North Carolina

State Budget Practice Report Cards and Budget Resource Guide

North Carolina was one of only four states to achieve an A or B average in all five categories evaluated by the Volcker Alliance for fiscal 2016 through 2018. The other three were Maine, Oklahoma, and South Dakota. 

The state averaged a top mark of A in budget forecasting, largely on its use of multiyear expenditure and revenue forecasts and of consensus revenue estimates. Although a consensus is not mandated by North Carolina’s constitution or statutes, the process has been adopted informally and used consistently. 

North Carolina got a B average in reserve funds; its C grades in 2016 and 2017 rose to an A in 2018 after the legislature more closely tied rainy day fund policies to revenue volatility. North Carolina’s attention to its rainy day fund, which has grown tenfold since the Great Recession, paid off when Hurricane Florence hit the state in September 2018. After the storm, lawmakers authorized the drawdown of $756.5 million from the $2 billion Savings Reserve—the rainy day fund—to help finance recovery efforts. 

The B average in legacy costs reflected the state’s lack of actuarially recommended contributions for public workers’ other postemployment benefits, mainly health care. In contrast, North Carolina funds its pensions according to actuarial guidelines, which has given it a funded ratio of 90.7 percent as of 2017—about 22 percentage points higher than the total for all states.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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