by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
The State Capital and Infrastructure Fund is creating a load of confusion this budget season. The SCIF (pronounced “skiff”) was created in 2017 to wean the state from debt to pay for capital projects. Each fiscal year, 4% of General Fund tax revenue and 25% of unreserved cash from the previous year goes to the SCIF instead of being available for General Fund appropriations.
For FY2019-20, Unreserved Cash Balance is $998 million. The SCIF receives 25% of that, or $249.5 million.
Tax Revenue is forecast to be $23.8 billion. The SCIF receives 4% of that, or $952.8 million.
From the $1.202 billion in the SCIF, $721 million pays for debt service, $250 million is set aside for repairs and renovations, $215 million pays for capital projects, and the remainder is available for future years.
That $721 million is the tricky part. In the current FY2018-19 budget and in Gov. Cooper’s proposed budget for FY2019-20, debt service is appropriated. As a result, to accurately compare spending and availability in the House budget bill with either current spending and availability or Gov. Cooper’s plan, we have to add or subtract roughly $720 million.
The House budget bill would spend $23.9 billion in FY2019-20, which is the reported budget amount and excludes debt service. The Governor proposed $24.5 billion in FY2019-20 excluding $721 million in debt service. The current budget spends $23.2 billion in FY2018-19 excluding $717 million in debt service. Using these numbers, the governor proposed a $1.3 billion dollar (5.6%) spending increase, $600 million more than the House’s proposed $700 million (3.1%) increase.
We make pro forma spending adjustments based on the House budget bill with the SCIF because that is how budgets will be developed starting this year until the statute changes.