North Carolina

State Fiscal Briefs

September 2021

Looking for North Carolina data related to the pandemic? We have health, economic, and fiscal data on our new tool, How the COVID-19 Pandemic is Transforming State Budgets.

North Carolina’s budget basics

According to the National Association of State Budget Officers (NASBO), North Carolina’s total expenditures in fiscal year (FY) 2020 were $60.2 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 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 $84.6 billion in FY 2018 (the most recent year census data were available), or $8,149 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 $9,801.

North Carolina’s largest spending areas per capita were elementary and secondary education ($1,495) and public welfare ($1,484). 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 $88.0 billion in FY 2018, or $8,474 per capita. National per capita general revenues were $10,071. North Carolina uses all major state and local taxes. After federal transfers, North Carolina’s largest sources of per capita revenue were charges ($1,930), such as state university tuition and highway tolls, and individual income taxes ($1,215).

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 51 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 recent fiscal debates

North Carolina’s current budget

Governor Cooper released his FY 2020-2021 biennial budget proposal in March 2019. Over the two-year period, the governor’s proposal called for $51.2 billion in general fund spending. However, Cooper (a Democrat) and North Carolina’s Republican-controlled legislature never agreed on a budget. The legislature refused to approve the governor’s major budget priorities, specifically Medicaid expansion, and the governor vetoed the legislature’s enacted budget. In fact, during the current biennial budget period (FY 2020 and FY 2021), the state government was funded by a series of “mini budgets”. In September 2020, however, the governor and legislature agreed on a $1.1 billion pandemic relief package that included a $50 boost to state unemployment insurance benefits and a $335 check to any individual or married couple with children. The relief package was funded mostly using federal aid from the CARES Act.

Governor Cooper released his FY 2022-2023 biennial budget proposal in March 2021. The governor’s proposal, which includes the federal funds North Carolina will receive from the American Rescue Plan, calls for $56.0 billion in general fund spending over the two-year period. The plan includes significant pay increases for teachers and other education employees (both K-12 and higher education), reinstatement of the state’s earned income tax credit (which was repealed in 2014), and Medicaid expansion. The governor has not yet given his State of the State address.

For more on North Carolina’s budget, see