What the CR? Explaining a continuing resolution

ContinuingResolutionRALEIGH — There is lots of talk in Raleigh these days about a continuing resolution. So just what is a CR?

Jones & Blount explains.

What is a continuing resolution?

A continuing resolution, or CR, is a law that continues to fund the government for a short period of time until a full budget is passed.

Why do we need a CR?

The state fiscal year runs July 1-June 30 every year, and state budgets authorize funding for government operations until June 30 of odd-numbered years (see below). So if budget bill is not passed by the end of June 30 this year, the state treasurer will not be able to lawfully expend funds from the state treasury. This would lead to “government shut-down,” which would affect everyone from the Highway Patrol to whoever feeds the lions at the N.C. Zoo.

The state House and Senate have passed very different budgets, and the chance of them coming to an agreement on all budget items by Tuesday night is supermodel thin.

Budget_Fr_TaxCreditsThe budget bill didn’t pass until August last year. Did we have a CR then?

No, because North Carolina operates on a biennial budget. Every “long session” (the sessions that seat a new General Assembly and begin in January of odd-numbered years), a two-year budget is passed by the legislature. In “short session” years, the even-numbered years, the budget can be adjusted – and usually is. But if nothing passes, the government will continue to be funded until June 30 of the next odd-numbered year because the previous budget is still in force.

So no CR was needed between July 1, 2014 and August 7, 2014, since the budget approved in 2013 was still in effect. However, there have been years where a CR was passed during the short session (see below).

Is there a special process to pass a continuing resolution?

Not really. It must pass both chambers in an identical form or go to a conference committee, just like any other bill. And it must be signed by the governor. Usually an existing bill is taken and the language replaced with language that continues government funding. For instance, the 2013 CR, House Bill 336, was originally a bill to allow the N.C. School of the Arts to charge fees.

Because it is absolutely necessary and can be done without controversy, it takes less time than a full budget bill. However, Thursday morning there seemed to be an agreement that broke down by the afternoon. It is unclear what exactly happened, and no one is talking.

So a CR simply says “keep things going as they were until we say something different”?

It can, but it doesn’t have to. For instance, the 2013 CR did not continue existing finding levels for state agencies and the courts, it funded them at 95 percent of the levels agreed to in the 2012 budget. The bill also enacted budget reductions that were identical in the House and Senate budget bills. It also froze state employee salaries and did a few other things that were not controversial (to Republican majorities) and were deemed time sensitive.

How long does a CR last?

It can be as short or long as the parties can agree upon. For instance, the 2013 CR, passed on June 26, 2014, was made effective from July 1 to July 31 of that year. The full budget passed the chambers July 24 and was signed by Gov. Pat McCrory July 26, 2014. That was followed by a technical corrections and modifications bill that became law on July 29, 2014.

Multiple sources tell Jones+Blount that the draft CR for this session was slated to end in mid-September. With that deal falling apart, it’s anyone’s guess as to what expiration date we’ll see on a CR.

How often is a CR necessary?

According to the ten-year budget history outlined by the General Assembly’s Fiscal Research team, CRs have been needed six times over the period 2005-2014. This year’s would make that seven.

In some years, multiple CRs are needed if negotiations continue too close to the expiration date of the CR in effect at the time. Twice since 2005 three separate CRs were needed, in 2005 and in 2009.

Republicans have been a little better than Democrats at passing budgets on time. In the last four years of Democratic control of the legislature, five CRs were passed and only one year did not need one. In the first four years of GOP control only one CR has been needed, although we seem destined for one this year as well.

Year Continuing Resolution Needed? CRs passed
2005 YES 3
2006 YES 1
2007 YES 1
2008 YES 1
2009 YES 3
2010 NO
2011 NO
2012 NO
2013 YES 1
2014 NO
2015 ??? ???
Source: General Assembly Fiscal Research Division