Weekly Briefing

The speech Governor Perdue should give as soon as possible

“Good evening my fellow North Carolinians. Thank you for allowing me to take few minutes of your time tonight to speak with you about some matters of the utmost importance to the future of our great state.

As you are no doubt aware, times right now are tough – very tough. The world economic recession remains in full swing and while we are beginning to see some hints of light at the end of the tunnel, there is no hiding the fact that we have a long way to go before things improve significantly.

Here in North Carolina, global and national events have conspired to deal us an especially tough hand. Right now, more than one in ten North Carolina workers – nearly half a million of our friends and neighbors – are out of a job.

The human consequences of this kind of economic crisis are enormous and extremely serious. In just the last few months, more than 230,000 North Carolinians (roughly as many as live in the city of Winston-Salem) have been forced to seek Food Stamp assistance – many for the first time in their lives.

So what should we do? How should we respond to such a profound and historic challenge?  Should we simply hunker down and wait for the world economy to rebound at some indeterminate point? Or should we stand up, dust ourselves off and get to work attacking the problem?  

Well, as far as I’m concerned, there’s really only one answer: action. The only real question is: What kind? How shall we come together to attack and solve this problem?

If we take a minute to review the hard numbers, it’s abundantly clear that Job One is to solve the budget crisis that confronts our state. Right now, the economic downturn has placed North Carolina government in dire fiscal straits.

According to the most reliable figures at our disposal, the budget for the upcoming state fiscal year, which starts on July 1, is around $4.8 billion – or more than 20% – short. In other words, while our fiscal experts had expected tax revenues to generate something on the order of $22 billion, the real number is now likely to be closer to $17 billion.

This is an enormous problem that will necessitate large and painful cuts to a host of important services across the board – from public schools to roads to public safety. All of us will have to make do with somewhat less of what we have come to expect our government to deliver.

Having said this, there is simply no way on Earth for us to make up such a huge budget gap with cuts alone. To do so would waste decades of progress and make the recession much worse.

Student class sizes would grow significantly and thousands of teachers would have to be laid off. Hundreds of thousands of our most vulnerable citizens – fixed-income seniors, disabled children and the mentally ill – would be left to fend for themselves or to already overstretched family members. Prisons and other important segments of our public safety and corrections systems would be pushed to the breaking point.

Perhaps even worse, to do so would only make the recession more severe by robbing our economy of vital jobs and activity that are necessary to keep things moving forward. Such cuts would also jeopardize our ability to draw down important federal assistance.

These are backward steps that simply cannot be allowed to occur and that will not occur as long as I am Governor. I will not allow us to retreat into such a self-destructive shell. We must keep moving forward.

Therefore, I hereby call on the General Assembly to send me a balanced budget for the upcoming fiscal year that includes a plan to fill the $4.8 billion budget hole with three, roughly equal components.

The first third will be made up of across-the-board spending cuts. While I leave it to the experts in the various legislative budget committees to spell out all of the details, it is my conviction that we can enact such cuts with a minimum of service disruption if we focus on modest and temporary, across-the-board pay cuts for current employees rather than broad reductions in services. Ideally, larger pay cuts of 5-6% would be targeted at employees making more than $75,000 per year. State employees making less would receive a pay cut of 3-4%.   

The second third will be made up with federal assistance from the American Recovery and Reinvestment Act passed by Congress and the President earlier this year. This is something we’ve planned for and know how to do. We should do everything within our power to maximize our ability to draw down these funds.

The final third of the hole should be filled with a package of modest and progressive tax hikes. These increases should include, at a minimum, the closure of several outdated business tax loopholes, a broadening of the state sales tax base as recently proposed by the state Senate, and the addition of two slightly higher income tax brackets for the wealthiest North Carolinians. To assure that these changes don’t unduly burden households of modest income, the package should also include an increase in the state earned income tax credit.

If done right, this plan will modernize our state revenue system so that, in the future, it will more equitably distribute the responsibility for funding government and grow more predictably as our economy recovers.

If lawmakers send me such a budget by June 30, I will be delighted to sign it. If, however, they send me a proposal that varies greatly from what I have just outlined, I will not hesitate to veto it. It’s that simple. This is a model that has been followed in several other states by leaders from both major parties. It’s a plan that calls upon all North Carolinians to sacrifice and it’s a balanced plan that allows us to move ahead without, as I like to say, eating our seed corn.

In closing, let us all remind ourselves of what it is that made North Carolina the best state in the union – namely, our common commitment to a better future for everyone. When we stick together, we can’t be beat. In the coming months, let’s remember this critical fact and work to turn the present crisis into a mere speed bump on our collective journey into a brighter and better future.

Thank you and good night.” 

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This entry was posted on Tuesday, June 2nd, 2009 at 9:29 am and is filed under Weekly Briefing. You can follow any responses to this entry through the RSS 2.0 feed.