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We are heading into mid-March and still don’t have an official budget recommendation from Governor McCrory.  Sources say his budget will be released this week or next, and many people are wondering what the first Republican Governor in 20 years will do with a budget that’s been in the hands of Democrats for so many years.

What do we know so far?

So far McCrory and his staff have given a few hints as to what we can expect in his budget recommendation.

  1. The budget will be balanced.  It is required by law for the Governor’s budget recommendation to be balanced.
  2. This year’s General Fund budget will be less than what was spent last fiscal year.
  3. State agencies will see a cut in funding as the Governor has already directed them to hold salary increases, limit purchases, and reduce travel.
  4. McCrory’s campaign promised to change the state’s tax structure by reducing corporate and personal income tax rates and removing the death tax.  Recently news outlets have claimed his budget tax plan will be revenue neutral.
  5. The budget will rearrange money within the education budget to include career and technical education and implement digital learning into k-12 programs.
  6. The proposed ‘economic development strategic plan’ will more than likely allow more government subsidies/tax incentives for new or growing businesses that bring jobs to or increase jobs in North Carolina.

Budget Numbers

Governor McCrory has received a difficult situation from former Governor Perdue, as the State is beginning with a budget shortfall according to a press release from the Governor’s Mansion last week.

Increasing costs from Medicaid, ranging from $70-$130 million are causing the state to overspend budgeted funds allocated in 2012.  This year’s budget will begin with a shortfall of $132 million because of a deferred federal government payment that should have been paid last fiscal year, but was paid this fiscal year in addition to the Medicaid allocation.  In total, the Governor’s Office expects there to be between $200-$262 million spending above what was budgeted for the fiscal year, July 1, 2012 — June 30, 2013.

On the brighter side, state revenue collections are expected to be $100 million above original estimates and incorporated state agency savings are estimated to equal $125 million.  Taking a more conservative approach to the budget last year literally paid off for lawmakers.  They directed $200 million into the State Savings Reserve Account and an un-appropriated amount of $213 million, allowing the state to have flexibility if necessary as we near the end of the fiscal year.

Here is a look at last fiscal year’s General Fund appropriations.  The Governor’s office has already said they will not propose a budget that spends more than the one below.

General Fund Appropriations, 2012-2013

Education



   Public Schools, k-12

$ 7,444,122,100

37.3%

   Community Colleges

985,000,000

4.9%

   Universities

2,551,672,698

12.8%

Health and Human Services

4,455,162,933

22.3%

Justice and Public Safety



   Prisons

1,348,410,793

6.8%

   Court System

516,005,245

2.6%

   Other Public Safety agencies

459,053,816

2.3%

General Government

401,375,973

2.0%

Natural and Economic Resources



   Environment

176,619,284

0.9%

   Economic Development

106,330,886

0.5%

   Other NER agencies

78,035,521

0.4%

Debt Service

761,601,354

3.8%

Statewide Reserves/Capital

654,058,772

3.3%

Total General Fund Expenditures

$ 19,937,449,375

100.0%

 

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