Last week in the North Carolina General Assembly was somewhat depressing, not unlike the weather with the overcast skies and rain of Tropical Storm Bertha.  We had received the consensus revenue forecast for the remainder of this fiscal year and for the 2020 – 2021 fiscal year.  Our minds were focused on how to deal with a projected shortfall not only in the General Fund, but in the Transportation funds as well.  We also had bills dealing with various aspects of the coronavirus crisis.

Last Tuesday, we got confirmation of what had been rumored about the shortfall in revenue for the 4th fiscal quarter ending June 30th, and the bigger shortfall for fiscal 2020 – 2021.  The General Fund is separate from the two transportation funds, the Highway Fund and the Highway Trust Fund.  The consensus revenue forecast is agreed upon by the economic experts in the General Assembly Fiscal Research Division and the Office of State Budget Management (OSBM), in the executive branch.

The revised forecast for fiscal year 2019 – 2020 General Fund is $23.4 billion, down $1.6 billion.  The revised forecast for fiscal year 2020 – 2021 is $23.5 billion, down $2.6 billion from the original forecast, which was done last year.  The General Fund is supported mainly by state sales taxes and state income taxes.  The delay in tax filings impacted both fiscal years, pushing funds into 2020 – 21.

In the transportation funds, the Highway Fund (primarily maintenance) is forecast at $2.15 billion for 2019 – 2020, down $156.5 million, and $2.13 billion for 2020 – 2021, down $275.5 million.  The Highway Trust Fund (primarily construction) is forecast at $1.50 billion for 2019 – 2020, down $104.3 Million, and $1.42 billion for 2020 – 2021, down $237.8 million.  The transportation funds are supported mainly by the motor fuels tax at the pump, the highway use tax when one buys a car, and DMV fees.

In summary, the total shortfall in the General Fund is projected at $ 4.2 billion below the original forecast done last year. The total shortfall in the two transportation funds is $ 774.1 million.  This is almost $ 5 billion less than previously planned and budgeted, and amounts to over 8% reduction in the General Fund and almost 10% in the transportation funds.

This week, we will be meeting early and late to come up with a plan/budget to deal with this unprecedented and unexpected shortfall. The focus will be mainly on the 2020 – 2021 budget, which takes effect July 1st.

Several bills last week dealt with emergency funding for upgrades to the Viper communication system for law enforcement, for court system funding to deal with the raise-the-age issue in juvenile justice, and loans for workforce housing.  One bill dealt with allowing temporary outdoor seating for restaurants, notwithstanding other statutes and ordinances.

A very important bill to facilitate the November election passed the House on Thursday.  House Bill 1169 – Bipartisan Election Act of 2020 makes several changes to make it easier to vote but maintain the security of the ballot.  It changes the absentee witnesses required from two to one, but requires a printed name, signature, and address of the one.  Before, two scribbled signatures were all that was required.  The bill also makes sure no state official can order an all-mail-in election.  Other provisions and funds will help county boards of election to create a healthier in-person voting situation.  The bill passed the House 116 – 3 and is in the Senate.