The North Carolina House budget proposal for fiscal year 2009-10 will raise taxes and fees by more than $860 million and spend roughly $19.97 billion. The spending amount is down from the projected $20.3 billion being spent in the current fiscal year. Looking back further, however, the House spending plan would mark a five year spending increase of 25 percent, with $4.05 billion in new spending introduced since FY 2004-05.
On the revenue side, the House plan anticipates balancing the budget through a mixture of tax and fee hikes, transfers from various special state funds and $1.4 billion of federal fiscal stimulus dollars.
A list of the House budget’s recommended revenue adjustments are as follows:
Major Adjustments to Revenue Availability
| FY 2009-10 Amount | |
| Improved Revenue Collections | |
| Department of Revenue Improved Enforcement | $60,000,000 |
| Transfers from Various Funds | |
| Transfer from Disproportionate Share Reserve | $25,000,000 |
| Transfers from Special Funds | $40,743,885 |
| Transfers from Cash Balances from Capital and R&R Accounts | $65,687,775 |
| Transfers of Cash Balances from Special Funds | $51,528,456 |
| Transfer from Health and Wellness Trust Fund | $5,000,000 |
| Transfer from Tobacco Trust Fund | $5,000,000 |
| Transfer Sales Tax for Wildlife Resources Commission | $23,150,000 |
| Subtotal: | $216,110,116 |
| Tax Increases | |
| Increase Upper-income Tax Brackets | $256,700,000 |
| Combined Reporting, Corporate Income Tax | $18,500,000 |
| Sales Tax on Warranties, Installations, Repairs/Maintenance | $176,200,000 |
| Sales Tax on Local and Interstate Courier Services | $25,000,000 |
| Sales Tax on Digital/Click-throughs | $13,200,000 |
| Sales Tax on Amusements/Movies | $23,600,000 |
| Franchise Tax on Limited Liability Companies | $59,000,000 |
| Throwback Rule, Corporate Income Tax | $5,900,000 |
| Change Bank Interest Deduction | $2,600,000 |
| Increase Liquor Tax by 1.5% | $7,900,000 |
| Increase Statewide Sales Tax rate 1/4 cent | $195,000,000 |
| Subtotal: | $783,600,000 |
| New Fees and Fee Increases | |
| Reserve for Increased/New Fees | $81,172,651 |
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Dozens of new fees and fee increases are included in the House Budget plan. A few of the fees being increased are:
Marriage license fee Charitable bingo license fee Insurance company licensing fee Health Maintenance Organization licensing fee Home inspector license fee |
Education, particularly K-12 education, takes the biggest hit in the House’s budget proposal. When comparing to the current fiscal year’s estimated spending (after adjusting for mandated spending cuts), public education spending would be down 7 percent under the House plan.
The next largest percentage cut relative to current year actual spending is General Government with a 4.6 percent decrease.
Health and Human Services, Natural and Economic Resources and Justice and Public Safety all hold essentially even to current year funding levels. Community colleges and the UNC system both would see a bump in spending under the House proposal.
Education
Total spending (including “education stabilization funds” from federal stimulus act): $11.32 billion
Estimated spending for FY 2008-09: $11.8 billion
Public education – K-12, community colleges and higher education – accounts for 54 percent of the state budget. Major House budget provisions impacting public education include the following:
K-12 Pubic Education
Community Colleges
UNC System
Health and Human Services (HHS)
Total spending (including federal stimulus and block grant funds): $4.76 billion
Estimated spending for FY 2008-09: $4.76 billion
A lot of noise has been made about cuts in the HHS budget, but a comparison to projected expenditures shows that the coming year’s House HHS budget will spend the same amount as the current fiscal year. There were, however, a number of significant changes of note included in the House plan.
Natural and Economic Resources (NER)
Total spending: $534 million
Estimated spending for FY 2008-09: $534 million
The House budget plan for NER would spend the same amount as is projected to be spent for the current fiscal year. The major story for the NER budget seems to be items that the House chose either not to cut at all, or to reduce funding only by a minimal amount. As House budget writers chose to cut school teachers and funding to mental health programs, the following are examples of funding for programs not targeted:
General Government
Total Spending: $439 million
Estimated Spending for FY 2008-09: $460.5 million
General Government appropriations are reduced by roughly 5 percent from actual current year expenditures. Similar to the NER budget, the most interesting aspects of the General Government budget are the items House budget writers decided to continue to partially or fully fund.
Justice & Public Safety (JPS)
Total Spending (including federal stimulus and block grant funds): $2.12 billion
Estimated Spending for FY 2008-09: $2.11 billion
JPS appropriations in the House budget proposal will include roughly $42.5 million in federal fiscal stimulus and block grant funds to bring the total to $2.12 billion, slightly up from the anticipated expenditures for the current fiscal year. Major targets for cuts are in corrections, as 500 vacant positions would be eliminated and eight underutilized prisons would be slated for closing.
Reserves
Transportation
Highway Fund
Total Spending: $1.7 billion
Highway Trust Fund
Total Spending: $869 million