If you blinked, you may have missed it. On Monday evening, the North Carolina Senate presented their budget to the public. On Tuesday, it was quickly moved through committee; on Wednesday, the full chamber passed it on second reading in a 31-16 vote, with third and final vote on Thursday. Four Democrats voted for the bill and one Republican against.

When session began, I said the General Assembly had their hands full, with a lot of major issues calling for their attention, especially:

  • Housing supply and prices
  • Health-care costs
  • Public safety
  • And disaster recovery

Of course there are many other issues the state face, but those were a few that needed to be addressed due to increasing populations, rising prices, the opioid crisis, and Hurricane Helene. Thankfully, it looks like the legislature is making major strides on all these issues this session.

And the budget that the Senate introduced and quickly passed this week would make further strides in many areas.

Budget highlights

The Rainy Day Fund would be replenished under this budget, which is impressive for a state that had to spend a lot on disaster relief after a historic storm that caused unfathomable damage. Before the storm, there was $4.75 billion in the fund, and the budget would bring it back to that number. Many states whose finances are not as prudently managed would not be able to replenish reserve funds that quickly.

There is $700 million in Hurricane Helene recovery funds and repurposing of an additional $633 million of other funds towards recovery.

Senate Appropriations Chairman Sen. Ralph Hise, R-Mitchell, said in a press statement that “This budget puts North Carolina first. Western North Carolina relief remains a top priority for all of us in the General Assembly. In recognition of that, we worked diligently to ensure that we can continue our Hurricane Helene recovery efforts and support other pressing needs.”

The budget also sets in place further income-tax reductions, which is always welcome, taking the number down to 2.99% by 2028.

State employees will get 1.25% raises across the board in the first year of the budget and a $3,000 bonus, half paid in the first year and half in the second. Importantly, correctional officers will get a much larger pay raise, at 8.9%. The conditions at North Carolina prisons have been strained in recent years, especially after COVID, and a serious shortage of correctional officers has left many prisons short staffed creating dangerous conditions for both prisoners and staff. At this time last year, about 40% of corrections openings were left unfilled. The pay increases would make these difficult jobs more attractive to high-quality applicants.

Other law enforcement positions, which are also going through challenges with recruitment and retention, were given sizeable raises as well. Hopefully, this can help shore up staffing so issues like gun violence, fentanyl trafficking, and gang activity can be brought under better control in the state.

There are also great strides made regarding health care in this budget. The most important is that it “repeals the state’s archaic certificate of need laws that drive up costs for patients by stifling competition,” as quoted in a press release from Senate leaders. Ending CON in North Carolina is a battle that the John Locke Foundation has been fighting for many years. If this part of the Senate budget survives in the final budget negotiations, it will be a major victory for the state.

In brief, getting rid of CON would allow health providers to add additional capacity and equipment without expensive government permission slips. If the experience of other states is repeated here, this would increase supply of care and bring down costs.

The budget also claws back money from NCInnovation, a private venture capital effort that received a $500 million state grant to bring UNC System research to market. The entire endowment will be reclaimed and $400 million of it used instead to help build NC Children’s, the state’s first children’s hospital. The hospital will be built in the Triangle area as a partnership between UNC and Duke health systems.

These funds would bring the total state money for the project to $855 million, so it’ll be interesting to watch its progress.

The budget would also remove the interim carbon benchmarks, which were blamed for solar and wind being given priority over nuclear and natural gas, causing increases in energy costs and problems with reliability. The Senate leadership press release said removing these interim targets would “preserve power reliability and affordability” in North Carolina energy.

There is a lot more in the budget that is also praiseworthy. But those are some highlights of the 458-pages bill.

Normal budget process still absent

In terms of a critique, however, it’s important to note that Senate leaders unveiled this committee substitute on Monday evening and it was passed on second reading on Wednesday. This means the press, legislators who weren’t already in the know, the public, and other interested parties had about two days to review this entire bill and all its parts and propose any changes.

In what’s often called “the normal budget process,” legislators used to discuss the various parts of the budget in subcommittees for various areas of government. The public, lobbyists, activists, and legislators would all then have a chance to debate, and often argue passionately, about various elements being proposed. But that process has been absent in recent years, as legislative leaders instead plop a finished work onto everyone desks soon before a vote.

As John Locke Foundation CEO Donald Bryson said during another recent budget battle, “The traditional budget process was implemented to ensure that all legislators had a hand in crafting the most critical piece of legislation each year… Deliberation in appropriations subcommittees, committees, and floor votes allows government watchdogs and lawmakers to find inappropriate spending and policy changes in the budget.”

Bryson said that while there is “nothing illegal or unethical about stepping away from the traditional process…, it lacks the transparency that citizens, the press, and lobbyists have become accustomed to for the past 30 years.”

A spokesperson for the North Carolina Budget and Tax Center, a group we are not always in agreement with, during the Senate Committee on Finance Tuesday, called for “an open and transparent budget process. That means adequate time for public review and public comment, and adequate time for all lawmakers to review fully.”

So, while there is much in this budget to praise, for the sake of public input and transparency, many are hoping future budgets see a bit more time for discussion and debate.

This piece has been adjusted to note that half the $3,000 bonus to public employees will be paid out in the first year of the biennium and half in the second. Originally it said the whole bonus would be paid in the second year.