Governor McCrory’s budget proposal, while representing a small step toward overall reinvestment, fails to fully support crucial public investments and North Carolina’s most vulnerable residents, according to a new report  from the Budget & Tax Center. The Center also released a companion factsheet  that highlights the report’s analysis of five important issues that remain part of the untold story on the proposal. The five points are summarized below.
- In historical context, his proposal reflects a diminished baseline budget when compared to pre-recession levels of spending and would make FY2013-14 the year that North Carolina spends the lowest in state General Fund dollars as a share of the economy in 42 years.
- While representing a small step toward overall reinvestment, his proposal falls far short of what is needed to maintain existing levels of public services in 5 of the 6 major budget areas.
- The Department of Commerce—whose core mission is to encourage economic development—would be converted into a public-private partnership under his proposal. This sweeping policy change has been proven ineffective in other states.
- A major uncertainty is whether the reserves in his proposal would be sufficient to cope with the first and potentially second rounds of sequestration cuts as well as the federal budget passed by the US House of Representatives—known as the “Ryan Plan.”
- The governor’s proposal significantly underinvests in expanding economic opportunities for all residents. For instance, his proposal shifts away from economic development investments targeted at low-income, distressed populations and communities and toward encouraging general economic growth through industrial recruitment. And, there is no additional investment in need-based financial aid for UNC system students.
The Center’s analysis shows that even as the economy recovers and revenue collections rebound slightly, the governor’s proposal ignores the reality of growing community needs and continues to underinvest in public structures that are critical to the state’s fiscal health.