NC Budget and Tax Center

North Carolina policymakers still propose making budget decisions using disastrously flawed formula

The Governor’s Office of State Budget & Management has told agencies to limit their requests for increases in budget items to just 2 percent above previous levels.

This reflects roughly the flawed formula of population plus inflation that has proven disastrous in places like Colorado. It results in artificially lower budget requests that don’t actually reflect the needs and opportunities that could strengthen N.C. families, communities and the economy.

The OSBM memo—in addition to requesting 2 percent budget reductions across all agencies—also limits requests for additional funding to 2 percent.

As has already been noted by NC Policy Watch, the Governor may not be willing to cut education by another 2 percent—a figure that could bring per pupil spending down to more than 10 percent below pre-recession levels when adjusted for inflation.  That in itself should raise concerns because even if the Governor and legislators try to make up those cuts in other budget areas like health care or environmental protection or community economic development, the cuts would still have an effect on our students. Research shows that where a child lives, how healthy they are and their environment is, matters to their educational success.

Such a limited view of what matters to North Carolina’s success and an unwillingness to pursue the best evidence of what works to build thriving communities is also fueling the 2 percent limit on proposed new investments. Such an arbitrary figure won’t allow North Carolina to make progress or pursue opportunities that set us apart and move us ahead as a state.  It will hold state investment below pre-recession levels despite seven years of an economic expansion. It will mean missed opportunities.

When you stop state agencies from requesting what is needed for communities and for North Carolina families, this is what will happen:.

  • More than 5,000 4-year olds will stay on the waiting list for pre-Kindergarten services;
  • Medicaid reimbursement rates will remain well below the national average;
  • North Carolina will fail to achieve peak levels of investment in the Housing Trust Fund even as Eastern NC and communities across the state face a housing crisis

These are just a few of the areas where North Carolina will see little to no progress for our communities under this arbitrary approach to the state budget. Another year of this approach makes it clear that our leaders aren’t thinking about our state’s future.

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