When Gov. Roy Cooper vetoed the budget bill in late June, he launched the state into a new fiscal year with no new budget.
Cooper has yet to sign a budget bill into law during his tenure as governor, vetoing all three that have been presented to him in the first three years of his four-year term. For the first two years, legislative Republicans had the three-fifths majority needed to override Cooper’s budget vetoes. Having lost that higher margin in the 2018 election, Republicans have been unable to recruit the needed Democrats to go against the governor’s budget veto this session.
Unlike the federal government, North Carolina does not shut down when a new budget is not passed. Due to a provision in the 2016 budget, the previous year’s recurring funding is carried over into the new fiscal year when no budget is passed. State fiscal years begin on July 1.
Projects funded in a non-recurring manner are halted under the carry-over budget. From a conservative perspective, this is not necessarily a bad thing, since many of those projects tend to be non-essential spending anyway.
However, some adjustments to last year’s budget are needed to account for state population growth or to provide state matching funds for federal programs. This week, the House passed House Bill 111, the “Supplemental Appropriations Act,” which seeks to fill some of those holes.
Civitas President and CEO Donald Bryson suggested this strategy for dealing with the budget impasse in the weeks following the veto, which he referred to as the “Conservative Solution.” Bryson explained,
“So, what is the Conservative Solution to the current state budget conflict? Simple. Instead of bargaining with other legislators or Governor Cooper to buy support through increased government spending, conservatives at the General Assembly should pass a smaller spending bill, which accounts for increases in required government services.”
The supplemental budget is a 6-page document, a far cry from the 395-page original budget. The new document directs around $166 million in spending, from the General Fund, Highway Trust Fund, or other accounts. Other provisions of the bill are policy-oriented and do not contain a specified cost. The supplemental budget:
- Increases funding for enrollment increases in K-12 public schools;
- Funds the program allowing certain universities in the UNC system to charge $500 tuition per semester;
- Waives the 12-month residency requirement for in-state tuition for veterans and their dependents;
- Appropriates funding for an online portal used by the Department of Health and Human Services from the General fund and from the Medicaid Transformation Fund;
- Funds the Suicide Prevention Hotline;
- Directs funding from the state’s local management entities/managed care organizations through intergovernmental transfers;
- Provides clarifications and implementation instructions for the 2018 disaster recovery spending;
- Funds the Raise the Age effort, which allows 16 and 17 year olds to be processed through the juvenile court system;
- Provides funding for the Department of Revenue to modernize some of their systems;
- Funds an on-going steam plant project at Western Carolina University;
- Funds debt service on outstanding state bonds; and
- Clarifies the state employer contribution rate under the budget continuation.
Regardless of whether the veto is overridden, a new budget is implemented, or only the supplemental budget goes into effect, the period of time under the continuing funding from last year provides a unique opportunity: evaluate which projects or programs funded on a non-recurring basis could be reduced or eliminated.
If state government’s core functions can be met without the 3 percent spending increase of the original budget, we should ask if the spending increase is needed at all.