Tom Campbell NC SPIN
May 12, 2014
When lawmakers return to Raleigh on Wednesday for the “short session” they will face their own high-stakes math text, one that could prove troublesome as they face budget numbers that don’t add up.
Last week the Office of State Budget and Management projected a $445 million shortfall of projected revenues for the year ending June 30. The deficit could be greater since we don’t know the final results from the April 15, personal income tax returns. What is clear is that tax reforms implemented last year didn’t generate the revenues lawmakers had anticipated. Additionally, because of the difficulty in getting accurate Medicaid costs from the NC Tracks information system the overrun for Medicaid might be more than the estimated $140 million.
If there is a silver lining it can be found in the $600 million lawmakers stashed away for rainy day and emergency funding. And earlier this year Governor McCrory ordered state agencies to reduce spending from authorized budget levels, but we have no idea how many dollars might revert to the General Fund as a result.
State budget math gets more complicated and difficult when you look ahead to the budget year that begins July 1. We must trust that when legislators approved last years’ biennial budget they made sufficient allowances for enrollment growth in education, Medicaid growth and other customary increases. Lawmakers obviously miscalculated revenues this year and their own calculations indicate they will fall again in the coming year, so it’s anyone’s guess whether next year’s revenue projections might need adjusting downward, putting further strain on the budget.
We do know legislative leaders promised teachers they would raise the minimum starting salary to $33,000, costing approximately $100 million more this coming year. Gov. Pat McCrory just announced he wants to raise teachers’ pay by two percent and add performance pay increases. Other state employees have gone years without a pay increase and one can only assume that a similar two percent increase will be given them. That two percent across-the-board increase in state employee pay will add $320 million in state budget expense.
Additionally, there will be pressure to reform Medicaid and privatize economic development, both likely to require expansion funding. There are infrastructure repairs desperately needed, IT improvements long overdue and who knows what other funding might be required as a result of actions taken in the short session. With hurricane season approaching and other emergencies always a possibility legislative leaders won’t want to drain their emergency cash reserves too low or use one-time money for recurring expenses.
There are many decisions to be made but going into this legislative session there easily could be an imbalance between state revenues and expenditures passed in last year’s state budget. Since our Constitution requires a balanced budget and there’s no indication new taxes will be passed in an election year lawmakers might be faced with further budget cuts.
It has often been said we can not remove prayer in public schools so long as schools have math tests, so it’s a good thing the U.S. Supreme Court just ruled that government agencies can start their meetings with prayer. Lawmakers are going to need all the help they can get working through this budget math. Let us hope they pass this high-stakes math test and adjourn quickly.
Campbell is the executive producer and moderator of NC SPIN, a weekly panel discussion on state issues that airs on WMYT “MY TV12” at 10 a.m. on Sundays and on WJZY “CW46” at 6:30 a.m. and 11:05 p.m. on Sundays. You can also visit www.ncspin.com and click on the “Watch NC SPIN Online Anytime” button for streaming. Each week’s show is posted on Friday.