N.C. Budget and Tax Center Statement on the Legislative Budget
The final legislative budget, voted on by the House late last night and approved by the Senate, will go to Governor Perdue’s desk for consideration. The failure of the new leadership to address the state’s fiscal challenges with a balanced approach that includes revenue will impede North Carolina’s fragile recovery, placing additional pressure on local governments and communities.
The Great Recession caused revenues to plummet and the budget gap to widen. Now more than three years later, North Carolina’s policymakers in the General Assembly have ignored the advice of the nation’s leading economists—cutting spending and introducing more loopholes into the state tax code, neither of which will create jobs.
According to forthcoming analysis by the Budget and Tax Center, the cuts to Medicaid alone would result in the loss of more than 19,000 jobs in the immediate term. Full analysis of the impact of the budget cuts will show that the cuts to investment in schools, public health and courts will reduce employment significantly more than even the overstated job-creation claims of tax-cut proponents. It will also generate additional hardship for North Carolina’s families who are struggling in a difficult economy with fewer supports and resources in their communities.
The long-term impacts on the labor market, while more difficult to quantify, are quite clear. Cutting investments in early childhood education, reducing funds for classrooms and instructional support in K-12 and making post-secondary education more costly will only serve to diminish the quality and competitiveness of the state’s workforce. Reductions in the skill level of our state’s workforce, underfunding of environmental protection, and the diminished efficiency of our court system will have a negative impact on the business climate of our state at a time when the need for jobs and private sector growth is urgent.
Strong public structures are needed to support a strong economy. This Legislative Budget will weaken public structures and with them, the prospects for North Carolina’s economic recovery. The Governor should make clear that there are better ways to ensure we achieve a more inclusive and competitive economy for North Carolina.