Friday, June 27, 2014, 9:57 AM

State Government Shut Down Looming on July 1st? Nah.

Most of you are aware that the fiscal year for states runs July1st to June 30th. Our prediction here in NC is that next Monday will become next Tuesday with no new budget. Will this lead to a state government shutdown? It will not and here's why:

In odd numbered years North Carolina enacts a biennial budget. In even numbered years the state budget is simply an adjustment to the existing state budget. So July 1st can come and go with no sky falling, and the legislative game of "chicken" can continue. The budget enacted last year will continue until June 30th of 2015. But that's not a perfect scenario.

It is important that the budget be adjusted in these even years for several reasons:
  • there need to be measures to address Medicaid cost overruns;
  • an opportunity to adjust predictions on the number of school children to expect;
  • pay raises for teachers, state employees and a COLA for state retirees; and
  • some state match to federal grant dollars must be appropriated each year.
Next we'll talk about what's happening with current budget negotiations.....

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