BTC REPORTS: The House Budget: A Familiar Story With A Few Plot Twists

By Jonathan Palmer, policy analyst
June 2010

EXECUTIVE SUMMARY:

 

  •  On June 4, the North Carolina House of Representatives passed a budget bill that makes changes to the certified budget already in place for fiscal year (FY) 2010-11. The House’s proposed budget would reduce overall General Fund appropriations by $684 million, or 3.5%, compared to the certified budget. Compared to the budget for the previous year (FY 2009-10), the House’s proposed budget is $132 million, or 0.7%, less.
  •  Like the Senate’s and the governor’s proposals, the House budget assumes that tax revenues will be lower next year than was projected when the two-year budget was adopted in 2009. And like the Senate’s plan, the House’s budget assumes that the state will lose an additional $85 million in estate tax revenues due to federal tax law changes. The House’s revenue plan also includes a $34 million revenue loss from other unspecified tax changes.
  • The House’s proposed budget, like the governor’s and Senate’s plans, assumes that Congress will extend a temporary increase in the share of Medicaid expenses paid for by the federal government. That increase is set to expire in December, right in the middle of the state’s fiscal year.
  • The spending plan includes $892 million in proposed reductions, the largest of which are a reduction in General Fund appropriations to public school funding, which will be offset by lottery funds, a reduction to the projected costs for teacher salaries, management flexibility reductions within the UNC system, and reductions to Medicaid-funded community support services.
  • The budget also provides for $252 million in new spending, the vast majority of which would pay for increased enrollment in community colleges and Medicaid, each of which have experienced unprecedented enrollment pressures since the start of the recession.
  • The House’s budget includes some noteworthy policy changes, such as limiting enrollment growth in the university system for one year and allowing the extent to which a particular school district is addressing racial and socioeconomic segregation to be considered when allocating funds. The plan also establishes a new Mobility Fund to address high-priority transportation projects, most notably the Yadkin River Bridge project, by redirecting money from the Turnpike Authority and Highway Trust Fund.
Authors: 
Research & Publications: 
Issues: