By Katherine Zehnder
Carolina Journal
Over the past several months, the Carolina Journal has examined “reserve funds” in depth, explaining what they are, how they work, and where the money is going. Given the destruction caused by Hurricane Helene, how can these “reserve funds” be used to fund relief efforts?
Two different reserve funds—the “State Emergency and Disaster Relief Fund” and the “Savings Reserve” —can be tapped to fund relief efforts for Helene. According to the latest Cash Watch report, the Disaster Relief Fund currently sits at $733 million, and the savings reserve sits at $4.75 billion.
In 2013, the Disaster Relief fund had only $13.2 million, while the Savings Reserve had only $651 million. Historic tax cuts were being passed, and critics of the tax reforms warned of massive budget shortfalls and a starving state government.
Instead of shortfalls, however, the years following the tax reforms saw sequential budget surpluses, from which lawmakers began building up savings reserves and creating new reserve funding vehicles, as well.
“The state is in a much better fiscal position to provide relief than it was just six years ago during Hurricane Florence,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “Since September of 2018, when Florence made landfall, the Savings Reserve and Disaster Relief Reserve balances have increased by $2.74 billion and $628 million, respectively.”
The 2023 budget appropriated $75 million for the Disaster Relief Fund, but no money was appropriated for the Saving Reserve for FY24.
For FY25, another $75 million was appropriated to the Disaster Relief Fund, and $125 million was appropriated to the Savings Reserve.
The House is expected to override Gov. Roy Cooper’s veto of HB 10 next week, but these numbers will remain the same regardless, as there was no change to these numbers in the budget adjustments.
The $75 million and $125 million appropriated to each reserve for FY25 have yet to be released. However, once these funds are released, they are legally required to be deposited into the reserves by June 30, 2025, if they are not immediately spent.
North Carolina’s healthy fiscal management contrasts with the Federal Emergency Management Agency (FEMA), who recently announced that they may not have the reserves to fund Helene’s relief efforts, making the “Rainy Day” funds for relief efforts could a saving grace. FEMA predicts that the agency will not have enough funds to make it through hurricane season, which ends Nov. 30.
FEMA reported that they rescued over 2100 people on Thursday.
“Thankfully, we have a disaster reserve that allows for an immediate response to the current crisis, ensuring that recovery efforts are already underway. However, this will not be enough,” said Sen. Michael Lee, R-New Hanover.
The General Assembly plans to reconvene this week to pass an initial disaster relief funding package.
In addition to the money already in the reserve funds, individuals can make donations to the Disaster Relief Fund of the State of North Carolina at online. The John Locke Foundation has also compiled a list of charities that are working on the front lines, providing relief and aid in the wake of a storm that has devastated Western North Carolina.
