Senate Leader Phil Berger said Monday that North Carolina lawmakers plan to work on the state’s budget in the upcoming weeks as they brace for a multibillion dollar shortfall caused by the response to COVID-19.
Berger, R-Rockingham, told reporters Monday the fiscal researchers still are crunching the numbers, but the state may be looking at a shortfall of around $4 billion.
The General Assembly will have to focus on making adjustments to the state’s spending limit for 2021, which was around $24 billion before the public health crisis shut down the state’s economy and clogged several revenue streams to the General Fund.
“When the last recession hit in 2008, 2009, the Democrats were forced to cut core state obligations and education, and teachers bore the brunt of those budget cuts,” Berger said. “We do not want to see a repeat of that.”
The Senate is expected to file bills this week that will secure funds for K-12 education, universities, community colleges, state park facilities and infrastructure, among other things, Berger said.
Legislative economist Barry Boardman, in March, estimated the state could take a 5 percent to 10 percent hit to its General Fund, about a $1.5 billion to $2.5 billion loss over the biennium.
A tax payment deadline extension from April 15 to July 15 also has created a gap in revenue for the state. The extension could shift about $2 billion to the next fiscal year, Boardman said.
State economists would have to weigh in their estimates how many people have filed their taxes and how many are expected to file.
If Senate budget writers have their way, then state agencies also may have find room for cuts. They sent a letter to Cooper in late April asking him to instruct state agency leaders to find a way to save 1 percent of their budgets, which could result in a total savings of $250 million, they said.
However, Berger said he is confident the state will recover.
Before the coronavirus outbreak, North Carolina had $1.2 billion in its rainy day fund, according to the state treasurer’s office.
Lawmakers also are holding on to hope that the nearly $2 billion in federal aid leftover from the more than $4 billion directed to the state from the CARES Act for COVID-19 relief efforts could be rerouted to make up revenue shortages. Congress would have to approve the change.
With the new fiscal year starting July 1, state lawmakers have six weeks to finalize the budget.
“There are a number of things that could cause us to have to stay longer,” Berger said. “If the folks in Washington are dragging their heels and they don’t give us the kind of guidance that we need to use the last $2 billion in CARES money, that can develop into a problem.”
