By Brenna Erford Burch, Tazra Mitchell, and Allan Freyer
Budget & Tax Center
- The $20.2 billion state budget proposed by the legislative final committee for fiscal year 2012-2013 (FY2012-13) increases total state spending by $242.4 million, or 1.2 percent, over the $19.9 billion continuation budget.
- Governor Perdue vetoed the final budget, and the General Assembly overrode the veto on July 2, 2012.
- The final budget increases gross total availability over base tax and non-tax revenues by $817.1 million by taking $75.5 million in cash balances from non-General Fund sources - including $45 million from the One NC Fund and $14 million from the Teaching Fellow Trust Fund - as well as diverting $3.8 million to the General Fund from Golden LEAF, transferring $239.9 million to the General Fund from the Highway and Highway Trust funds, and claiming $9.6 million in General Fund restitution from the National Mortgage Settlement.
- The final budget reduces gross availability by depositing $146.3 million in state savings accounts, extending three tax sunsets - including the state's film production tax credit - and creating a new tax deduction at a cost of $5.8 million. It also adjusts for the non-sale of $25 million in state assets, and pays $154 million toward North Carolina's $280.5 million current-year Medicaid shortfall. This leaves the final budget with net General Fund availability of $486 million over base tax and non-tax revenues.
- The final budget reduces the $503 million in recurring cuts to school districts by $143.3 million, leaving a recurring LEA Adjustment of $360 million. However, the net increase to the state's K-12 public school budget is only $62 million, and when accounting for the loss of $259 million in federal recovery funding next year, public schools across North Carolina will have to operate with $190 million less in FY2012-13 than they had in FY2011-12.
- The final budget restores $194.2 million in funding to the Medicaid program, which significantly reduces but does not eliminate the program's projected $243 million shortfall for FY2012-13.
- The final budget takes no significant actions to address the state's growing structural budget deficit, and as such it provides neither short-term nor long-term relief from growing budget pressures in key areas of state investment necessary to supporting full economic recovery.