News » North Carolina

Watching the budget: Magical thinking led North Carolina to a $445 million shortfall



Just when we were wondering what surprise the Republicans were going to hit us with, political observers and number crunchers discovered the state budget, tricked out by Gov. Pat McCrory and Budget Director Art Pope, has come up short—$445 million short—for the fiscal year that ends June 30. That could mean more cuts to state programs that are already lean.

Add an $140 million Medicaid funding gap and a projected $191 million revenue shortage next year, and North Carolina, under GOP financial stewardship, has a major money problem.

How did this happen? Oops! Sorry! Math is hard! (That's understandable. Maybe your fly-by-night charter school math teacher wasn't accredited.)

Last year the GOP assured us that after slashing funding for education, social services and environmental protection; and reducing the corporate tax and the personal income tax rate, somehow the budget would balance. As it turns out, it was balanced like Jenga.

What the financial soothsayers in the Legislature either did not foresee or chose to ignore is that overall income tax collections would fall. And they would fall not just because the rate is lower, but because people have lost their jobs—it's hard to pay income tax when you have no income—and the work they are getting pays poorly. Lower wages equal reduced state income tax revenue.

Meanwhile, the corporate tax cuts that ostensibly would spur reinvestment in the North Carolina economy have not helped the public sector. It's not helping the teachers, who were counting on a small but important pay raise next year. It's not helping close the gap in Medicaid. It's not helping the university employees being laid off because of shortfalls. And those university budget shortfalls are not being covered by student enrollments because those numbers are down, too, thanks to rising tuition.

The next legislative session begins Wednesday, May 14. In addition to a slew of horrendous bills that could come before the Legislature—we discuss many over the next few pages—this pesky budget crisis must be addressed. Keep in mind that forecasters are projecting a $191 million reduction in revenues next fiscal year.

So when Gov. McCrory advises we should prepare for further belt-tightening, we have to wonder whose waistline will be cinched. His? Oh right, he is selling the state helicopter. He hopes it will fetch $3 million. Where will that money go?

This article appeared in print with the headline "Math is hard"

Comments (8)

Showing 1-8 of 8

Add a comment

Add a comment