Bill Summaries: H7 LRC/STRENGTHEN SAVINGS RESERVE.

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  • Summary date: Apr 13 2017 - View Summary

    AN ACT TO STRENGTHEN THE SAVINGS RESERVE, AS RECOMMENDED BY THE LEGISLATIVE RESEARCH COMMISSION. Enacted April 13, 2017. Sections 8 and 9 are effective April 13, 2017. The remainder is effective October 1, 2017. 


  • Summary date: Mar 16 2017 - View Summary

    Senate committee substitute makes the following changes to the 2nd edition.

    Corrects statutory cross references throughout the act to now correctly refer to GS 143C-4-2(f), which contains provisions for developing the recommended Savings Reserve balance.


  • Summary date: Feb 15 2017 - View Summary

    House amendment makes the following changes to the 1st edition.

    Revises the proposed language in GS 143C-4-2(b) to provide that, in each fiscal year, funds reserved to the Savings Reserve must be available for expenditure upon appropriation by a majority vote of the Senate and House of Representatives present and voting in an aggregate amount that cannot exceed 7.5% of the prior fiscal year’s General Fund operating budget appropriations, excluding departmental receipts (previously, did not expressly exclude departmental receipts). Makes conforming changes to proposed subsections (b1) and (e).

    Further revises the proposed language in subsection (b) to allow the general use of the funds in the Savings Reserve under subsection (b) to cover the difference between that fiscal year’s General Fund operating budget appropriations, excluding departmental receipts and projected revenue (previously base budget needs and projected revenue).

    Revises proposed subsection (d) to clarify that the transfer of 15% of each fiscal year's estimated growth in State tax revenues means those State tax revenues deposited in the General Fund. Makes conforming changes to proposed subdivision (6) of GS 143C-3-5(b).

    Adds a new subsection to require the Office of State Controller to transfer to the Savings Reserve the estimated growth amount required by proposed subsection (d). Provides that upon calculation of the actual growth in State tax revenues deposited in the General Fund, the Office of the State Controller must adjust the amount of the transfer to the Savings Reserve to achieve an amount equivalent to 15% of the actual growth. Reletters proposed subsection (e) and (f). Makes technical changes.

    Adds a new subsection to clarify that nothing in the statute is to be construed to apply to the Highway Fund or the Highway Trust Fund. Also clarifies that nothing in the statute prohibits the General Assembly from directing the transfer of additional funds (was, from depositing additional funds) into the Savings Reserve.

    Adds new subsection to GS 142-15.4, concerning savings from refinancing of general obligation bonds to be placed in the Savings Reserve, to establish that the statute does not apply to general obligation bond indebtedness of the State serviced by the Highway Fund or Highway Trust Fund or other transportation related debt financing arrangements.

    Adds new subsection to GS 142-96, concerning savings from refinancing of special indebtedness to be placed in the Savings Reserve, to establish that the statute does not apply to special indebtedness of the State serviced by the Highway Fund or Highway Trust Fund or other transportation related debt financing arrangements.

    Directs the Office of State Budget and Management and the Fiscal Research Division to commence development of the methodology for arriving at the consensus estimate required in GS 143C-4-2(e).

    Makes technical changes.

    Removes the effective date of July 1, 2017, for the proposed revisions to GS 142-15.4 and GS 142-96 to instead makes those changes effective on October 1, 2017. 


  • Summary date: Jan 25 2017 - View Summary

    Amends GS 143C-4-2 to rename the Savings Reserve Account to the Savings Reserve, and makes the following changes to its creation, source of funding, and use.

    Currently, the State Controller is required to reserve one fourth of any unreserved fund balance from the General Fund at the end of each fiscal year. The act eliminates this requirement of the State Controller.

    Currently, subsections (b) and (c) provide for use of the funds in the Savings Reserve only upon an act of appropriation by the General Assembly, and sets out that the goals for the Savings Reserve Account balance are to address unanticipated events and circumstances such as natural disasters; economic downturns; threats to public safety, health and welfare; and other emergencies.  The act revises the use of funds prescribed in subsection (b) as follows, and eliminates the goals set out in subsection (c).

    Revises subsection (b) to provide that, in each fiscal year, funds reserved to the Savings Reserve must be available for expenditure upon appropriation by a majority vote of the Senate and House of Representatives present and voting in an aggregate amount that cannot exceed 7.5% of the prior fiscal year’s General Fund net appropriations operating budget. Limits the general use of the funds in the Savings Reserve under subsection (b) to the following four purposes: (1) to cover a decline in General Fund revenue between fiscal years; (2) to cover the difference between that fiscal year’s base budget needs and projected revenue; (3) to pay costs imposed by a court or administrative order; (4) to provide relief and assistance from the effects of an emergency.

    Creates a new subsection (b1) to provide that, in each fiscal year, funds reserved in the Savings Reserve must be available for expenditure upon a two-thirds vote of the Senate and House of Representatives present and voting. Limits the extraordinary use of the funds in the Savings Reserve under subsection (b1) to any of the four uses specified in subsection (b) where the aggregate amount exceeds 7.5% of the prior year’s General Fund net appropriations operating budget, or for another purpose in any amount.

    Creates new subsection (d) to require each Appropriations Act to transfer 15% of each fiscal year’s estimated growth in State tax revenues to the Savings Reserve, unless the transfer must be reduced because the transfer would cause the balance of the Reserve to exceed the recommended balance developed pursuant to subsection (e).

    Creates subsection (e) to direct the Office of State Budget and Management and the Fiscal Research Division of the General Assembly to estimate the target balance for the Savings Reserve, expressed as a percentage of the prior year’s General Fund net appropriations operating budget, to be reported to the chairs of the Senate and House Appropriations and Finance Committees no later than February 1 of each year.

    Creates new subsection (f) to allow for additional appropriation of funds to be deposited into the Savings Reserve by the General Assembly.

    Amends GS 143C-3-5, which sets out the provisions for the Governor’s budget recommendations, to require that, in odd-numbered years, the Governor’s Recommended State Budget must include a transfer to the Savings Reserve of 15% of the estimated growth in State tax revenues for each fiscal year of the upcoming biennium. Provides that this requirement only applies if the balance of the Savings Reserve remains below the recommended balance developed under GS 143C-4-25(e), as enacted by this act.

    Makes conforming changes to GS 142-15.4 (requiring savings from the refinancing of general obligation bonds to be placed in the Savings Reserve) and GS 142-96 (requiring savings from refinancing of special indebtedness to be placed in the Savings Reserve), effective July 1, 2017, and GS 143C-5-4(b)(8) and GS 147-86.11(e)(7), effective October 1, 2017.

    Sets out that, during the 2019 Regular Session, it is the intent of the General Assembly to study whether the changes to the Savings Reserve enacted by this act have accomplished the purpose of establishing and maintaining sufficient reserves to address unanticipated events and circumstances such as natural disasters; economic downturns; threats to public safety, health and welfare; and other emergencies.

    Effective October 1, 2017.