Follow the money: how the Senate pays for its budget

Call it round two: as we did for the House budget, BTC has taken a close look at the Senate budget’s availability statement to break out where they raise, and spend, General Fund dollars before the budget negotiation itself even begins.

Here’s where the Senate raised its money:

  • $19.7 billion in baseline tax and non-tax revenues. Base revenues of $18.9 million – primarily from the state income tax, sales tax, and corporate income tax – and nontax revenues (excluding transfers from transportation funds) of $773 million constitute baseline revenue availability for FY2012-13. The Senate budget’s spending side would require $20.1 billion – which is approximately $212 million more than the continuation budget and $127 million less than the House – leaving approximately $445 million that budget writers had to “find” in order to balance their budget.
  • $479 million credit balance. The Senate, like the House, relies on a healthy current-year credit balance consisting of $41.2 million in unappropriated funds; $205.5 million in anticipated state agency reversions; and a $232.5 million revenue surplus.
  • $248 million in transportation funds. As in the House budget, the Senate budget would transfer $248 million from funds within the state’s transportation budget to increase General Fund availability. While approximately $188 million of that transfer is to support the State Highway Patrol (which was shifted over to the Justice and Public Safety budget last year), the remaining money would go to other purposes. This practice is contrary to a 2007 General Assembly resolution that budget writers would phase out the use of transportation funds to increase General Fund availability by FY2013-14.
  • $66.5 million in non-General Fund balance transfers. The Senate would take $50 million in fund balance from the One NC Fund – a considerable increase over the House’s recommended $30 million. The Senate would take $2.5 million, rather than the $1.3 million under the House budget, from the E-Commerce Cash Reserve. The Senate would also transfer $14 million from the Information Technology Internal Service Fund – an increase of $10 million over the House’s recommended $4 million transfer from that source.
  • $9.6 million from the National Mortgage Settlement. This amount complies the $10 million in General Fund restitution allowed to North Carolina as part of the 49-state National Mortgage Settlement and is the same as in the House budget.

How the Senate spends money in the availability statement:

  • $178.6 million in deposits to state savings accounts. The Senate budget would deposit 1/4 of the credit balance, or $139.3 million, in the state’s Rainy Day account and $39.3 million in the state’s Repairs and Renovations Reserve Account. The House budget recommended no deposit in the Rainy Day account, but a higher deposit into Repairs and Renovations.
  • $154 million to pay off part of the current-year Medicaid shortfall. This portion of the Senate availability statement is unchanged from the House budget, providing funds to comply with S.L. 2012-2/SB 797, Payment of 2012 Medicaid Costs/Inmate Medical Costs.
  • $25 million adjustment for (non)sale of state assets. While no detail is given, it seems possible that the legislature’s fire sale of state assets didn’t go quite as planned – resulting in this downward adjustment to General Fund availability. The House budget’s availability statement included, a similar adjustment, for $20 million.
  • $800,000 to extend the state’s Work Opportunity Tax Credit. This is the only earmark for tax changes in the Senate budget’s availability statement.
Other noteworthy items in the Senate availability statement:
  • No mention of the $42 million Education Lottery surplus. While the House budget would have diverted this surplus to increase total General Fund availability, the Senate budget takes a different route, budgeting the surplus to increase funding for class size reduction, early childhood education, and need-based college scholarships. The budget bill notes that if the surplus is greater than currently forecasted, any additional money is to be budgeted for UNC Need-Based Scholarships. As did the House budget, the Senate budget skips the statutory 5% transfer to the Education Lottery Reserve Fund but that’s where the similarities end.

While the Senate relies less heavily on short-term resources than the House, it has proposed a budget that will fail to light a much-needed fire under North Carolina’s slow recovery from recession. As in the House proposal, the modest increase in state spending under the Senate proposal would be financed almost entirely one-time money, and even so would be far too insignificant in scale to make any noticeable economic impact. However, what would surely be noticed under the Senate’s budget is the disappearance this fall of 4,000 to 5,000 public schools jobs across North Carolina. In that sense, this budget would make a real impact – just not the kind thousands of North Carolinians will necessarily want to experience.

 

One Comment

  1. Paulatics

    June 11, 2012 at 1:21 pm

    Apparently, the 4,000 to 5,000 teachers missing will NOT be noticeable to Republicans who continue to deny it.