Bill Summary for H 188 (2011-2012)

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Summary date: 

Feb 24 2011

Bill Information:

View NCGA Bill Details2011-2012 Session
House Bill 188 (Public) Filed Thursday, February 24, 2011
TO PROVIDE GOVERNMENTAL ACCOUNTABILITY AND PROTECTION TO THE TAXPAYERS BY LIMITING INCREASES IN THE GENERAL FUND BUDGET, TO REFORM THE BUDGET PROCESS, TO ESTABLISH AN EMERGENCY RESERVE TRUST FUND, AND TO AMEND THE NORTH CAROLINA CONSTITUTION TO ESTABLISH A GENERAL FUND EXPENDITURE LIMIT.
Intro. by Blust, Killian, Holloway, Dollar.

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Bill summary

Constitutional amendments. Subject to approval by the voters at the November 2012 general election, enacts a new Section 15 to Article V of the North Carolina Constitution, effective upon certification by the State Board of Elections to the Secretary of State, to establish a General Fund expenditure limit. Sets forth definitions for fiscal growth factor, inflation, and population change. Requires that the General Fund expenditure limit for each fiscal year be the previous year’s expenditure limit increased by a percentage rate that equals the fiscal growth factor. Prohibits the Governor from proposing expenditures from the General Fund in excess of the projected expenditure limit and the General Assembly from making appropriations in excess of the expenditure limit. Provides that the General Fund budget authorized for the fiscal year beginning in July 1, 2012, increased by the fiscal growth factor, be used as the base fiscal year to determine the General Fund expenditure limit beginning July 1, 2013, and for succeeding fiscal years. Requires that if, on or after December 31, 2012, the cost of any state function or program is shifted from the General Fund to another funding source, including counties or local government, or if money is transferred from the General Fund to another account, the expenditure limit must be reduced by that same amount. Provides that a two-thirds vote of the General Assembly is required to exceed the General Fund expenditure limit and is only allowed for appropriations for nonrecurring expenses for a maximum period of 12 months from the effective date of the appropriation. Requires that any unexpended funds that exceed 5% of the General Fund appropriation for the prior fiscal year be returned to the taxpayers.
Corresponding statutory changes. Enacts a new GS 143C-4-8 to establish a General Fund expenditure limit. Requires that the General Fund expenditure limit for each fiscal year be the previous year’s expenditure limit increased by a percentage rate that equals the fiscal growth factor. Provides that the General Fund budget authorized for the fiscal year beginning in July 1, 2012, increased by the fiscal growth factor, be used as the base fiscal year to determine the General Fund expenditure limit beginning July 1, 2013, and for succeeding fiscal years. Requires that if, on or after December 31, 2012, the cost of any state function or program is shifted from the General Fund to another funding source, including counties or local government, or if money is transferred from the General Fund to another account, the expenditure limit must be reduced by that same amount. Directs that, by March 15 of each year, the Fiscal Research Division (Division) and the Office of State Budget and Management (OSBM) issue a determination of the General Fund expenditure limit for that fiscal year and a projected limit for the following fiscal year. If the Division and OSBM do not agree on the expenditure limit, then requires that the lowest determination and projection be used.
Enacts a new GS 143C-4-9 to prohibit the Governor from proposing expenditures from the General Fund in excess of the projected General Fund expenditure limit and the General Assembly from making appropriations in excess of the expenditure limit. Restricts money from being drawn by the state treasury, as well as prohibiting the Governor, State Treasurer, and the State Controller from issuing or redeeming any draft, check, warrant, or voucher, if that action results in a state expenditure in excess of the expenditure limit. Provides that any General Fund revenue collected in excess of the expenditure limit is credited to the Emergency Reserve Trust Fund (Fund) at the end of the fiscal year.
Enacts a new GS 143C-4-10 to provide that a two-thirds vote of the General Assembly is required to exceed the General Fund expenditure limit and is only allowed for appropriations for nonrecurring expenses for a maximum period of 12 months from the effective date of the appropriation.
Amends GS 143C-1-1(d) (definition section for the State Budget Act) to add definitions for fiscal growth factor, inflation, and population change.
Amends GS 143C-4-2 to rename the Savings Reserve Account as the Emergency Reserve Trust Fund (Fund). Makes conforming changes and deletes the goal provision for the Savings Reserve Account Balance. Allows the Director of the Budget to transfer money from the Fund to pay for appropriations for the fiscal year, if available, if the Director determines (1) pursuant to GS 143C-6-2 (Methods to avoid deficit), the aggregate revenues collected and available are not sufficient to pay appropriations for that fiscal year in full or (2) pursuant to Section 5(3) of Article III of the NC Constitution, receipts during the fiscal year when added to the surplus remaining in the state treasury at the beginning of the fiscal year are not sufficient to meet budgeted expenditures. Requires the Director to administer the budget to prevent any overdraft or deficit if the Director decides to not transfer money from the Fund. Requires that any unexpended funds that exceed 5% of the General Fund appropriation for the prior fiscal year be reserved for taxpayer relief. Transfers the funds in the Savings Reserve Account to the Fund.
Enacts new GS 143C-3.6 directing the Governor to use collections for the previous calendar year ending December 31 in preparing the budget for the next fiscal year. Provides that only the following changes are to be made: (1) reduce the revenue estimate by an annualized total of the impact of any revenue decreases that were effective for only part of that calendar year; (2) if the budget proposes any revenue reductions to be effective during the fiscal year, reduce the revenue estimate by the total estimated amount of the reduction; (3) omit any onetime revenues in the previous calendar year from revenue estimates; and (4) may make an estimate of collections of proposed increased or new taxes or fees. Places similar constraints on the General Assembly in enacting the budget for a fiscal year. Adds restriction that in enacting the budget, the revenue estimate for that fiscal year may not exceed the lower of an estimate made by the Fiscal Research Division or an estimate made by the Office of State Budget and Management. Provides that if the budget contains an estimated credit balance from the immediately preceding fiscal year, one-half of that credit balance may be proposed only for capital projects or other projects with a fiscal impact in the current fiscal year. Provides that if the General Assembly appropriates any credit balance in the State treasury at the end of the immediately preceding fiscal year, one-half of that credit balance may be appropriated only for capital projects or other projects with a fiscal impact only in the current fiscal year.
This Act becomes effective only if the proposed constitutional amendment is approved by qualified voters, in which case, proposed GS 143C-3.6 becomes effective beginning with the budget for fiscal year 2013-14.