Earlier this week, the North Carolina House of Representatives revealed its 2025-27 biennium budget proposal. Negotiations between the House and Senate will soon begin until an agreement is reached.
Last year, the Carolina Journal published a series examining “reserve funds,” what they are, how they work, and appropriations allocated in the previous budget to each reserve fund, including how they were spent. Now that the House has released its budget proposal, how do House reserve-fund appropriations differ from those in the Senate proposal?
First, the two statutorily required appropriations are the Savings Reserve and the State Capital and Infrastructure Fund. The proposal would appropriate $36.7 million to the Savings Reserve and $1.1 billion to the State Capital and Infrastructure Fund (pg. 9 of budget proposal).
Discretionary appropriations would total $2 billion. An additional $1.1 billion would be appropriated to replenish the Savings Reserve to pre-Helene levels.
“This move would signal policymakers’ commitment to the long-term fiscal sustainability of the state,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal.
The Senate proposal, on the other hand, would allocate $1.12 billion to the State Capital and Infrastructure Fund (SCIF) and $44.8 million to the Savings Reserve, in statutory requirements. An additional $1.1 billion in discretionary reservations would be allocated to the Savings Reserve, totaling $1.145 billion.
In the House proposal, the Economic Development Project Reserve would receive $250 million, and the Regional Economic Development Reserve would receive $600 million. The Senate proposal allocated $314.6 million to the Economic Development Project Reserve, but none to the regional reserve.
This would result in a total of $1.1 billion to the Savings Reserve and $850 million to economic development.
“In FY 2024, more than $1.2 billion was allocated to the Regional Economic Development Reserve and simultaneously appropriated for immediate use within the same fiscal year,” said Harris. “This approach drew criticism, as many viewed it as a misuse of a reserve account, undermining the intended purpose of setting aside funds for the future. Interestingly, of the $600 million the House recommends for the same reserve in FY 2026, none of the funds would be immediately spent under the proposed budget. This shift in policy may reflect a direct response to earlier concerns that the immediate expenditure of reserve funds is improper.”
According to the April 2025 financial report from the Office of the State Controller, the Savings Reserve currently holds $3.6 billion. The Economic Development Project Reserves are at $676.7 million, while the Regional Economic Development Reserve is empty.