Much as we hate to be the bearer of bad news here at the NC Budget & Tax Center, we feel obligated to share with you, our progressive allies, our latest calculations about the fiscal situation facing our state budget next year. Think of this more as a call to action for all of us to work together for comprehensive tax reform and to make our collective budget priorities clearer to the rest of the world.
So here is what is facing state budget-writers next year. They will need to have enough revenue to cover the following items before they can even consider pay raises or other new investments.
1) Recurring items in current budget paid for with non-recurring revenues = $156 million
2) Non-recurring items in current budget historically funded as recurring = $220 million
3) Implementation of two tax reductions (EITC and gift tax cut) = $39 million
4) First year of payments on the new non-voter approved debt = $52 million
5) Growth in continuation budget needed to maintain current services = $500 million
Grand Total = $967 million
Tax revenues would have to increase by 4.75% in order to have this much available revenue which is greater than the current rate of growth. Also, please note that our numbers do not include any pay raise for state employees and teachers so add an additional $125 million to the hole for each 1% pay raise you want to assume.
Yes these numbers look dire, but it didn't seem right to calculate them and then not share them with the broader community. We must work together to address what really ails the state budget if we as progressives want to be able to progress rather than simply play defense when it comes to state budget and tax policy.