- NC Policy Watch - http://www.ncpolicywatch.com -

The crux of the state budget battle

State lawmakers will face a budget shortfall when they return for the 2009 legislative session that Elaine Mejia of the North Carolina Budget and Tax Center now says could reach $3 billion. Governor-elect Beverly Perdue will have to tackle it first. She will submit her spending plan to the General Assembly for the next two years early in the legislative session.

But the budget battle has already begun— behind the scenes as state agencies work on next year's budget and prepare memos for Perdue's staff—and in public in the talking head and editorial page world, where pundits and ideologues are speculating about possible ways to address the shortfall and think tanks on the left and right are weighing in.

It is not that complicated. There are two ways to balance the budget. Lawmakers can make up the shortfall entirely though budget cuts, regardless of the implications for state services and the people who need them, or use a combination of thoughtful cuts and tax increases that protects programs that serve the most vulnerable people in the state.

The anti-government crowd refuses to even discuss raising any taxes, which means at least a ten percent reduction in state spending if the shortfall is $2 billion, much less the three billion that Mejia says could happen. Education, human services, and criminal justice spending accounts for 90 percent of the state's $21 billion budget, which means the majority of budget cuts would come from those services. 

Governor Mike Easley has ordered state agencies to reduce spending for the current year by five percent, which has meant $2 million less for Meals on Wheels and other programs that serve the elderly and disabled.   If you want to understand what is at stake in the tax and budget cut battle, the Locke Foundation's "Freedom Budget" is a pretty good place to start.

That spending plan published in 2007 and promoted again in 2008 would abolish Smart Start, drastically increase college tuition, end the state's health insurance program for poor children and wreak all sorts of other havoc on state services and institutions.

Many Republicans in North Carolina and around the country know that doesn't make sense. Forty other states are also struggling with budget shortfalls, Governor Jim Gibbons of Nevada, a Republican, recently backed away from this his previous commitment not to raise any taxes to solve his state's budget problem.

There is a precedent for bipartisan sanity in North Carolina too. The 1991 General Assembly faced a $1.2 billion shortfall and solved it by cutting $600 million from the state budget and raising taxes by the same amount.  Republican Governor Jim Martin supported raising taxes that year because he understood the effect of people's lives of slashing state programs.

Governor-elect Perdue has shied away from talking about tax increases and legislative leaders haven't mentioned raising revenue either, but that's their only choice, unless they want to cut spending on schools and mental health and law enforcement.

Lawmakers ought to look hard for budget cuts. There is certainly waste in state government. They also ought to examine every nook and cranny for money, trust funds, dedicated funds and fees. The budget is simply a list of priorities and everything should be on the table. The state's saving account can help.

But all of that won't come close to filling a two of three billion dollar hole. The people of North Carolina may not want higher taxes, but they don't want their children's schools to suffer either, or the family down the street to lose help taking care of their disabled son.

That's what at stake, real programs that help real people. It is not a rhetorical or philosophical game. It is about people's lives and state leaders with courage need to explain that soon. The debate about taxes and the state's is already raging.