As state budget takes effect, watch for job losses, fiscal problems

Today marks the start of a new fiscal year and the implementation of the 2011-2013 state budget. For the next two years, this budget will weaken North Carolina’s ongoing economic recovery and undermine years of shared investment in vital public structures that strengthen and support our communities and the foundation of our shared economic opportunities.

This budget will have a daily impact on the lives of North Carolinians in communities across the state. The whole-budget analysis conducted by the Budget and Tax Center finds that the budget’s plan for North Carolina will result in the net loss of 30,000 public- and private-sector jobs throughout the state over the course of the next two years. In the longer term, lower funding for schools and colleges will reduce the competitiveness of the state’s workforce, declining investment in health care will reduce the well-being of North Carolinians, the significant drop in resources for infrastructure improvements and environmental protection will reduce the quality of life and desirability of North Carolina as a great place to do business and work.

Less discussed but equally important to our daily lives and communities, is this budget’s significant impact on the long-term fiscal health of the state. Policymaker’s refusal to take a responsible and balanced approach to the budget shortfall has resulted in a budget that is fundamentally out of balance, severely underfunding public structures and threatening their long-term viability. By using $220 million in accounting maneuvers as well as $707 million in one-time money to balance the budget on paper, policymakers have pushed serious state fiscal challenges down the road rather than addressing them promptly and honestly. By cutting taxes for businesses and individuals at the top without investing in the public structures that support struggling low-income and middle-class families, whose demand for goods and services is the engine driving both business expansion and economic growth, the budget is bound to damage North Carolina’s slow and uncertain economic recovery.

As this new budget takes effect, it will be more important than ever to monitor the economic, social, and financial health of the state and continue to emphasize that the real solution to the state’s challenges must include adequate revenue. Until an adequate, modern revenue system is in place, North Carolina will continue to come up short of what’s needed to support our public structures, and the change of each fiscal year will cause ever-greater uncertainty.

 

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