Just in from the Director of the N.C. Budget and Tax Center, Alexandra Sirota:
“Relying on one-time funds and failing to really address revenue will hinder North Carolina’s prospects for growth
The House budget proposal, while acknowledging the need for state reinvestment in a few key public structures supporting North Carolina’s future, continues to fall short of meeting the needs of our communities in this economic recovery.
Moreover, legislative leaders have chosen to rely on $815 million in one-time money to meet the state’s recurring needs in education, health, safety, and infrastructure. While this budget may appear to address North Carolina’s most immediate fiscal challenges, it is at best a temporary fix, one that is neither sustainable nor adequate in its provision of the certainty and stability necessary to North Carolina’s economic recovery.
As we have said before, the impacts of a cuts-only approach are clear in communities across the state: fewer teachers in the classroom, less access to health care, higher costs to accessing the courts, and reduced protections for the health and well-being of our environment and communities.
Let it be clear that in this proposal, House budget writers have only temporarily and partially restored some of the deep cuts made to these investments in last year’s budget. Under this budget, there will still be fewer dollars for need-based grants for university students, fewer slots for children in NC Pre-K, a continued shortfall in Medicaid, fewer dollars to provide public transit in our urban communities, and further reductions to environmental protections and infrastructure next year. The approach taken by the House falls far short of what is needed to meet the state’s recurring obligations, let alone to restore the level of state investment needed to provide all of North Carolina’s children with a quality education and keep our communities healthy and safe.
House budget writers chose not raise revenue to address these fundamental needs. Instead, they have crafted a budget that is dependent on $815 million in one-time money – an amount even greater than what would be raised by increasing the state sales tax by 0.75 cents, as Governor Perdue proposed.
Unlike raising revenue, this approach to restoring much-needed resources to North Carolina’s classrooms and pre-kindergarten programs still fails to meet existing demand for educational services. Moreover, it fails to provide any security to educators across the state who will face yet another half-billion dollar budget gap once again in FY2013-14. Even with the addition of one-time money, the House budget would continue spending $2.5 billion (11%) less than pre-recession levels and $613 million (3%) less than the Governor’s revenue-inclusive budget proposal.
While the House budget partially addresses the upcoming Medicaid shortfall with $130 million in recurring funding, it does not commit enough resources to address the entire $243 million projected shortfall. Moreover, the projected savings expected from Community Care of North Carolina, the state’s managed care program, on top of existing projected savings could result in further reductions impacting the health and well-being of our state’s most vulnerable residents.
The House budget conforms with the Governor’s proposal and caps the gas tax, severely limiting the state’s ability to ensure the safety of our roads and bridges and the transportation system necessary for the 21st century economy. This is particularly troubling because the gas tax cap is paid for in part by cuts in aid to municipalities as well as funding for public transit – an area of growing importance in North Carolina’s urban communities, where many working North Carolinians rely on public transit as their only means to get to work.
North Carolina must rebuild and reinvest after this historic economic downturn. Recommitting to support North Carolina’s growth and opportunity requires a balanced and sustainable approach, one that responsibly looks at revenue as a tool to improve the long-term fiscal condition of the state. The House budget proposes a set of piecemeal corrections to a fundamentally flawed biennial budget. Anything less than a long-term, balanced approach will fail to address the fundamental needs of North Carolina today and in the future.”