GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	2 

SENATE BILL 833
Economic Development Committee Substitute Adopted 5/13/91

Short Title:  General Fund Budget Reform.	(Public)
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Sponsors:
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Referred to:  
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April 25, 1991

A BILL TO BE ENTITLED
AN ACT TO CHANGE THE BUDGET PROCESS BY LIMITING THE INCREASE IN GENERAL FUND APPROPRIATIONS TO THE ESTIMATED GROWTH IN PERSONAL INCOME, PLACING HALF OF CREDIT BALANCES IN A RAINY-DAY FUND, SUNSETTING PROGRAMS, REQUIRING MAINTENANCE RESERVES, PROVIDING FOR ANNUAL BUDGETS, AND REQUIRING REVENUE ESTIMATES AND FISCAL NOTES TO COVER A FOUR-YEAR PERIOD.
The General Assembly of North Carolina enacts:
PART 1. STATUTORY CHANGES
––-REVENUE ESTIMATES/ANNUAL BUDGET
Section 1.  The Executive Budget Act, Article 1 of Chapter 143 of the General Statutes, is amended by adding the following new sections:
"§ 143-2.1. Growth in General Fund expenditures limited.
(a)	The General Fund revenue amount used in the recommended budget of the Governor and the budget enacted by the General Assembly shall not exceed a percentage increase in operating expenditures paid out of the General Fund which exceeds the growth in State personal income for the most recent 12-month period for which State personal income data has been compiled by the Bureau of Economic Analysis of the United States Department of Commerce, with the following changes only:
(1)	If any revenue decreases were effective for only part of that calendar year, an annualized total of the impact of such decreases;
(2)	If there are any revenue reductions to be effective during the fiscal year, the total estimated amount of such reductions during the fiscal year;
(3)	Any one-time revenues in the prior calendar year shall not be included in the estimates; and
(4)	If the budget proposes or assumes any revenue increases due to increases in taxes or fees to be enacted, or new taxes or fees to be enacted, an estimate of collections of such increased or new taxes or fees may be made.
(b)	If the budget estimates any reversions at the end of the fiscal year ending immediately prior to the beginning of the fiscal year covered by the budget, those reversions not proposed for appropriation to the Permanent Rainy-Day Fund may be proposed only for capital projects, or other projects with a fiscal impact only in that fiscal year.  The remainder shall be expended only as provided in G.S. 143-2.2.
(c)	Revenue from borrowings in the prior calendar year shall not be included in the estimates, unless expenditure of the funds is proposed during the fiscal year covered by the proposed budget.  Proposed revenue from borrowing in the proposed budget shall only be included to the extent that appropriations against such borrowings are budgeted.
(d)	If the General Assembly appropriates any credit balance in the State treasury due to reversions at the end of the fiscal year ending immediately prior to the beginning of the fiscal year covered by the budget, those reversions not appropriated to the Permanent Rainy-Day Fund may be appropriated only for capital projects, or other projects with a fiscal impact only in that fiscal year.  The remainder shall be expended only as provided in G.S. 143-2.2.
(e)	The recommended and enacted budget shall fully fund all positions.
"§ 143-2.2.  Reserve Fund.
(a)	There is established in the State treasury a Permanent Rainy-Day Fund.
(b)	Effective with the credit balance at the end of the 1991-92 fiscal year, the General Assembly hereby appropriates to the Permanent Rainy-Day Fund one-half of any General Fund credit balance in the State treasury at the end of the fiscal year ending immediately prior to the fiscal year covered by the budget, provided that when the amount in the fund equals seven per cent (7%) of the General Fund budget, no new funds shall be added until the amount drops below that level.
(c)	If the Director of the Budget determines:
(1)	Pursuant to the provisions of G.S. 143-25 that the aggregate revenues collected and available during a fiscal year are not sufficient to pay all of the appropriations for that fiscal year in full; or
(2)	Pursuant to the provisions of Article III, Section 5(3) of the Constitution of North Carolina that receipts during a fiscal year, when added to the surplus remaining in the State treasury at the beginning of the fiscal year will not be sufficient to meet budgeted expenditures
he may, in his discretion, transfer funds from the Permanent Rainy-Day Fund to pay the appropriations for the fiscal year in full.  If the Director of the Budget decides not to transfer the funds from the Permanent Rainy-Day Fund as provided in this section, he shall proceed as provided in G.S. 143-25 or Article III, Section 5(3) of the Constitution to administer the budget so as to prevent any overdraft or deficit.
(d)	The General Assembly may make appropriations out of the Permanent Rainy-Day Fund.
"§ 143-2.3. Annual budget.
	The Governor shall propose and the General Assembly shall enact a budget covering one fiscal year only, that being the fiscal year commencing on July 1 of the year of enactment of the bill."
––-SUNSET OF PROGRAMS
Sec. 2.  Effective June 30, 1998, statutory authority for all programs operated by the State, other than payment of debt service, expires and all authority for appropriating and expending funds by the State lapses, provided that any new programs established after July 1, 1991, expire five years after their effective date.
––-FISCAL NOTES
Sec. 3. All overall revenue estimates prepared by the Office of State Budget and Management, the Governor, or the Fiscal Research Division shall project expenses for a period of at least four fiscal years.  The recommended annual budget and the budget as enacted shall contain for information purposes projected revenues and expenditures for at least four fiscal years.
––-MAINTENANCE RESERVE
Sec. 4.  Article 1 of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143-10.3.  Budget to include item for repair and renovation.
The Office of State Budget and Management shall require each department, bureau, board, commission, institution, and agency to include in its budget an amount for each square foot of building space it occupies to be placed in a reserve for repairs and renovations.  The amount per square foot shall be established by the General Assembly for the next fiscal period in the Capital Improvements Appropriations Act.  The reserve shall be administered by the Office of State Budget and Management, and allocated based on repair and renovation priorities derived from the Facility Condition Assessment Program of the Office of State Construction."
Sec. 5.  This act becomes effective for budgets beginning with the budget for fiscal year 1992-93, except that G.S. 143-2.2 becomes effective beginning with the credit balance at the end of fiscal year 1991-92.