Multiple state agency and department heads appeared before the NC House Oversight Committee Thursday to brief lawmakers on their respective landscapes and efforts to find and eliminate waste, fraud, and abuse within their programs.
The hearings come as state lawmakers gear up for biennial budget negotiations. The purpose of the hearings with agency heads is to hear about “what they do, how they do it, and if they’re doing a good job,” according to committee co-chair and House Majority Leader Rep. Brendan Jones, R-Columbus. The oversight comes amid a backdrop of national interest in government waste versus efficiency driven by the administration of President Donald Trump.
department of revenue
Secretary of Revenue McKinley Wooten, Jr. told members his department’s two main priorities were upgrading a 30-year-old technology system with a $50 million legislative appropriation, with an RFP process underway and a contract expected by the fiscal year-end; and, ensuring a stable workforce by maintaining a low vacancy rate (7.2%) and reducing turnover to ensure skilled staff for revenue collection.
“Technology is on the top of the list at the Department of Revenue,” stated Wooten to the committee. “What you may not know [is] that the department has run on a technology system that is 30 years old, and so it is really important for us to move with the times and go about enhancing our technology.”
When it comes to performance metrics Wooten told the committee the department’s key measures include efficient tax return processing, growing continuous revenue collection consistent with the legislature’s intent, getting funds distributed in a timely manner, and taxpayer education.
Further efforts to improve taxpayer convenience focus on modernizing technology to offer a public-facing portal for easier tax processes, akin to private-sector convenience.
“It is not unreasonable for a citizen and a taxpayer to expect the same electronic convenience that they experience in their personal lives,” said Wooten, adding that improving customer service is a constant priority for the department.
The department also works to eliminate tax fraud. Wooten told committee members that the department intercepted $966 million in fraudulent returns last year.
Asked if the NC Department of revenue is committing resources to any diversity, equity, and inclusion (DEI) initiatives, Wooten assured the committee that no formal DEI program exists. He said past references to DEI in the department’s strategic plan were not implemented and will be removed in the new administration’s update.
office of state budget and management
Kristin Walker, who has served as state budget director since 2022, informed lawmakers that agency prioritizes continuous improvement and an evidence-based focus.
“We’re always looking for what is the evidence behind that program? Why are you running that program instead of a different program?” said Walker, describing how OSBM helps agencies evaluate effectiveness and redirect funds from outdated or unproven initiatives.
Walker was not able to identify examples of waste the agency has targeted for elimination, but did tell the committee OSBM is exploring AI tools like Microsoft Copilot, in partnership with the Department of Information Technology, to enhance efficiency and potentially identify waste, fraud, and abuse.
“We are in partnership with DIT to look at the ways in which we could use Copilot to evaluate a number of government things and also just to become more efficient.” Walker told the committee on AI’s potential role in the agency.
Asked if federal efforts to find and eliminate waste, fraud, and abuse via the Department of Government Efficiency (DOGE) are complicating state budget considerations, Walker revealed the agency is monitoring 2,600 federal grants amid potential cuts, and preparing for localized economic impacts, particularly in university-heavy regions like the Triangle.
State side, Walker was asked about recent forecasts warning of revenue shortfalls beyond 2026. She acknowledged the potential for budget gaps based on revenue and spending projections going forward, while also pointing out that current revenue levels are unprecedented.
“Revenues are greater than they’ve ever been, right?” Walker asserted, noting the growth North Carolina has experienced, particularly post-pandemic. “We’ve enjoyed a lot of economic prosperity in this state.”
However, the static modeling the agency conducts to predict future revenues is again flashing warning signals. Current revenue forecasts project $34.7 billion in the current fiscal year, $34.9 billion for FY 2025-26, and then falling to $34.1 billion for FY 2026-27.
“By 2030, we’re projecting a $4 billion gap between projected revenues and a current services budget or a population plus inflation budget,” Walker warned.
For context, warnings of revenue shortfalls have been frequent over the last decade. Fortunately, none of the shortfalls have come to pass, and, instead, revenue surpluses have occurred more often than not.
When it comes to performance accountability, Walker assured the committee that OSBM tracks internal goals via a strategic plan and dashboard, reviewed quarterly, with staff performance tied to objectives. External accountability is shown, she said, through a balanced budget and high credit ratings.
“You can see that we are doing our job and our primary mission when we have a balanced budget [and] the highest credit rating from all three credit rating agencies,” concluded Walker.
Follow Carolina Journal for more reporting on Oversight Committee hearings, including testimony from NC Department of Motor Vehicles Commissioner Wayne Goodwin, who announced he would be stepping down from the job after three years and lots of frustration from lawmakers and drivers.