The Governor’s Recommended 2013 -15 Budget Governor Pat McCrory Art Pope State Budget Director Office of State Budget and Management March 21, 2013 1
Governor’s Priorities and Summary • Governor McCrory has structured his budget around three main priorities – Economy – Education – Efficiency and Transformation in State Government • Presents a budget that continues North Carolina’s long tradition as a national leader in fiscal management – Maintains and enhances reserves in excess of $900 million – Will allow North Carolina to continue to be one of only eight states to hold the Triple A bond rating from all three rating agencies – Leaves $131 million unspent in FY 2013-14 and $332 million unspent in FY 2014-15 • Authorizes no new debt • Authorizes no tax increases • Budgets 9% less per capita than the budget did 5 years ago, while the state population has grown by 560,000 • Budget grows responsibly, consistent with inflation of 1.5% and below the overall economic growth anticipated for FY 2013-14 2 2
General Fund Availability Brief Description FY 2013-14 FY 2014-15 Availability Credit Balance: Unappropriated Balance 213,432,878 130,825,236 Anticipated Overcollections from FY 2012-13 102,600,000 0 Anticipated Reversions from FY 2012-13 125,000,000 0 Medicaid Funding Required for FY 2012-13 (123,100,000) 0 Transfer to Savings Reserve Account (200,000,000) (130,825,236) Transfer to Repair and Renovations Account (117,932,878) 0 Subtotal Credit Balance 0 0 Revenue Based on Existing Tax Structure 20,567,000,000 21,513,600,000 Revenue Changes: Repeal Estate Tax (52,000,000) (57,000,000) Other Funds and Transfers 142,493,840 135,304,087 Repeal Transfer to Public School Building Capital Fund 75,000,000 75,000,000 Subtotal Revenue Changes 165,493,840 153,304,087 Total Availability 20,732,493,840 21,666,904,087 3 3
General Fund Revenue by Source Corporate Income FY 2013-14 General Fund 5% Revenues = $20.6 billion Franchise • Individual income tax - 3% comprises more than half of Individual all General Fund revenues Income • Sales and use tax - $11.2 billion Sales and comprises more than one 55% Use quarter of total General Fund $5.5 billion revenues 27% • All other taxes combined comprise 15% of total General Fund revenues • Non-tax revenue sources comprise remaining 4% Non-Tax Beverage & 4% Other Tax Insurance Tobacco 4 4 1% 2% 3%
Revenue Forecast for FY 2013-15 Forecast for FY 2013-15 Anticipates Modest Growth • Consensus General Fund Revenue Forecast with the Fiscal Research Division • FY 2013-14 Base Growth: 3.6% • FY 2014-15 Base Growth: 4.1% • Below long-term average and typical growth realized during economic recoveries 5 5
Other Funds and Transfers Budget transfers other funds into the General Fund – Greater Transparency FY 2013-14 FY 2014-15 Retention of Golden LEAF Funds 65,000,000 65,000,000 Natural Heritage Trust Fund 9,900,000 9,900,000 Parks and Recreation Trust Fund 27,500,000 27,500,000 White Goods Management Account 1,217,796 1,217,796 Scrap Tire Disposal Account 2,675,291 2,675,291 Solid Waste Trust Fund 4,011,000 4,011,000 Master Settlement Agreement Funds** 25,000,000 25,000,000 Repeal NC Public Campaign Fund 4,125,171 0 Repeal NC Political Parties Financing Fund 1,064,582 0 Transfer from NC Flex FICA Funds 2,000,000 0 Total 142,493,840 135,304,087 **Additional funds may be available in April 2013 pending final audit of disputed payments arbitration per settlement agreement 6 6
General Fund Appropriations Total Availability 20,732,493,840 21,666,904,087 Recommended Appropriations FY 2012-13 Authorized Budget 20,161,042,925 20,161,042,925 Major Adjustments (includes Medicaid Rebase, Public and Higher 275,009,131 668,005,130 Education Enrollment, other base budget changes) Fiscal Responsibility: Transfer to Savings Reserve Account 0 69,174,764 Transfer to Repair and Renovations Account 32,067,122 150,000,000 Medicaid Risk Reserve 90,000,000 90,000,000 Other Reserves 59,000,000 64,000,000 Subtotal Fiscal Responsibility 181,067,122 373,174,764 Salaries and Benefits (includes 1% Pay Increase for All Teachers and State Employees, State Health Plan, 1% COLA for Retirees, 251,800,000 343,000,000 Contribution to TSERS) Net Agency Changes (267,250,574) (210,678,753) Total Recommended General Fund Appropriations 20,601,668,604 21,334,544,066 General Fund Balance 130,825,236 332,360,021 7 7
General Fund Appropriations by Subcommittee Natural & Economic FY 2013-14 General Fund Resources General Appropriations = $20.6 billion 2% Government • 2% Education-related spending - Justice & Public more than half of all Safety Debt Service appropriations (56%) $2.4 billion & Reserves 11% • Health & Human Services - 6% Health & Human nearly one-quarter of all Services appropriations, with Medicaid $4.8 billion accounting for more than 23% two-thirds of HHS spending • Justice & Public Safety – less than one-eighth of total appropriations Education • General Government and $11.4 billion Natural & Economic Resources - 56% comprises 1/27 th of all appropriations 8 8
Highlights: Public Education 2011-12 2012-13 2013-14 % 2014-15 % Actual Authorized Recommended Change Recommended Change Requirements $9,811,730,401 $11,104,716,746 $11,200,962,588 0.9% $11,388,034,980 2.6% Requirements 1 $11,273,142,010 1.5% $11,460,214,402 3.2% Receipts $2,232,043,999 $3,260,113,134 $3,301,193,662 1.3% $3,268,260,827 0.2% GF Appropriation $7,579,686,402 $7,844,603,612 $7,899,768,926 0.7% $8,119,774,153 3.5% GF Appropriation 1 $7,971,948,348 1.6% $8,191,953,575 4.4% 1. Including allocation of statewide salary reserve • $43 million from Education Lottery receipts over the biennium to enhance digital learning opportunities – Purchases tablets for 3 rd grade reading or other targeted high priority instructional needs • $28 million for Summer Reading Camps and Reading Plans for parents as directed by the Excellent Public Schools Act • Focuses teacher assistant funding on grades K-1 – Provides sufficient funds for one teacher assistant per 17 students in those grades and reduces remaining funds ($117 million) 9 9
Highlights: NCCCS 2012-13 2013-14 % 2014-15 % 2011-12 Actual Authorized Recommended Change Recommended Change Requirements $1,408,984,462 $1,458,318,427 $1,450,873,517 -0.5% $1,459,873,517 0.1% Requirements 1 $1,462,731,714 0.3% $1,471,731,714 0.9% Receipts $406,902,847 $417,896,822 $424,070,298 1.5% $424,070,298 1.5% GF Appropriation $1,002,081,615 $1,040,421,605 $1,026,803,219 -1.3% $1,035,803,219 -0.4% GF Appropriation 1 $1,038,661,416 -0.2% $1,047,661,416 0.7% 1. Including allocation of statewide salary reserve. • $16.8 million each year to support higher costs and higher demand instructional programs – Leads to immediate employment • $28 million over the biennium to support technical education equipment • Funds enrollment at the higher of current year or 2-year average ($20 million) instead of 3-year average • Reduces budget for benefits associated with part-time employees who are not eligible for retirement and health insurance ($15.2 million) 10 10
Highlights: UNC System 2011-12 2012-13 2013-14 % 2014-15 % Actual Authorized Recommended Change Recommended Change Requirements $4,063,837,413 $4,240,777,779 $4,125,195,728 -2.7% $4,168,334,352 -1.7% Requirements 1 $4,201,931,810 -0.9% $4,245,070,434 0.1% Receipts $1,530,901,102 $1,577,215,344 $1,604,551,452 1.7% $1,611,773,786 2.2% GF Appropriation $2,532,936,311 $2,663,562,435 $2,520,644,276 -5.4% $2,556,560,566 -4.0% GF Appropriation 1 $2,597,380,358 -2.5% $2,633,296,648 -1.1% 1. Including allocation of statewide salary reserve and repair and renovation reserve . • $63.2 million over the biennium for the initial implementation of the UNC Strategic Directions Plan • Allocates $50 million from the Repair and Renovation Reserves each year of the biennium for University facilities • Mgmt. flexibility reduction of $110.7 million for UNC campuses and UNC G.A. • Increases non-resident tuition 6% and 12.3% at select campuses with lower non- resident rates than their public peers 11 11
DHHS: Budget Overview TOTAL HEALTH AND HUMAN SERVICES GENERAL FUND BUDGETS 2011-12 2012-13 2013-14 % 2014-15 % Actual Authorized Recommended Change Recommended Change Requirements $19,528,811,309 $17,575,935,887 $18,494,128,258 5.2% $19,051,739,102 8.4% Receipts $14,944,812,786 $12,875,232,484 $13,735,202,590 6.7% $14,087,442,657 9.4% GF Appropriation $4,583,998,523 $4,700,703,403 $4,758,925,668 1.2% $4,964,296,445 5.6% Includes: • Medicaid and Health Choice • Social Services • Mental Health • Public Health • Child Development and Early Education • Vocational Rehabilitation • Central Administration • Aging and Adult Services • Services for the Blind, Deaf and Hard of Hearing 12 12
Highlights: DHHS DHHS State Funding Medical Assistance and Mental Health account for 84% of DHHS General Fund appropriations in the recommended budget Medical Assistance $800M (16%) Mental Health $700M (15% ) All Other Programs $3.2B (69%) 2013-14 Recommended State General Fund Appropriation 13 13
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