Earlier in the week Under the Dome ran a piece by N&O reporter Will Doran where he relays Governor Cooper’s apprehension about having enough money for next year’s state budget. Doran notes that state revenues are running about $91 million behind revenue targets and officials are uncertain about the impact of tax cuts on state revenues. Doran also notes a laundry list of expanded and new spending priorities for which Gov. Cooper may advocate.
It’s fair to report on the Governor’s budget concerns. But let’s not forget that Republican super-majorities in the House and the Senate means they will have the major say on spending decisions.
Doran fails to note two points relevant to this discussion. First, as part of the last budget, Republicans transferred an additional $363 million in funds to the state’s “Rainy Day” fund. Earlier this year the balance stood at about $1.8 billion, an all-time high and very close to the recommended balance of 8 percent of the state’s previous year’s operating budget.
Second, last year the House and Senate passed — and Governor Cooper signed — legislation (S.L. 2017-5) that: a) requires the automatic annual transfer of funds to the state’s reserve fund each fiscal year (The amount is to be equal to 15 percent of the expected growth in the state’s tax revenue) and b) limits the uses for which reserve funding can be used.
These two actions go a long way in allowing state government to address the needs of all North Carolinians. Equally important, the changes also bring much-needed stability to a budget process that is had been ravaged by recent economic downturns.
The General Assembly should be commended for taking these actions and exercising prudence.
Next time let’s tell the whole story.
For more information on the impact of the Rainy-Day Fund on North Carolina’s fiscal health, see here.