NC Budget and Tax Center

State House of Representatives approves a 45-day stop-gap spending measure

With one day left in the current 2015 fiscal year, state lawmakers reached a stop-gap spending deal today that would avoid a shutdown and keep state programs and services operating until August 14. The House approved the deal—known formally as a Continuing Resolution—tonight, with the Senate poised to follow suit tomorrow morning.  The deal is required because the state House and Senate leadership will not be able to iron out the differences between their respective budgets by time the new fiscal year begins on Wednesday, July 1.

State legislative leadership opted for a 45-day continuing resolution to fund state government. It would fund current programs and services at existing levels, with three major exceptions that are listed below.

  • Budget cuts to programs, services, and vacant positions would not receive funding under the temporary deal if the House and Senate included identical cuts (i.e. items that are not in controversy). Filled positions that are cut and not in controversy would receive a 30-day notice before termination. It is unclear how many positions would be cut under the temporary deal.
  • Public schools would receive additional money to cover the costs of student enrollment growth. There is no additional money for Teacher Assistants, driver’s education, or reduced classroom sizes—which are major points of contention between the House and Senate approved budgets. As such, local school districts are left waiting for a complete budget picture for the upcoming school year.
  • Beginning teachers would receive another boost in pay, to $35,000 from $33,000. But the deal freezes pay for the remaining teachers and all state employees. Raises will be negotiated upon going forward.

Recent temporary spending deals, which occurred in the aftermath of the economic downturn, were less generous than the one proposed tonight and only allowed for spending ranging between 84 percent and 95 percent of the current year spending.  Because revenues are slowly recovering in this modest economic recovery, it is the correct move to—at minimum—do no further harm and keep spending at current levels.

With that said, the temporary spending deal leaves a lot to be desired and a lot of differences to be hammered out during the conference process—from tax cuts to education priorities to pay raises for all teachers and state employees and more (see our comparison chart). State legislators should heed the advice of Governor McCrory and make no further significant corporate and personal income tax cuts in their final spending proposal. Doing so would allow the state to meaningfully rebuild and reinvest in public education, health safety, justice, and the other building blocks of a strong economy.

Once the temporary spending deal becomes law, both chambers are expected to appoint budget conferees who will negotiate the final budget.

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