Passing a state spending plan is one of the major highlights of, as well as the driving force behind, the legislative biennium. North Carolina passes a state budget each long session and then returns in the short session to make adjustments based on actual spending and revenue. Keeping the state adequately funded and running is no simple or quick task, and work on this session’s budget has already begun.
Building the Budget
As a reminder, both of North Carolina’s legislative chambers break down their respective appropriations committees in the same way: one full appropriations committee as well as a handful of area appropriations committees that handle specific policy topics. In the state budget process work begins at the policy appropriations committees and ultimately comes together into one spending package that aligns with the full chairs’ spending targets. Earlier this month House and Senate area appropriations committees began meeting jointly to learn more about their various funding responsibilities in order to develop their spending and policy priorities for this year’s budget cycle.
In terms of timeline, initial conversations around spending targets based on revenue estimates kick off in February among the full Appropriations Committee chairs. Meanwhile, area appropriations committees also receive briefings on revenue forecasts and discuss policy priorities. At some point, usually sometime in March, the Governor’s recommended budget is presented to lawmakers as well. This session Gov. Cooper is expected to announce his budget recommendations as early as next week, and he has indicated some preliminary conversations with legislative leaders took place. Later, around April or May, the Senate’s full appropriations chairs will roll out a proposed budget that meets funding targets and includes spending priorities from each of the area appropriations committees. (It’s worth noting that the originating chamber alternates each biennium, so the House will be first to roll out a budget next long session.) The budget bill will receive a handful of committee hearings before going to the Senate floor for a vote. Upon favorable report, the budget bill heads over to the House. Once the House receives the budget bill from the Senate it will move it through the committee process and make changes in accordance with its own appropriations chairs’ spending priorities. Typically around June both chambers are reconciling differences and hammering out final details in the conference budget report. The goal is to pass a budget by June 30, as the new fiscal year begins July 1.
Recall: 2019 Mini Budgets
Ideally the Governor will sign the budget into law ahead of the July 1 deadline, but that’s not always the case. Last session’s budget was vetoed as part of a political stalemate over Medicaid expansion. As a result, the General Assembly ultimately spliced it apart and created several must-pass “mini budgets” to keep essential functions running. It’s unclear whether similar dynamics will be at play this session– state government is still divided and Medicaid remains un-expanded– but legislative leaders and the Governor alike have indicated a willingness to work together and find bipartisan compromise when possible.
State Spending & Federal Funds
Unlike previous bienniums, this session we will see significant COVID-19 relief spending alongside the regularly scheduled state spending process. Already this session North Carolina has enacted three relief bills allocating federal coronavirus relief funds, and additional spending is expected since Congress passed its most recent tranche of aid. Some spending pieces of the state budget are usually supplemented by federal grant dollars, and it remains unclear whether or how those usual, recurring federal allocations will be affected or diverted by federal relief spending.
Despite the pandemic, the consensus revenue forecast released earlier this year indicates North Carolina is in good economic shape and has $4.1 billion more in revenue than initially expected. The report also estimates North Carolina has already received $18 billion for households and $12.5 billion for businesses from the federal CARES Act. It remains optimistic in its growth projections for the state as well, which will be crucial as North Carolina continues to rebound and refill its coffers following the coronavirus pandemic.