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North Carolina’s budget basics
According to the National Association of State Budget Officers (NASBO), North Carolina’s total expenditures in fiscal year (FY) 2021 were $59.9 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, North Carolina’s combined state and local direct general expenditures were $89.8 billion in FY 2019 (the most recent year census data were available), or $8,553 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.
North Carolina’s largest spending areas per capita were elementary and secondary education ($1,558) and health and hospitals ($1,534). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
North Carolina’s combined state and local general revenues were $93.2 billion in FY 2019, or $8,871 per capita. National per capita general revenues were $10,563. North Carolina uses all major state and local taxes. After federal transfers, North Carolina’s largest sources of per capita revenue were charges ($1,957), such as state university tuition and highway tolls, and individual income taxes ($1,263).
North Carolina’s politics
Governor Roy Cooper, a Democrat, was elected in 2020 with 52 percent of the vote. The next gubernatorial election is in 2024.
North Carolina has a divided government. Republicans control both the House of Representatives (69 Republicans to 50 Democrats) and Senate (28 Republicans to 22 Democrats). The entire legislature is up for election in 2022 because both representatives and senators serve two-year terms.
North Carolina’s budget institutions, rules, and constraints
North Carolina uses a biennial budget. The legislature must pass a balanced budget and is prohibited from carrying a deficit over into the following year. State spending growth is limited by a budget rule based on personal income growth, but the legislature can override the rule with a simple majority vote. North Carolina limits authorized debt incurred by the state, but not debt service.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
North Carolina’s current budget
Governor Cooper has not released a supplemental budget proposal (the state uses a biennial budget) and not given his state of the state address in 2022.
North Carolina enacted its FY 2022-2023 biennial budget in November 2021. The enacted budget included $26.99 billion in general fund spending for 2022 and $28.25 billion in general fund spending for 2023. North Carolina also enacted aseries of tax cuts as part of the budget, including lowering its individual income tax rate from 5.25 percent to 3.99 percent and eliminating the state’s corporate income tax (the current rate is 2.5 percent). Both reductions will phase in over multiple years.
Under the American Rescue Plan, North Carolina will receive $5.4 billion in direct state fiscal aid and $2.7 billion in local government aid from the federal government. As of January 2022, North Carolina had spent part of its ARP funds on education spending, public health response, human services, and economic development.
According to NASBO, North Carolina’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
FY 2021: $24.5 billion/$59.9 billion
FY 2020: $24.6 billion/$61.7 billion
FY 2019: $24.0 billion/$58.2 billion
For more on North Carolina’s budget, see
North Carolina’s economic trends
North Carolina’s per capita income (per the Bureau of Economic Analysis) was $55,043 in 2021, ranking 38th among the states. It was below both the national average of $63,444 and the Southeast regional average of $56,118. The state’s median household income (five-year estimate) was $56,642 in 2020, ranking 39th among the states and below the national average of $64,994. North Carolina’s poverty rate was 14 percent in 2020 (five-year estimate), above the national rate of 12.8 percent.
Although North Carolina’s averages tell a story about the entire state, North Carolina is composed of diverse localities. For example, the city of Kinston’s median household income was $32,094, and its poverty rate was 27.4 percent; the city of Apex’s median household income was $112,549, and its poverty rate was 3.6 percent.
North Carolina’s unemployment rate historically tracks the national rate. The state’s rate was slightly above the national average following the Great Recession, but it has again paralleled the US rate for the past few years. (See how COVID-19 is affecting state employment and earnings data.)
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In North Carolina, the average unemployment rate in 2021 was 3.7 percent for white residents, 7.7 percent for Black residents, and 5.6 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)