North Carolina’s General Fund revenues for this fiscal year are proving to be higher than anticipated. According to the legislature’s Fiscal Research Division, the 2012 surplus will be $232.5 million. Combine that with a $21 million higher projection for 2013, and legislators have $253.5 million to play with this session as they adjust their initial budget.

If they were to maintain or lower planned spending levels in the second budgeted year, the money could go to replenishing the state’s Savings Reserve Account or “Rainy Day Fund.” This fund stands perilously low at less than $300 million or 1.6 percent (p.6) of the General Fund budget. Otherwise, legislators could rely on less nonrecurring funds or simply leave the surplus as an unappropriated balance remaining to better enable tax reform in the next session.

What have they proposed? The governor and legislators in both chambers want higher General Fund spending than planned for 2013, as indicated by the red blocks in the diagram. The House and governor’s proposed General Fund budget would even increase spending by more than the revenue surplus.

Given the context of record total state spending this year—more than 14 percent of total income—these proposals for even more spending suggest an unwillingness to forgo state spending on virtually any new revenue that comes in.

Proposed New General Fund Spending for 2013