Legislative leaders want to make sure budget writers set aside savings every year for the state’s rainy-day fund.
The proposal was among the first bills filed in the House and Senate, and the House version will get a hearing Thursday in the House Appropriations Committee. The legislation’s sponsors, Republican Rep. Nelson Dollar of Cary and Republican Sen. Brent Jackson of Sampson County, held a news conference Wednesday to promote the idea.
The bill would require that 15 percent of each year’s revenue growth from the prior year go into the savings account. It would also limit legislators from spending more than a set amount from the savings fund. Spending from the savings wouldn’t be able to exceed 7.5 percent of the previous fiscal year’s operating budget, unless lawmakers agreed to a higher amount with two-thirds majority votes in the House and Senate.
The fund could only be used to make up for revenue losses, pay the costs of a court order or provide emergency disaster relief.
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“This is a major, major step toward putting together a solid financial foundation for the state long into the future, and putting us in a scenario where we know what we have,” Dollar said, “so we’re not asking to raise taxes when people cannot afford to do that.”
The current budgeting process doesn’t have specific rules for setting aside savings, so it’s up to the budget writers to decide how much goes into the rainy day fund. Republican leaders have added to the amount in recent years and say the moves meant the state was in good shape to deal with last year’s Hurricane Matthew flooding and wildfires.
“It actually takes savings to a new level,” Jackson said of his bill. “We move it up to the front instead of an afterthought.”
The bill was the result of recommendations from a bipartisan committee of House and Senate legislators.
The conservative group Americans For Prosperity praised the bill Wednesday, saying it shows lawmakers “intend to be fiscally responsible.” The group’s press release criticized Gov. Roy Cooper for suggesting last year that some of the savings could be used for other purposes.
In September, Cooper told The News & Observer that legislators were “building up the rainy day fund in excess of what’s necessary for the state. Instead of doing that, we could invest in our people.”
Cooper has not made any public comments about Dollar and Jackson’s proposal.
Last year’s budget bill added $475 million to the state’s rainy-day reserve fund, which legislators said was “an absolute record level” putting the state on track to soon have savings equal to 8 percent of annual spending.