by Brian Balfour
Senior Vice President of Research, John Locke Foundation
Another year, another hot summer in North Carolina without a budget bill in place by the July 1 start of the fiscal year.
The House and Senate reportedly continue to debate issues such as the scope and timing of tax cuts, how best to earmark surplus funds for future use, and whether to allow non-tribal casinos in North Carolina.
While beginning a new fiscal year without a budget bill in place has become a common occurrence in Raleigh over the past several years, there is no fear of a government “shutdown.” Seven years ago the General Assembly included in the budget bill a “Budget Stability and Continuity” provision, which dictates that state government funding will continue at current levels in the new fiscal year until a spending bill is passed.
That may provide a temporary reprieve, but the absence of an actual spending plan can create great uncertainty for state agencies and employees. Local school districts are unsure of what their funding levels will be when school starts back up in the fall. School teachers, staff, and other state government employees don’t know what — if any — pay raises they will receive. State retirees don’t know if their pension funds will be receiving any cost-of-living adjustments to keep up with inflating prices.
Such uncertainty makes for bad governance.
Moreover, the uncertainty directly impacts North Carolina citizens as well. For instance, the expansion of the state’s Opportunity Scholarship Program, which would immediately impact tens of thousands of families, hangs in the balance. Likewise, many Parents’ Bill of Rights provisions were included in legislative budget plans. Providing certainty for North Carolina families regarding these initiatives should come sooner rather than later.
With negotiations about to drag into August with no concrete end in sight, it might be time to consider an alternative in order to reduce the uncertainty. One such alternative could be mini-budgets.
As John Locke Foundation CEO Donald Bryson recently wrote, “In 2019, the North Carolina General Assembly passed several ‘mini-budget’ bills. These mini-budget bills aimed to fund core government services within the state rather than passing a single comprehensive budget.”
These smaller, self-contained spending bills separately addressed issues like teacher pay, health care spending, and transportation funding.
If, as reported, Senate and House budget negotiators agree on most of their spending priorities, they can get those items passed in a series of individual bills instead of holding up the entire state government while they hash out their remaining differences.
With each spending bill receiving its own debate, there would be a significant amount of transparency in the process, and the public would have a clearer measure of each legislator’s priorities. Budget writers could tackle multiple priorities individually rather than dealing with all of them at once.
Similarly, Gov. Cooper would need to reckon with each spending bill individually and decide whether to approve or veto it. This would make his priorities clearer.
It’s hard to tell if state spending would end up being higher or lower this fiscal year with the mini-budget approach or with one comprehensive budget bill. The mini-budget approach, however, would provide much-needed certainty to North Carolina families, government agencies, and state employees while allowing scrutiny of each smaller spending plan.
Ideally, the General Assembly and Gov. Cooper would have agreed on a budget bill focused on funding the core services of state government — while leaving policy priorities for separate legislation — in an open, transparent manner by the first of July. With that option off the table for this year, however, legislators should consider the mini-budget approach as a better alternative to delaying a spending plan indefinitely.