Better Be Preparing for the Budget Storm
The one thing everyone agreed on during this year's budget debate is that North Carolina's financial problems will be a lot worse the next time lawmakers put a budget together.
The $1.3 billion temporary tax increase passed in 2009 will expire next June. The $1.4 billion in federal money used to balance this year's budget will be gone, or at best dramatically reduced.
More students will be showing up at universities and community colleges. Medicaid enrollment is almost certain to increase, and the cost of health care continues to rise. Add it all up, and it is a shortfall that the N.C. Budget and Tax Center says could come close to $4 billion.
Filling that hole would be an almost impossible challenge in a normal year, but addressing it after cutting $3 billion in General Fund spending in the last biennium boggles the mind.
More devastating cuts and less new revenue are on the way, no matter how much lawmakers talk about cutting waste and inefficiency in government. The hole is simply too massive.
The easy cuts have been made, and so have many that were not easy and in a lot of cases were inadvisable because of the damage they have inflicted on the fundamental institutions of the state, from the safety net to education at every level.
Most of the talk to date about the $4 billion problem on the not too distant horizon has been cast in political terms, used as a talking point by Republicans to portray Democrats as fiscally irresponsible, though Republicans didn't rush forward with any brilliant ideas about where to find a billion dollars or two to set aside without laying off thousands of teachers or closing hospitals.
That's the way politics works, and this is an especially charged political year. But we need more than soundbites to get ready for what's shaping up as the worst state budget crisis in 75 years. We need political leaders in both parties to start working on solutions now, not two months before the next fiscal year begins.
The most obvious place to start would be an overhaul of the state's antiquated tax system, an effort that has stalled time and time again in the face of heated opposition from well-heeled special interests and demagoguery from groups ready to twist any mention of taxes into crass government-bashing to serve their ideological agenda.
And tax reform is not the only place we need in-depth discussions now to get ready for next year. The state's criminal justice system continues to lock up nonviolent offenders that could be better served for less money in alternative settings, yet alternative programs suffered their own rounds of budget cuts in the last two years.
There's plenty more that lawmakers should consider to get ready for next year's crisis, from an honest look at business incentives to the program that provides tuition grants for North Carolina students at private colleges regardless of the student's family income level.
But they need to get started soon, not wait until the middle of next year's session.
Chris Fitzsimon is executive director of N.C. Policy Watch. Contact him at email@example.com.
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