When the legislature set April 28 as the return date for this legislative session, no one could have imagined this session would be so different from any that has ever come before.
Like every aspect of life right now, the state legislature is facing unprecedented challenges. Along with those challenges comes equally formidable opportunities for leadership and vision. Here are some things to keep in mind going in to the legislative session.
There was no new state budget last year
North Carolina government operates under a two-year budget cycle known as a biennial budget. Since the governor vetoed the state budget passed by the legislature, and the Senate has yet to call a veto override vote, no new comprehensive state budget was passed into law last year.
However, as I’ve previously explored, this is not necessarily a doomsday scenario. In fact, the governor’s veto prevented spending increases from going into effect. Without a new budget, the state is funded at the previous year’s recurring funding levels. Other, non-recurring funds were not automatically renewed. The legislature passed a series of mini-budgets in the fall to address the most important of those budget holes. But one should question whether the other funding like the pork barrel spending that is prevalent every year should have been included in the state budget at all.
The legislature typically uses the short session held in the second year of the biennium to make adjustments to the 2-year budget passed the previous year. With no previous budget, this year’s path is unclear. The fiscal impact of the coronavirus further muddies the waters. The state tax filing deadline has been pushed into July 2020, meaning the revenue outlook for the fiscal year ending June 30 is as uncertain as the outlook for the year beginning July 1.
Federal funds will likely be allocated first…
Congress passed federal coronavirus relief bills in recent weeks, and much of the money will flow to states for allocation. For the first few weeks of session, the legislature will likely be busy deciding how to put federal funding to the best use to meet our state’s needs.
…Then the state response will follow
As mentioned, the state will likely be in somewhat of a fiscal limbo until the state tax filing deadline this summer. Additionally, lawmakers will want to make sure they spend state money in order to maximize federal matching funds.
Civitas Executive Vice President Brian Balfour outlined some fiscally prudent suggestions for how the state can best survive the financial uncertainty caused by this virus. You can read Balfour’s piece here. But it is worth noting that North Carolina is better equipped than many other states to handle this crisis due to a decade of wisely managing state finances. Going into this emergency, state government had $1.2 billion in the rainy day fund and another $3.9 billion in the unemployment insurance reserve.
House committees have been meeting; Senate plan is yet unseen
In response to the ongoing coronavirus crisis, the North Carolina House convened a series of working groups to address concerns in the areas of health, education, economic development, and state operations. The groups have met remotely over the past weeks, hearing from state agencies, business groups, and other stakeholders. Working groups are preparing draft legislation for House committees to review
The Senate, on the other hand, has decided to defer its policy work to meetings of its standing committees. This means – while they have almost certainly been at work behind the scenes – the public has yet to see the Senate proposals going in to the beginning of the session. The House bill drafts will still have to be approved through the normal legislative process, including its standing committees. But House working groups have provided more public oversight and input than the Senate will have time to obtain, since both chambers will likely move quickly to allocate federal funding.
In the coming weeks, the legislature will have to make major decisions on the state’s response to the coronavirus pandemic and subsequent shutdown of the state economy. Civitas has a full range of policy recommendations in the areas of health, fiscal, education, elections, and agriculture policy, which you can find at nccivitas.org/coronavirus