|Mike’s Weekly Message
119th District, North Carolina House
16 Jones Street, Room 1420
Raleigh, NC 27601
Phone: (919) 715-3005
May 18, 2017
|Moving Into Budget Season
This week, we have begun step six of what will be a nine or ten step process that began last September when state agencies began making their budget requests for the coming biennium. To recap, by the time budget requests are made, and revenues are forecast, the Governor’s office begins working on their proposal, which was made public in February.
Last week, in the Senate, the activity was all about the budget. All the necessary committees (Appropriations/Base Budget, Finance, Pensions and Retirement) met on Wednesday, and went through the budget with a “fine-tooth comb” and hearing six amendments. Of the Senate floor Thursday, the budget was debated for several hours, with fourteen amendments added.
This year’s budget, as passed by the Senate, spends $22.88 billion, an increase of 3.8% factoring in inflation plus population growth. This part of the budget is the general fund, which can be broken down in the following areas: Education, Health and Human Services, Natural and Economic Resources, Justice and Public Safety, General Government, and Reserves and Debt Service.
General Fund Budget
Education takes up 57% of the state budget, or nearly $13 billion. Education spending can be broken down into three categories: K-12, Community Colleges, and the UNC System (which encompasses all of the state universities in North Carolina). The K-12 budget, which runs through the Department of Public Instruction, is $9 billion. The University System budget is $2.886 billion.
Health and Human Services
The Health and Human Services budget is $5.23 billion, or 24% of the state budget. The chart below shows the breakdown of the budget.
|Health and Human Services|
|Central Management and Support||124,254,579|
|Aging and Adult Services||45,106,213|
|Blind and Deaf / Hard of Hearing Services||8,418,832|
|Child Development and Early Education||268,984,429|
|Health Service Regulation||18,438,099|
|Mental Health, Developmental Disabilities & Sub. Abuse Services||684,418,672|
|NC Health Choice||459,077|
|Total Health and Human Services||5,235,060,048|
Justice and Public Safety
The total outlay for this area totals $2.67 billion. There are four subcategories under Justice and Public Safety. They are public safety, judicial department, judicial (indigent defense), and justice. The outlay for public safety is $1.977 billion, which covers the prison system, the National Guard, law enforcement, and emergency management. The outlay for the Justice Department is $55.9 million, which covers items like administration, legal services, and the state crime lab. The outlay for indigent defense is $121 million. The outlay for the judicial branch, which covers the state courts, district attorneys, and independent commissions, is $516.5 million.
Agricultural, Natural, and Economic Resources
The Agriculture piece should be self-explanatory. Natural and economic resources cover subcategories such as commerce, environmental quality, natural and cultural resources (i.e. tourism, parks, etc.), labor, and wildlife resources. In order to continue to focus on maintaining a pro-growth and pro-job development climate, the biggest increase in this area is commerce, whose outlay is $77.9 million. The outlay for agriculture and consumer services is $126.5 million, environmental quality is $70.7 million, natural and cultural resources is $175.3 million, labor is $17.5 million, and the wildlife commission is $10.6 million.
This covers the Department of Administration, the Governor’s Office, the General Assembly, Department of Revenue, Secretary of State’s office, among other items.
|Governor – Special Projects||2,001,625|
|Military and Veterans Affairs||10,302,913|
|Office of Administrative Hearings||5,906,579|
|Secretary of State||13,070,985|
|State Board of Elections||6,600,070|
|State Budget and Management||8,009,843|
|State Budget and Management– Special||2,000,000|
|Treasurer – Operations||4,802,959|
|Fire Rescue National Guard Pensions & LDD Benefits||27,645,361|
|Total General Government||387,391,305|
Department of Information Technology
Information Technology is a stand-alone category in the general fund budget. The outlay for IT is $51.5 million.
Statewide Reserves and Debt Service
This involves interest on the state’s debt ($727 million), as well as Federal reimbursement ($1.6 million). That’s the debt service part.
The second part involves the statewide reserves. There are eleven accounts in this subcategory.
|Contingency and Emergency Fund||5,000,000|
|Other Operating Reserves||500,000|
|Classification and Compensation System||3,900,000|
|Statutory Pay Plan Reserve||20,365,642|
|Workers’ Compensation Settlement Reserve||2,000,000|
|Salary Adjustment Fund||5,000,000|
|University System Enrollment Reserve||46,571,112|
|Film and Entertainment Grant Fund||15,000,000|
|Supplemental Disaster Recovery Act||70,000,000|
|Matching Funds for Disaster Recovery||80,000,000|
|Enterprise Resource Planning||3,000,000|
|Total Statewide Reserves||251,336,754|
There is a capital improvements fund broken down in three categories this year. They are water resources development projects ($15.65 million), Veterans Memorial ($250,000), and the North Carolina Zoo Infrastructure Improvements ($5 million). All of those are non-recurring expenditures, which is generally the case with all capital improvements expenditures.
The transportation budget is separate from the General Fund, which is funded mainly by motor vehicle taxes.
|Department of Transportation|
|Division of Highways|
|State Aid to Municipalities||147,500,000|
|Bicycle and Pedestrian||724,032|
|Governor’s Highway Safety||255,367|
|Division of Motor Vehicles||127,257,318|
|Other State Agencies, Reserves, Transfers||33,270,363|
|Total Highway Fund Appropriations||2,191,246,441|
Two Important Things
First, it’s important to understand that what you are reading in this newsletter doesn’t tell the whole story. What I mean is that we are still only at the beginning on the legislative process. This week, the senior House appropriations chairs are meeting with the “subject matter” Appropriations Chairs working on their proposal.
There are three more steps to go before the budget goes to the House floor. During that process, there will be opportunities for the full membership of each committee (Appropriations, Finance, Pensions and Retirement) to vet the House proposal. During that time, the public can review what is being proposed, as well as hear the discussion in the committees. My estimate is that once the House proposal is unveiled, the final House proposal will not be debated on the House floor until after the Memorial Day weekend.
Furthermore, once the House passed its budget, it is more likely than not that differences will have to be reconciled with the Senate.
The second thing that must be understood is that while I have given you a rough breakdown of what came out of the Senate, it’s not the deep dive that will be done once the conference report is released, which I expect will happen next month. In that deep dive, I’ll be able to give more in-depth details as it relates to the tax side, and what specific line items as it relates to Haywood, Jackson, and Swain Counties.
Please remember that you can reach my office by phone and by email. My phone number is (919) 715-3005, and my email address is email@example.com. Also, you can listen to the session, or most committee meetings by visiting ncleg.net,and clicking the audio tab.