Sen. Jim Perry: The North Carolina budget process

Published 9:47 am Friday, March 31, 2023

The North Carolina budget process

The North Carolina state budget covers a two-year period known as a biennium. The biennium matches up with the Legislative Long Session in year one and the Legislative Short Session in year two. North Carolina’s fiscal (budget) year begins July 1 and ends June 30 of the following calendar year. For example, the fiscal year 2022-23 begins July 1, 2022, and ends June 30, 2023.

Year one of the budget is in odd numbered years (2023) and this is known as the “Legislative Long Session.” This is the true budget year. While we address budget issues in year two (Legislative Short Session) that session is more focused on budget adjustments and corrections – not new spending.

Process – Executive Branch
The budget is produced during a multistep process that begins with determining how much we should have available, based on a consensus revenue forecast from Office of State Budget and Management (OSBM) and the General Assembly’s Fiscal Research Division. State Agencies then forward their budget requests to OSBM and the Governor’s Office. The Governor’s Office offers a recommended budget to the General Assembly, per our North Carolina Constitution.

Process – General Assembly
We have a bicameral General Assembly made up of the North Carolina House and North Carolina Senate. The NC House and the NC Senate take turns, each biennium, originating the first draft of the “Budget Bill.” The chambers are not obligated to take any of the recommendations from the Governor’s Recommended Budget. As a very important first step, the House and Senate agree to a target level of increased spending before building their budgets. We typically consider the growth in population plus the growth of inflation. This step is key to restrain the growth of recurring spending. If we began by adding up all of the spending everyone wanted, our budget would grow at unsustainable levels.

This year, the NC House originates the budget and sends it to the NC Senate for consideration. The Senate will review, make their changes, and send it back to the House. Historically, the House will not agree with the changes, and this would trigger the creation of a “conference committee” process, where a consensus budget would emerge and be voted on by both chambers.

Balanced Budget
North Carolina’s State Constitution requires that our state must maintain a balanced budget, which means state revenues must cover all spending. This is different than our Federal Government, which does not have the same constraints.

Projects / Capital Spending
Money spent on capital projects (wastewater systems, buildings, etc.) is considered to be “one-time” money and does not count against our recurring spend number.

Senator Jim Perry serves as Majority Whip of the NC Senate and is Chairman of the Finance Committee. He represents Craven, Beaufort and Lenoir Counties.