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Budget and Taxation
State Agency Consolidation

The constitutional offices of North Carolina state government have changed little since the beginning of the century. As a reaction first to the tyranny of royal governors and then to the Civil War, the state has divided executive power among a number of separately elected offices. At the same time, governors and legislators have created many agencies under their direct control. The result has been a lack of coordination and focus on major functions, wasteful administrative spending, and a lack of accountability to the public.

The Need for Consolidation

State government departments need to be reorganized and consolidated. Departments or agencies that perform similar functions should be grouped together, both to reduce cost and improve the delivery of services. At the same time, the number of separately elected executive branch officers should be reduced to three at most — the governor and lieutenant governor, who should run as a team, and an independent state auditor. By electing too many officers to fixed four-year terms, the current system limits immediate accountability for poor performance by department heads and creates confusion among citizens and lawmakers.

For example, there are five major departments or offices that oversee state finances: the Department of Revenue, State Treasurer, State Controller, State Auditor, and the Office of State Budget, Planning, and Management. Most of these separate units could be merged into a Department of Finance, headed by an appointed secretary. It would include divisions similar to the previous departments, but would not require the staff or funding now necessary. Similarly, there are currently six departments or agency categories that attempt to regulate business activities in North Carolina. These should be consolidated (when not eliminated outright) to form a single Department of Commerce devoted to providing consumers with reliable information and protection from fraud.

Other opportunities for savings include forming a single statewide police force within a consolidated Public Safety Department and merging all disability services within the Health and Human Services Department.

Under the state constitution, the governor has constitutional authority to reorganize state government. If the reorganization affects existing law, the governor must file the changes as executive orders with the General Assembly during a legislative session. They become effective at the end of the session unless at least one house votes them down. Furthermore, if the governor and General Assembly wish to proceed with administrative reorganization that eliminates the major duties of the Council of State, they can do so. While the constitution mandates that Council of State offices be elected, it does not define their duties. The offices could be made parttime advisory positions with no administrative duties. The governor could reassign their duties by executive order, and could even appoint Council of State members to head departments in his or her administration.

Goal

Consolidate state departments to eliminate unnecessary bureaucracy, clarify responsibility for governmental functions, and concentrate departments around core state functions.

Recommendations

1. Consolidate functions and reduce the number of major administrative departments to 13 from 26. These and other agency reorganizations could save taxpayers as much as $54 million a year.
2. Amend the state constitution to eliminate all elected state executives except the governor, lieutenant governor, and state auditor, and to downsize and streamline accountability for appointed state boards.

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