'I can only have one forkful': North Carolina has $6.2 billion state budget surplus

The North Carolina General Assembly approved the budget for the 2022-23 fiscal year July 1. The $27.9 billion budget was signed into law by Gov. Roy Cooper on July 11. 

It is an adjustment of the budget Cooper signed into law in November that allocated about $25.9 billion for the 2021–22 fiscal year and just under $27 billion for 2022–23.

“Today, I signed the state budget (HB 103) that includes critical investments in education, economic development, transportation and the state workforce,” Cooper said in a press release July 11. 

While the budget does not include Medicaid expansion, which Cooper supports, he said a veto of the budget would be counterproductive since negotiations on the issue are ongoing.

The budget included a $1 billion inflationary reserve, transfer of sales tax revenue to cover declining transportation revenue and funding for school safety initiatives and infrastructure projects, N.C. Senate President Pro Tempore Phil Berger, R-Caswell, Rockingham, Stokes, Surry, said at a June 28 press briefing. 

The state’s surplus was  $6.5 billion, but a large portion of it was put into the state’s Rainy Day fund — money set aside for unexpected emergencies. The fund was increased to $4.75 billion.

“In my opinion, there's no reason for everybody not to have been able to dip their feet in this surplus situation,” N.C. Senator Milton F. "Toby" Fitch Jr. , D-Edgecombe, Halifax, Wilson said.

Suzy Khachaturyan, senior policy analyst at the North Carolina Budget and Tax Center, said $4.2 billion of fund over-collection came from the fiscal year that ended in June.

N.C. Rep. Graig Meyer, D-Orange, Caswell, said the surplus came from a couple different sources — including federal assistance during the pandemic and sales tax from online purchasing. The sales tax has only been in effect since 2018 and revenue from the tax increased during the COVID-19 pandemic as more people shopped at home, he said.

Khachaturyan said increases in corporate profits also contributed to higher corporate income tax revenue. The state's corporate income tax is gradually phasing out, which she said could put a bigger burden on everyday North Carolinians.

“We had higher than expected revenues over the last couple years, which shows that even during the pandemic, the North Carolina economy is especially strong,” Meyer said.

Meyer said he wanted this surplus to go to one-time costs such as clean energy and repairing schools. He added that over $8 billion in repairs are needed for North Carolina schools. 

He also proposed a bill called Green Schools Save Money, which would have repaired older schools and replaced 50 percent of the state’s gasoline-powered schools buses with electric buses run on solar power, he said.

“I think that you should spend surplus money on things that are one-time expenses, but critically important to the state, because you can't depend on having that money coming back when it's a surplus,” he said.

Khachaturyan said many schools in North Carolina still fail to meet the basic requirements set out in the Leandro Plan, which says the state constitution mandates that all children have a sound and basic education. She said the budget only funded approximately 44 percent of the plan.

Meyer noted he voted against the budget because it did not address “outstanding needs,” such as the state’s teacher shortage, Medicaid expansion and climate resilience.

Meanwhile, Fitch said while he voted for the budget because he supported many things included in it, he wished more needs had been met — including Medicaid and teacher shortages.

“It's just like a whole cow sitting on the table and all you say that I can have — for the betterment of us all — I can only have one forkful,” Fitch said.

He said he is not against a savings plan, and that the Rainy Day fund has prevented state crises in the past. 

Sam Chan, Cooper's press assistant, said in an email statement that while it is important to have a robust Rainy Day fund for emergencies, it is wrong to have billions of dollars remain uninvested.

“We need to make more investments in our workforce, education, child care and health care that will strengthen our communities and economy for all North Carolinians," Chan said.

@msingleton42

@DTHCityState | city@dailytarheel.com