A BILL TO BE ENTITLED
AN ACT to restructure the general fund budget process so as to assure more stable budgeting by requiring that the prior fiscal year's collections be used as the availability estimate of the general fund.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 3 of Chapter 143C of the General Statutes is amended by adding a new section to read:
"§ 143C‑3‑6.  Calculation of General Fund availability estimate for recommended continuation budget; recommended supplemental budget.
(a)	For purposes of this section, the term "Recommended Continuation Budget" shall refer to the part of the Recommended State Budget prepared by the Governor that is balanced using the General Fund availability calculated pursuant to subsections (b), (c), and (d) or subsection (e) of this section.
(b)	In odd‑numbered years, when preparing the Recommended Continuation Budget for the first year of the upcoming fiscal biennium, the Governor shall use as the availability estimate for the General Fund the amount of the total State funds actually received by the General Fund in the immediate prior fiscal year ending June 30, with the changes listed in subdivisions (1) and (2) of this subsection, and then adjusted by either the Consumer Price Index (CPI) or the Gross Domestic Price deflator (GDP) based on the prior fiscal year's inflation, whichever is lower. The changes that may be made to the amount of the total State funds actually received by the General Fund in the prior fiscal year ending June 30 are as follows:
(1)	If any revenue increases or decreases were effective for only part of that fiscal year, the General Fund availability estimate shall be adjusted by an annualized total of the impact accordingly.
(2)	Any one‑time revenues in the prior fiscal year shall not be included in the General Fund availability estimate.
(c)	In odd‑numbered years, when preparing the Recommended Continuation Budget for the second year of the upcoming fiscal biennium, the Governor shall calculate the availability estimate for the General Fund as follows: take the amount of the availability estimate for the General Fund calculated for the first year of the upcoming fiscal biennium, make any changes listed in subdivisions (1) and (2) of subsection (b) of this section that are required in the second fiscal year, and then adjust the amount by either the Consumer Price Index (CPI) or the Gross Domestic Price deflator (GDP), whichever is lower.
(d)	In even‑numbered years, when preparing recommended changes to the enacted budget for the second year of the fiscal biennium, the Governor shall calculate the General Fund availability for the budget year in the same manner as set out in subsection (b) of this section.(e)	In the event of a revenue shortfall in the prior fiscal year ending June 30, the General Fund availability for the Recommended Continuation Budget shall not be determined pursuant to subsections (b), (c), and (d) of this section but instead shall be determined pursuant to a consensus revenue estimate as authorized by G.S. 143C‑3‑5(e1).
(f)	When preparing the Recommended Continuation Budget, the Governor shall not adjust the General Fund availability for the items listed in subdivisions (1) and (2) of this subsection; however, the Governor may prepare a Recommended Supplemental Budget and may include these items in the Recommended Supplemental Budget:
(1)	An estimate of General Fund availability that is the differential between the amounts determined pursuant to subsections (b), (c), and (d) of this section and the estimate of collections as determined in a consensus revenue estimate as authorized by G.S. 143C‑3‑5(e1).
(2)	If the Governor recommends a change that will result in collections in the budget year that differ from prior year actuals due to proposed increases or decreases in taxes or fees or proposed new taxes or fees, the estimate of the collections resulting from the proposed increases or decreases in taxes or fees or proposed new taxes or fees.
(g)	A Recommended Supplemental Budget is part of the Recommended State Budget as described in G.S. 143C‑3‑5(b)(1). The Governor may present the Recommended Supplemental Budget to the General Assembly for consideration but only after presenting to the General Assembly a Recommended Continuation Budget as defined in subsection (a) of this section and further described in G.S. 143C‑3‑5(b)(2)."
SECTION 2.  G.S. 143C‑3‑5 reads as rewritten:
"§ 143C‑3‑5.  Budget recommendations and budget message.
(a)	Budget Proposals. – The Governor shall present budget recommendations, consistent with G.S. 143C‑3‑1, 143C‑3‑2, and 143C‑3‑3 to each regular session of the General Assembly at a mutually agreeable time to be fixed by joint resolution.
(b)	Odd‑Numbered Years. – In odd‑numbered years the budget recommendations shall include the following components:
(1)	A Recommended State Budget setting forth goals for improving the State with recommended expenditure requirements, funding sources, and performance information for each State government program and for each proposed capital improvement. The Recommended State Budget may be presented in a format chosen by the Director, except that the Recommended State Budget shall clearly distinguish program continuation requirements, program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six‑Year Capital Improvements Plan and as required by G.S. 143C‑8‑6.
a.	The Governor's budget recommendations shall include a continuation budget as that part of the Recommended State Budget necessary to continue the current level of services, including mandated rate increases such as social security, annualization of programs, and operation of new facilities, and if deemed necessary by the Director, other increases such as inflation. These requirements shall be presented pursuant to subdivision (2) of this subsection.
b.	The Governor may also prepare a supplemental budget, in a format chosen by the Governor, that clearly delineates proposed new expenditures for each new or expanded State government program or service and any other expansion and shall clearly delineate the corresponding funding sources in proposed availability.
(2)	A Budget Support Document showing, for each budget code and purpose or program in State government, accounting detail corresponding to the Recommended Continuation Budget as defined in G.S. 143C‑3‑6(a).
a.	The Budget Support Document shall employ the North Carolina Accounting System Uniform Chart of Accounts adopted by the State Controller to show both uses and sources of funds and shall display in separate parallel columns all of the following: (i) actual expenditures and receipts for the most recent fiscal year for which actual information is available, (ii) the certified budget for the preceding fiscal year, (iii) the currently authorized budget for the preceding fiscal year, (iv) program continuation requirements for each fiscal year of the biennium, (v) proposed expenditures and receipts for each fiscal year of the biennium, and (vi) proposed increases and decreases.
b.	The Budget Support Document shall include detailed information on recommended expenditures for capital improvements as required by G.S. 143C‑8‑6.
c.	The Budget Support Document shall include accurate projections of receipts, expenditures, and fund balances. Estimated receipts, including tuition collected by university or community college institutions, shall be adjusted to reflect actual collections from the previous fiscal year, unless the Director recommends a change that will result in collections in the budget year that differ from prior year actuals, or the Director otherwise determines there is a more reasonable basis upon which to accurately project receipts. Revenue and expenditure detail provided in the Budget Support Document shall be no less detailed than the two‑digit level in the North Carolina Accounting System Uniform Chart of Accounts as prescribed by the State Controller.
d.	The Budget Support Document shall clearly identify all proposed expenditures supported by existing or proposed appropriations, and shall include as continuation requirements the amounts the Director proposes to fund for the enrollment increases in public schools, community colleges, and all statutory appropriations.
(3)	A Current Operations Appropriations Act that makes appropriations for each fiscal year of the upcoming biennium for the operating expenses of all State agencies as contained in the Recommended State Budget, together with a Capital Improvements Appropriations Act that authorizes any capital improvements projects.
(4)	The biennial State Information Technology Plan as outlined in G.S. 147‑33.72B to be consistent in facilitating the goals outlined in the Recommended State Budget.
(c)	Even‑Numbered Years. – In even‑numbered years, the Governor may recommend changes in the enacted budget for the second year of the biennium. These recommendations shall be presented as amendments to the enacted budget and shall be incorporated in a recommended Current Operations Appropriation Act and a recommended Capital Improvements Appropriations Act as necessary. Any recommended changes shall clearly distinguish program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six‑Year Capital Improvements Plan and as required by G.S. 143C‑8‑6. The Governor shall provide sufficient supporting documentation and accounting detail, consistent with that required by G.S. 143C‑3‑5(b), corresponding to the recommended amendments to the enacted budget.
(d)	Funds Included in Budget. – Consistent with requirements of the North Carolina Constitution, Article 5, Section 7(l), the Governor's Recommended State Budget, together with the Budget Support Document, shall include recommended expenditures of State funds from all Governmental and Proprietary Funds, as those funds are described in G.S. 143C‑1‑3. Except where provided otherwise by federal law, funds received from the federal government become State funds when deposited in the State treasury and shall be classified and accounted for in the Governor's budget recommendations no differently than funds from other sources.
(e)	Availability Estimates. – The recommended Current Operations Appropriations Act shall contain a statement showing the estimates of General Fund availability, Highway Fund availability, and Highway Trust Fund availability upon which the Recommended State Budget is based.
(e1)	Consensus Revenue Estimate. – The Governor and the General Assembly may request an independent consensus revenue estimate.
(f)	Budget Message. – The Governor's budget recommendations shall be accompanied by a written budget message that does all of the following:
(1)	Explains the goals embodied in the recommended budget.
(2)	Explains important features of the activities anticipated in the budget.
(3)	Explains the assumptions underlying the statement of revenue availability.
(4)	Sets forth the reasons for changes from the previous biennium or fiscal year, as appropriate, in terms of programs, program goals, appropriation levels, and revenue yields.
(5)	Identifies anticipated sources of funding for major spending initiatives.
(6)	Prepares a fiscal analysis that addresses the State's budget outlook for the upcoming five‑year period. This fiscal analysis shall include detailed estimates for five years for any proposals to create new or significantly expand programs and for proposals to create new or change existing law.
(g)	Different Gubernatorial Administrations. – For years in which there will be a change in gubernatorial administrations, the incumbent Governor shall complete the budget recommendations and budget message by December 15 and deliver them to the Governor‑elect."
SECTION 3.  G.S.  143C‑5‑2 reads as rewritten:"§ 143C‑5‑2.  Order of appropriations bills.
(a)	The General Assembly shall first enact a Current Operations Appropriations Act that has a continuation budget in which the General Fund appropriations do not exceed the General Fund availability estimate calculated pursuant to G.S. 143C‑3‑6(b), (c), and (d) or (e), as appropriate, before placing any other appropriations bill on the calendar for second reading.
(b)	 This section does not apply to the following bills:
(1)	An appropriations bill to respond to a disaster as defined by G.S. 166A‑4(1).
(2)	An appropriations bill making adjustments to the current year budget.
(3)	An appropriations bill authorizing continued operations at current funding levels.
(c)	This section shall be considered and treated as a rule of procedure in the Senate and House of Representatives, unless provided otherwise by a rule of either chamber of the General Assembly."SECTION 4.  This act is effective when it becomes law and applies to the 2015‑2016 fiscal year, the Recommended State Budget for the 2015‑2016 fiscal year, and to each subsequent Recommended State Budget and fiscal year.