– A significant portion of North Carolina’s newly introduced budget is devoted to fighting inflation.

The budget sets aside $1 billion in a new state inflationary reserve to prepare for a possible recession and hundreds of millions of dollars to protect against projected cost overruns on state projects as labor and material costs increase.

Lawmakers see the spending increase as unusually high compared to previous years, but say it is necessary to prepare for economic headwinds.

Included are $250 million set aside from the State Capital and Infrastructure Fund for increased construction costs of capital projects and $135 million from the State Highway Fund to maintain existing transportation contracts. The extra money for transportation is the result of “escalating costs for materials and supplies in construction programs,” according to a committee report presented to lawmakers on Wednesday.

State Rep. Donny Lambeth, a Republican from Forsyth County, said he believed about $2 billion of the budget was spent on fighting inflation when factoring in other initiatives, including the disbursements for local governments and water and sewer projects. The $2 billion estimate represents 7.2% of the proposed $27.9 billion budget for the coming fiscal year

“If you go back and look at some of the previous budgets, you’ll actually see decreases in line items because costs were actually down,” Lambeth said. “And in this budget, it’s just the opposite. And not just a small amount of increases, a significant amount of increases. We should all be concerned about what is happening in the economy, because it impacts not only household incomes, but also state and local government revenues.

Prices for non-residential building inputs – such as lumber, concrete products, steel, plumbing fixtures and other materials – have risen 21.9% over the past year, analysis shows. from Associated Builders and Contractors with data from the US Bureau of Labor Statistics Producer Price Index. The analysis was published on June 14.

“Inflationary pressures show no signs of abating,” ABC chief economist Anirban Basu said in a statement. “For months, economists and others have expected inflation to peak and then decline. Instead, the Russian-Ukrainian war has disrupted markets, driving up energy prices. high levels of energy are now flowing throughout the economy, affecting manufacturing and distribution.”

North Carolina Democratic Gov. Roy Cooper did not weigh in on the budget proposal.

Senate Republican Leader Phil Berger said he and his colleagues had tried to pass budgets over the past decade that took into account population growth and the rising cost of goods and services.

“In previous years, we looked at a number between 3% and 4.5%,” Berger said of past inflation levels. “This year, that figure was over 7%. We have seen significant upward pressure on the state budget due to inflation. One of the easiest things to point out that illustrates the problem is the cost of fuel.

Indeed, several raw materials became increasingly expensive at the beginning of the year, although the prices of certain materials have fallen in recent months. From mid-August to mid-January, the price of wood almost tripled. Crude oil doubled from December to early March. Aluminum prices increased by 50% between early November and early March. Land prices are also on the rise across the state.

“We don’t know where the end is, so it’s extremely important that we put some money aside just to make sure,” Berger said.

Some feel left out of the budget as inflation exceeds proposed increases for teachers and state employees. The budget calls for a 3.5% wage increase for most state employees and an average 4.2% wage increase for educators, less than half the inflation rate of 8.6 % from May 2021 to May 2022.

“The irony is that the legislature wants to save because there is inflation and we could be in a recession,” said Adris Watkins, executive director of the North Carolina State Employees Association. . “But this budget does not allow employees to save for themselves [and] take care of themselves when times are bad.