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Appropriations/Base Budget Committee Substitute Adopted 2/2/11
Third Edition Engrossed 2/7/11


Short Title:        Balanced Budget Act of 2011.




Referred to:


February 1, 2011



AN ACT to enact the balanced budget act of 2011.

The General Assembly of North Carolina enacts:


Title of Act

SECTION 1.  This act shall be known as the "Balanced Budget Act of 2011."


authority for the governor to reduce expenditures

SECTION 2.  Notwithstanding the State Budget Act or any other provision of law, the Director of the Budget is authorized to take all actions necessary to reduce General Fund expenditures for the remainder of fiscal year 2010-2011. This grant of authority includes all powers to balance the budget granted the Governor under Article III, Section 5 of the Constitution. For the remainder of the 2010-2011 fiscal year, the Director of the Budget shall exercise these powers with a goal of reducing recurring expenditures by at least four hundred million dollars ($400,000,000).


Changes to the 2010-2011 availability statement

SECTION 3.  Section 2.2(a) of S.L. 2010-31 reads as rewritten:

"SECTION 2.2.(a)  Section 2.2(a) of S.L. 2009-451 is repealed. The General Fund availability used in adjusting the 2010-2011 budget is shown below:


                                                                                                                                           FY 2010-2011


Unappropriated Balance Remaining from Previous Year                                                     3,702,182

Adjustment from Estimated to Actual FY 2009-2010 Beginning Unreserved

      Fund Balance                                                                                                                 270,080

Beginning Unreserved Fund Balance                                                                            3,972,262


Revenues Based on Existing Tax Structure                                                        18,199,339,016


Nontax Revenues                                                                                                                          

      Investment Income                                                                                                     57,500,000

      Judicial Fees                                                                                                            239,100,000

      Disproportionate Share                                                                                            100,000,000

      Insurance                                                                                                                   67,000,000

      Other Nontax Revenues                                                                                           182,700,000

      Highway Trust Fund/Use Tax Reimbursement Transfer                                               72,800,000

      Highway Fund Transfer                                                                                              17,600,000

Subtotal Nontax Revenues                                                                                        736,700,000


Total General Fund Availability                                                                            18,940,011,278


Adjustments to Availability: Senate Bill 897Availability                                                             

      Internal Revenue Code Conformity                                                                             (7,700,000)

      Unemployment Insurance Refundable Tax Credit                                                      (34,100,000)

      Increase Sales Tax Prepayment Threshold                                                                  (7,000,000)

      Relieve Annual Report Compliance Burden on Small Businesses                                     (400,000)

      Fair Tax Penalties                                                                                                                      0

      Extend Sunsets on Various Tax Incentives                                                                   (3,500,000)

      Improve Tax and Debt Collection Process                                                                   3,000,000

      Modernize Sales Tax on Accommodations                                                                   1,700,000

      Modernize Admissions Tax and Restore Amenities Exclusion                                         (700,000)

      Reserve for Pending Finance Legislation                                                                      (9,800,000)

      Reduce Franchise Tax Burden on Construction Companies                                         (1,500,000)

      Department of Revenue Settlement Initiative                                                             110,000,000

      Disproportionate Share                                                                                              35,000,000

      Loss of Estate Tax Revenues for FY 2010-2011                                                      (85,000,000)

      Increase Justice and Public Safety Fees                                                                      13,930,670

      Transfer from the Health and Wellness Trust Fund                                                        5,397,000


Transfer Aviation from Department of Commerce to Department

      of Transportation                                                                                                     (500,000)

      Transfer from Wildlife Resources Commission                                                              3,000,000


      Divert Funds from Scrap Tire Disposal Account                                                           2,500,000

      Divert Funds from White Goods Fund                                                                          1,200,000

      Transfer from Mercury Pollution Prevention Fund                                                         2,250,000

      Transfer from Bladen Lakes Special Fund                                                                       150,000

      Transfer from DACS - N.C. State Fair                                                                        1,000,000

      Transfer from ECU Magnetic Resonance Imaging Lease and Equipment

            Fund                                                                                                                     1,000,000

      Adjust Transfer from Insurance Regulatory Fund                                                         (2,176,454)

      Transfer from Motorfleet Internal Services Fund                                                         14,000,000

      Transfer from Golden LEAF Funds                                                                            67,563,760

      Transfer from Tobacco Trust Fund                                                                               2,800,000


      Various Budget Fund Transfers to General Fund

      Budget Fund

      Code            Code                                                                 Description

      24667                 Information Technology Fund                                                            1,000,000

      74660                 Information Technology Internal Service Fund                                   7,586,800

      24669                 ITS Wireless Fund                                                                            5,000,000

      74500  7100       Correction Enterprise Fund                                                               3,000,000

      24609  2560       One North Carolina Fund                                                                 5,208,333

                                 Department of Agriculture & Consumer Services (various                                                                   special funds)       1,500,000

      63702  6208       Farmland Preservation Trust Fund                                                     1,800,000

      54600  5881       Alcoholic Beverage Control Commission Fund                                     950,000

      24609  2567       Industrial Development Utility                                                            2,500,000

      19944                 Job Development Investment Grants (JDIG)                                      3,000,000

      24300  2911       SWC CREP/Expansion                                                                       500,000

      24300  2865       Aquariums Special Fund                                                                   1,500,000

      24309  2235       Parks and Recreation Trust Fund                                                      8,500,000

      24611  2200       Industrial Commission - IT Projects Fund                                         1,000,000

      24100  2514       E-Commerce Reserve                                                                      4,630,891


Subtotal Adjustments to Availability: Senate Bill 897Availability         41,751,216176,439,800


Revised General Fund Availability                                              18,981,762,49419,116,451,078

Less General Fund Appropriations                                              18,958,293,33718,958,994,212


Balance Remaining                                                                                   23,469,157157,456,866"



SECTION 3.1.(a)  Effective June 30, 2011, the following amounts are reverted to the General Fund:


Code      Code         Description

11000     1900          General Assembly Reserve                                                               1,901,522

13085     1900          Department of Insurance Reserve                                                      1,150,693

SECTION 3.1.(b)  G.S. 143C-1-2(b) does not apply to the reversion from the General Assembly Reserve in subsection (a) of this section.



SECTION 4.(a)  Pursuant to Section 2(b) of S.L. 1999-2, the fifty percent (50%) of the 2011 annual installment payment to the North Carolina State Specific Account that would have been transferred to The Golden L.E.A.F. (Long-Term Economic Advancement Foundation), Inc., is transferred to a General Fund account within the Settlement Reserve Fund to be used to support General Fund appropriations for the 2010-2011 fiscal year.  The Attorney General shall take all necessary actions to notify the court in the action entitled State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, and the administrators of the State Specific Account established under the Master Settlement Agreement of this action by the General Assembly redirecting the payment set forth in this section.

SECTION 4.(b)  A General Fund Account is established in the Settlement Reserve Fund.  In 2011, the portion of the Master Settlement Agreement payment identified in Section 6(1) of S.L. 1999-2 shall be credited to the General Fund Account. The State Controller shall transfer all funds in the General Fund Account to the General Fund.

SECTION 4.(c)  Funds transferred from the General Fund Account to the General Fund shall be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for the 2010-2011 fiscal year.


TRANSFER health and wellness trust funds

SECTION 5.  Section 2.2(i) of S.L. 2009-451, as rewritten by Section 2.2(f) of S.L. 2010-31, reads as rewritten:

"SECTION 2.2.(i)  Notwithstanding G.S. 143C-9-3, of the funds credited to the Health Trust Account, the sum of ten million three hundred ninety-seven thousand dollars ($10,397,000)twenty-two million forty-five thousand eight hundred dollars ($22,045,800) that would otherwise be deposited in the Fund Reserve shall be transferred from the Department of State Treasurer, Budget Code 23460 (Health and Wellness Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for the 2009-2010 and 2010-2011 fiscal years.year. These funds shall be transferred on or after April 30, 2010."


TRANSFER tobacco trust funds

SECTION 6.  Section 2.2(h) of S.L. 2009-451, as rewritten by Section 2.2(i) of S.L. 2010-31, reads as rewritten:

"SECTION 2.2.(h) Notwithstanding G.S. 143C-9-3, of the funds credited to the Tobacco Trust, the sum of five million dollars ($5,000,000)seven million eight hundred thousand dollars ($7,800,000) shall be transferred from the Department of Agriculture and Consumer Services, Budget Code 23703 (Tobacco Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for the 2010-2011 fiscal year. These funds shall be transferred on or after April 30, 2011."


transfer from the industrial commission - IT fund

SECTION 6.1.  Section 14.15 of S.L. 2009-451 reads as rewritten:

"SECTION 14.15.  The For the 2010-2011 fiscal year, the North Carolina Industrial Commission may retain the additional revenue generated as a result of an increase in the fee charged to parties for the filing of compromised settlements.all overrealized receipts. These funds shall be used for the purpose of replacing existing computer hardware and software used for the operations of the Commission. These funds may also be used to prepare any assessment of hardware and software needs prior to purchase and to develop and administer the needed databases and new Electronic Case Management System, including the establishment of two time-limited positions for application development and support and mainframe migration. The Commission may not retain any fees under this section unless they are in excess of the former two-hundred-dollar ($200.00) fee charged by the Commission for filing a compromised settlement."



SECTION 7.  This act is effective when it becomes law and applies to fiscal year 2010-2011 only.