North Carolina’s State Budget: An Overview

April 24, 2023


  • Budgets are a statement of what voters really value
  • The State of North Carolina has collected more in revenues than it has spent
  • Not investing in areas of public need is a choice, not a financial necessity


Much of what government itself is all about is budgeting. Through their elected representatives, the voters get to decide how much money should be collected to perform which tasks, and budgets are how the former gets turned into the latter. (At least, voters who aren’t gerrymandered for partisan advantage.) For a tiny subset of people, budgeting is a thrilling, drama-filled exercise; for most, it’s opaque, utterly inscrutable and extremely boring.

No matter which category you fit into, budgets are nevertheless very important. The State of North Carolina is a large, sprawling enterprise which touches every single resident’s daily life. The state government provides a sort of “platform” on which rests North Carolina’s $560 billion (and growing) state GDP. State employees themselves are often stereotyped as faceless bureaucrats far off in Raleigh, but that is totally false. Our state government’s roughly 255,000 employees includes every single teacher and school staffer (schools are the largest employer in many counties in the state), game and wildlife professionals, highway workers, nurses, thousands of law enforcement personnel, agricultural extension workers and many more that help shape every resident’s work, education, health and life.

North Carolina’s state budget could easily fill a week-long seminar to understand in its entirety – we certainly won’t tackle that here. (Readers can learn more about the budgeting process here.) But as the biennial state budgeting process gets underway, simply understanding the basics can help anyone better grapple with what’s at stake, and what the state budget means for them.

Money in, money out

The State of North Carolina generates revenue through taxes – mostly individual income taxes. In the 2020-2021 fiscal year, total tax revenue came to about $30 billion:

By contrast, in fiscal year 2020-2021, the state spent about $24 billion:

This is a highly simplified illustration of all spending categories.

  • "Education" encompasses everything from the more than 2,500 public schools across the state, to the entire community college and UNC systems, to myriad other special programs.
  • "Health and Human Services," primarily through NC DHHS, administers the state food stamp and family assistance programs (though those benefits are mostly paid for by the federal government, not state), operates a network of hospitals, clinics and public health facilities
  • "All Other" is what it says: law enforcement, natural resources, transportation, general government operations, and much more.

Eagle-eyed readers will note that in the last fiscal year, the state took in more revenue than it spent. This was, indeed, the case - and North Carolina appears to be on the same track this year. The Governor's Office of State Budget and Management, as well as the legislature's Fiscal Research Division, both expect the state to collect around $3.25 billion more in tax revenue than expected in the 2022-2023 fiscal year (about a 10.7% increase year-on year), for around $33.8 billion total. (Note: we are rounding figures for ease of explanation.)

There are, of course, competing priorities whenever there are higher-than-expected revenues. Democrats point to over a decade of underinvestment in public education, which has brought North Carolina to last-in-the-nation status for support for its schools. With ample savings in the state's so-called "Rainy Day Fund," excess revenues could be tapped to invest in the state's next generation of growth. But instead, Republican lawmakers have chosen instead to abolish the corporate income tax entirely, and shift the future burden on to individual taxpayers.

The budget matters

Budgets can sometimes be boring - except for those who like balancing their checkbook. But in their essential form, budgets are also moral documents. They are the most concrete and tangible expression of what the voters value, and what they don't, relative to one another.

Yet they are also highly obscured behind walls of numbers, complicated naming conventions, interminable committee deliberations, and most especially, special interest lobbying. This often makes "the budget" a favored vehicle for under-the-radar policymaking, especially for politicians delivering very unpopular measures for favored groups. The only way to combat this tendency is through transparency. Pay attention to state lawmakers' resourcing choices - it will often be much more honest than their public statements.

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