What is happening with our state budget?

Published August 12, 2021

By Becki Gray

The General Assembly convened Jan. 13 and has met for well over 100 days. More than 1,700 bills have been filed; bills on election reform, appropriating federal COVID money, energy modernization, medical marijuana, sports betting, constitutional amendments, education reforms, health care advancements, regulatory reforms, unemployment benefits, confirmations, and appointments — to name a few.  

Out of all the bills filed, the one that matters most is the overall budget.  

Under our state constitution, the legislative branch is charged with appropriations bills and determining how much revenue is needed to meet core functions of government (taxing).  

On one side, Republicans have established a decade-long record of restrained spending, fiscal responsibility, saving and paying down debt, and returning tax money to those who need it. They are working to narrow the function of government and empower citizens over their own property. On the other side, Democrats have a 140-year-long record of tax-and-spend policies. But there are sides within the sides having heated discussions within their own caucuses, amongst state departments, and with the governor. Working out a budget is complicated, nuanced, and takes time. 

The governor takes the first stab at a budget in early spring. He proposed spending $27.4 billion in 2021-22 and $28.5 billion in 2022-23. The legislative chambers take turns by the biennium. This year, the Senate goes first, passing its budget on June 25. The House anticipates having its budget done by mid-August. The two proposals will go to a legislative conference committee, appointed by the members who voted yes on either proposal. The conference report is voted up or down by both chambers and then goes to the governor. He can sign it, veto it, or if he does nothing, it becomes law within 10 days.  

Although we’re far from a final budget, there are a few things we know. Our economy is strong. We have $5.7 billion in surplus revenue. Legislative chambers agreed to cap spending at $25.7 billion, a 3.45% increase over last year for 2021-22 and $26.7 billion, a 3.65% increase for 22-23, within a population growth plus inflation calculation. There will be tax cuts, most likely to the personal and corporate income rates, the standard deduction will be increased to offer more tax relief to low-and middle-income families, and the per-child tax deduction will be increased.  

Every North Carolinian who pays taxes will see cuts. Capital needs will be met without further debt. Money will be put into savings. Investments will be made in water and sewer, roads, and broadband. Teachers and state employees get pay increases, but more importantly, the state retirement fund and health plan will be shored up to ensure promises made will be kept. Medicaid expansion won’t happen. 

As always, there will be policy in the budget. Look for an expansion of Opportunity Scholarships, Certificate of Need reforms, expansion of telehealth, a focus on mental health services, revisions to the Emergency Management Act, transparency requirements in education and health care, and election reforms. There will be special provisions spread across specific districts. There will be last-minute insertions.  

Expect a budget to pass the General Assembly with bipartisan support and be on the governor’s desk by Labor Day. Gov. Roy Cooper has vetoed every budget presented to him. If he vetoes this one, will at least two Democrats in the Senate and three in the House join their Republican colleagues to override a veto? If not and a budget does not pass, due to a 2015 law, spending just reverts to the previous year, and the General Assembly will try to pass a series of mini budgets to address timely needs and federal matching funds as needed.  

It’s messy and complicated. There is something for everyone and something for opponents to complain about. But in the end, North Carolina will have a budget, even if it’s last year’s. Schools will open, law enforcement will do their job, the government will govern, we’ll continue to pay taxes, and the General Assembly will have done their job.  

This article originally appeared in the August print edition of Carolina Journal.