Fitzsimon File

Two new reports about the state budget provide a closer look at how badly the national economic slowdown has affected state revenues and have given House Minority Leader Paul Stam another chance to mislead the public about it.

The State Controller’s year-end General Fund report shows the state spent $19.6 billion in the fiscal year that ended June 30, $1.7 billion less than the $21.3 billion budget approved by lawmakers last year.

State revenues for the current fiscal year that began July 1 are forecast to be $17.6 billion, roughly $4.7 billion less than the amount needed to keep state services at the same levels authorized by the General Assembly in 2008.

That’s called the continuation budget in wonk speak, because it takes into account the increased enrollment in schools, the increased costs of health care, population growth and other inflationary increases.

The $4.7 billion difference between expected revenues and the continuation budget was the hole lawmakers had to fill this summer.

A new, detailed budget summary from the N.C. Budget and Tax Center shows that lawmakers filled most of the hole with net budget cuts of $1.7 billion, $1.4 billion in federal stimulus money, and $1 billion in tax increases.

The budget cuts are still rippling through public schools, mental hospitals, and local communities. People with disabilities are losing important services, many at-risk kids are back on the street after mentoring programs were ended, and public schools have fired teachers, administrators and support personnel.

The revenue package made the cuts smaller than they would have been, but the cuts are still affecting people’s lives every day.

Stam and his Republican colleagues wanted to forego any new taxes and slash another billion from schools and hospitals and the courts. Stam claims that the controller’s report proves that the shortfall was only $300 million, not $4.7 billion, based on what the state actually spent in the last fiscal year.

His rhetorical shell game seems plausible at first, but doesn’t stand up to a closer look.  Governor Beverly Perdue took emergency budget measures several times after taking office in January, transferring money from the state’s savings account, freezing trust funds, furloughing state employees for a day.

But none of that affected the built in increases in the budget. Even more students are enrolling in community colleges and the universities than the increase forecasters had predicted. Health care costs continue to rise, whether the state temporarily cut the budget last year or not. More people are eligible and entitled to Medicaid and other services, regardless of what the revenue picture looks like. 

Slashing a budget for a few months at the end of the year doesn’t mean the agency can survive all year long at that reduced funding level.

The best evidence of the flaw in Stam’s logic is the struggles of families across the state even with the budget that he thinks is bloated with an unnecessary tax increase.  Simply imagine the devastation to services of lawmakers had followed Stam’s advice.

Twice as many people would lose help keeping a family member with a mental illness out of an institution. More people leaving mental hospitals would show up at homeless shelters.  Thousands more teachers and teacher assistants would have been fired.

The budget shortfall this legislative session was $4.7 billion. That’s the real number. People are suffering because of the way lawmakers addressed it. Many more would have suffered if Stam’s budget shell game had prevailed.

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This entry was posted on Thursday, October 1st, 2009 at 7:09 pm and is filed under Fitzsimon File. You can follow any responses to this entry through the RSS 2.0 feed.