to the launch of NC Open Book, the Office of the State Auditor established a searchable database that reported on private organizations receiving state funds. That database can be found here.

Government tools

The table to the right is helpful in evaluating the level of transparency provided by 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 measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented 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.[25][26]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. North Carolina tied for 20th in the nation with 12 other states, earning five out of eight possible points.[26]

North Carolina - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget
{{{1}}}
Multi-year forecasting
{{{1}}}
Annual cycle N
600px-Red x.png
Binding revenue forecast
{{{1}}}
Legislative revenue forecast
{{{1}}}
Nonpartisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations N
600px-Red x.png
TOTAL 5

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[26]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[27] According to the report, North Carolina received a grade of B+ and a numerical score of 88.5, indicating that North Carolina was an "advancing" state in terms of transparency regarding state spending.[27]

Accounting principles

See also: North Carolina government accounting principles

The North Carolina 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.[28] Audit reports are published online and can be found here.

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 six 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.[29] North Carolina's CAFRs are prepared and published online by the North Carolina Office of State Controller (dead link).[30]

Credit Rating Fitch Moody's S&P
North Carolina[31] AAA Aaa AAA[32]

Contact information

Office of State Budget and Management
116 West Jones Street
Raleigh, NC 27603-8005
Phone: (919) 807-4700
http://www.osbm.state.nc.us/

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. Open States, "North Carolina Senate Bill 402," accessed April 30, 2014
  15. National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  16. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  17. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  18. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  19. Pew Center on the States, "Widening Gap Update: North Carolina," June 18, 2012
  20. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  21. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  22. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  23. 23.0 23.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  24. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  25. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  26. 26.0 26.1 26.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  27. 27.0 27.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  28. North Carolina Office of the State Auditor Website, accessed November 4, 2009
  29. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  30. North Carolina Office of State Controller Website, accessed November 4, 2009 (dead link)
  31. State of Indiana, “State Credit Ratings," June 24, 2009"
  32. Pew Center, "Stateline Infographic on State Credit Ratings," accessed September 19, 2013