The N.C. state budget dance

The state budget dance has begun and what starts out as a traditional box step Waltz often ends up as a Break Dance.

Step one is the annual State of the State Address. The governor comes to the General Assembly and lays out his budget priorities. It looks like a Sunday School social; everyone displays their “nicey-nicey” manners, applauding at appropriate points, and acting like they really like each other. It’s quite a show.

Step two occurs a few weeks later when the governor presents his formal budget proposals, printing large numbers of copies for legislators, state agencies, the media, lobbyists and most anyone else.

Step three is when legislators (except for a few members of the governor’s party) take the governor’s budget, place it upon their office shelf, then promptly ignore it. Some have bragged about using it as a doorstop. When enough dust has accumulated, it is shredded.  

Step four of the box step is when one house of the legislature begins work on crafting a budget. Few are still alive who remember years past, when lawmakers would actually conduct full scale budget hearings, asking agency heads (like education, transportation, health and human services, etc.) to defend their current use of appropriated funds and allow them to beg for more money. The public was able to attend these lengthy hearings and could actually learn what went on in state agencies.

But these hearings consumed a lot of time and legislators ultimately decided the public didn’t need to know what the agencies thought about their budgets; besides they (the legislators) were elected by the people because of their superior wisdom to spend endless months in Raleigh, then go back home and tell folks what was best for them. A handful of members in each chamber made budget decisions.

Step five has one chamber of the legislature taking a first cut at the budget. This year it is the Senate. It is mid-May, after tax returns have been processed, before it is known how much money legislators have to spend. In recent years there’s been an “April Surprise,” meaning there was more money than had been projected.

Projections by the Office of State Budget and Management estimate there will be a tiny surplus this year (estimated $544 million), but that revenues will be flat for next year (2025-26) and will decline 2.4 percent in 2026-’27, yielding a revenue shortfall.

Accordingly, Governor Stein is proposing a hold on any further tax cuts. Personal tax rates of 4.25 percent were projected to drop to 3.99 percent next year. Corporate rates were projected to drop from 2.25 percent to 2 percent. Stein proposes a working family tax credit of up to $1,600 and a child tax credit of at least $600 for a family with two or more children spending at least $6,000 on childcare. Count on the tax cuts continuing.

Governor Stein obviously wants to be an education governor. He proposes to increase teacher pay by 10.7 percent over the next two years and starting teachers should earn $53,000 their first year. The governor wants to put a $4 billion school bond referendum on the ballot, but that’s not going to happen. He also might be shadow dancing in calling for a moratorium on school vouchers. And his proposal that community college tuition be free to those students studying to fill high demand industry jobs is long needed but might not pass.

State government has a 20 percent personnel vacancy rate, but the governor’s proposed 2 percent pay raise for state employees isn’t getting any passing grades. The House says they want to give them much larger raises.

Step six is when the House considers the Senate budget, then passes a budget of their own.

Step seven is when a conference committee of members from both houses attempt to resolve the budget differences between the two. The executive branch is like the girl who doesn’t get asked to the prom; its suggestions are esssentially ignored. Upon reaching a compromise, members of both the House and Senate will have two choices…either vote in favor of the compromise budget or oppose it. No amendments are allowed. It almost always passes.

Step eight is when the budget dance gets really interesting. It this year follows the recent past, the governor vetoes the budget.

Step nine is when the two legislative bodies “whip” their membership trying to get the requisite three-fifths votes to override the governor’s veto. If lawmakers follow their party leadership, one chamber can override the veto, the other can’t. The budget doesn’t pass and the new fiscal year, starts July 1 by continuing operating on the previously passed budget.

Step ten is hard to predict. Nobody is happy. We don’t have a budget. The legislature usually starts single shotting legislation they wanted in the budget; again, the governor vetoes the bills and the dance continues.

Tom Campbell is a Hall of Fame North Carolina broadcaster and columnist who has covered North Carolina public policy issues since 1965.  Contact him at tomcamp@carolinabroadcasting.com