As our state continues to recover from the economic slowdown, we enter a new era of Republican leadership in the Governor’s Mansion, House, and Senate. How will the new conservative voice in Raleigh plan their budgets for the upcoming biennium? Every legislature has specific projects or agendas they wish to focus on; for this session the focus should be on fewer projects and more saving.
Understanding the Budget
When referring to the state’s budget, we commonly see the term General Fund. Many during the budgeting time use this term incorrectly, but for John Locke’s purposes (and many others) this only refers to the portion of the budget that North Carolina raises itself directly. On average, we see NC’s portion of the state budget, the general fund, at around $20 billion. This includes categories such as education, health and human services, justice and public safety, natural and economic resources, and general government.
Our budget as a whole amounts to a figure of around $50+ billion. Federal allocation to North Carolina, highway and highway trust funds, and other smaller categories account for the additional $30 billion. See below for a simple breakdown of the these different types of funds.
General Fund Revenue Facts for 2012
- General Fund revenue is $6.5 million below a $9.8 billion target.
- Tax revenues are $38 million above the $9.3 billion target.
- Income tax collections are essentially on target, less than 1% below.
- Sales tax collections have been a little weaker than income collections and are 1.2% below target.
- Non-tax revenues are $44.5 million below $334 million target.
- This includes short-term investment income and judicial fees.
- Income tax withholding on wages and salaries is up for 2012 by 4.4%.
- Net sales tax collections (after refunds and transfers) are $32 million below the $2.7 billion target.
Revenues were not as expected in the fourth quarter of 2012, and we are expecting a slow start in 2013. Legislators will need to keep that in mind when planning the next budget. Cutting unnecessary expenditures and consolidating our state government will help alleviate the need for higher revenues to fund government operations. Next week we will get more in depth on our 2013 outlook, what effects our state revenue, and what trends we should watch.
Click here for the Fiscal Insights archive.