North Carolina’s House may soon consider a Senate-passed proposal that would amend the state constitution to establish a new rainy day fund. States should have strong reserves, but this proposal would hamstring decision-makers and hurt the state’s fiscal health.
In creating the new fund, the proposal would make two ill-advised changes to current policy for filling and using reserves. It would:
These changes are not only fiscally harmful, they’re unnecessary. North Carolina already has a rainy day fund that’s well-stocked, with over $1 billion. (Under the new proposal, the laws defining the existing fund would be replaced with a different constitutional provision.)
Adding this new rainy day fund to North Carolina’s constitution would be a fiscally irresponsible step backward.