The North Carolina Senate recently passed its budget proposal, SB 257, for the 2025-27 biennium. The House is expected to introduce its budget proposal soon. Negotiations will follow until an agreement is reached in the General Assembly.
Last year, the Carolina Journal published a series examining “reserve funds,” what they are, how they work, and appropriations allocated in the previous budget to each reserve fund, including how they were spent.
With the passage of the recent budget proposal, Carolina Journal will again examine the allocations to reserve funds, how much, which funds, and how they will be spent, focusing on the latest Senate proposal.
Firstly, two allocations are statutorily required: $1.12 billion to the State Capital and Infrastructure Fund (SCIF) and $44.8 million to the Savings Reserve. An additional $1.1 billion in discretionary reservations would be allocated to the Savings Reserve, totaling $1.145 billion.
“In the aftermath of Hurricane Helene, the state has primarily utilized the Savings Reserve to fund disaster-recovery efforts,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “The Senate’s budget proposal recommends replenishing the Savings Reserve to its pre-Helene level by allocating more than $1.1 billion to the reserve. This allotment would demonstrate a commitment to fiscal sustainability and disaster recovery efforts.”
The Economic Development Project Reserve will be allocated a total of $314.6 million. Of this, $15.4 million would be transferred from the Information Technology Reserve, $258.4 million would be transferred from the Stabilization and Inflation Reserve, and $40.9 million would be allocated from the General Fund.
“The Stabilization and Inflation Reserve received an allocation of $1 billion in FY 22-2023, none of which has been spent,” continued Harris.
The Hurricane Helene Disaster Recovery Fund (Helene Fund) would be allocated a total of $700 million, with $476.5 million transferred from the Medicaid Contingency Reserve, $61.3 million from the Information Technology Reserve, $45.5 million from the Federal Infrastructure Match Reserve and $116.7 million from the State Emergency Response and Disaster Relief Fund.
“The willingness to transfer funds from other reserves signifies adaptive fiscal planning and policymakers’ dedication to helping the victims of Helene,” said Harris.
Finally, exactly $1 million would be transferred from the Stabilization and Inflation Reserve to the Information Technology Reserve.
According to the latest cash watch report from the state auditor’s office, the Savings Reserve currently sits at $3.6 billion, the State Emergency Response/Disaster Reserve at $213.9 million, the Medicaid Contingency Reserve at $726.5 million, the Information Technology Reserve at $343.8 million, the Economic Development Project Reserve at $676.7 million, the Federal Infrastructure Match Reserve at $95.7 million, and the Stabilization and Inflation Reserve has exactly $1 billion.
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