A near-unanimous N.C. House voted Wednesday to require budget writers to set aside savings every year for the state’s rainy-day fund.
Only three Democrats voted against the proposal, which now heads to the Senate. 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.
“This is a common sense and bold bill that puts into law strong financial principles of good government and fiscal discipline,” said Rep. Dean Arp, a Republican from Monroe. “If we do not save for future economic downturns, we will have to cut vital and important government functions.”
The last several budgets approved by the legislature have included money for the savings account, but there’s no formal requirement for legislators to do that.
Rep. Nelson Dollar of Cary, a House budget writer and sponsor of the bill, said the plan was developed with guidelines from The Pew Charitable Trusts, a nonpartisan government policy think tank that has done extensive research on state rainy day funds.
“It takes North Carolina from frankly one of the weaker savings regimens of any state to what the Pew center believes will be one of the strongest,” Dollar said.
But Rep. Billy Richardson, a Fayetteville Democrat, said he couldn’t support the measure because he thinks it’s unnecessary and would add restrictions on the governor as he develops his budget proposal.
“Process matters, and respect for the other branches of government matters,” Richardson said. “This is not worth the paper it’s written on. This is politics over substantive law.”
One of the other “no” votes came from Rep. John Autry, a Charlotte Democrat who said the legislature should instead be saving money to deal with climate change.
The House shot down an amendment from Rep. Mark Brody, a Monroe Republican, to require any spending of the savings to be approved as a standalone bill – not through the legislature’s massive budget bill. Brody said that requirement would improve transparency, but Dollar said it would “create some serious headaches” for budget writers.
Brody’s proposal was defeated in a 12-99 vote.
The bill’s passage drew praise from the conservative advocacy group Americans For Prosperity. “Responsible fiscal legislation like this bill will protect taxpayers from future tax increases,” AFP state director Donald Bryson said in a news release. “With a companion bill moving through the state Senate, the larger question is how Gov. Cooper will view this bill, who has been hostile to a well-funded reserve fund in the past.”
Dollar and Sen. Brent Jackson, a Sampson County Republican, developed the bill together, so it’s expected to pass the Senate. Cooper has not yet said if he’ll sign the bill, and Bryson’s comment referred to a statement Cooper made during his campaign that that legislators were “building up the rainy day fund in excess of what’s necessary for the state” and should instead “invest in our people.”