Gov. Beverly Perdue had spent much of her first month in office talking about how tough the state budget is going to be, but when the governor announced her budget proposal, something miraculous happened: The $3.4 billion budget hole had been cured by budget cuts of less than $400 million. Perdue's education background obviously goes all the way back to the New Math of the 1970s.
The state's current budget of $21.4 billion would shrink all the way down to $21 billion under Perdue's proposal. What pain! What austerity! The new budget spends more than the state budgeted just two years ago.
Perdue achieves this mathematical miracle in part by using federal stimulus money to pay for continuing state expenses. By doing so, she is laying a trap for next year's budget. The federal stimulus package is (presumably) a one-time appropriation. Using the stimulus for ongoing expenses, including schools, merely postpones the reckoning.
Despite the magnitude of the budget deficit, Perdue could not present a budget without an increase in education funding. She wants the state to spend more money on schools, increasing per-pupil state spending by $135, even though the money simply isn't there. Even though the governor is boosting education spending, local school boards are preparing for possible layoffs because they're not sure the numbers add up.
Perdue would raise taxes on cigarettes and alcohol to raise around $500 million. Hitting smokers and drinkers is more palatable than other forms of tax increases, but it's still a tax hike, which increases the state's taking of the public's income. Governors and legislative leaders have unabashedly touted the rapid annual increases in state spending over the past decade. In the four previous budget years, state spending increased 8.6 percent annually. After eagerly spending previous budget surpluses with new spending programs, North Carolina was facing an inevitable reckoning, but Perdue seems to be denying or postponing that reckoning.
North Carolina should have sufficient funds to educate its children, maintain its highways and enforce its laws without continual excessive increases in state spending, and it should be able to set spending priorities, eliminating, when necessary, ineffective and inefficient spending.
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1 comment:
Not being an economist, I can't really play fiscal arm-chair quarterback. I will leave that to others. And I am sure it's in the best interest of the state that has the Governor and her people trying to come up with the best (if not any) solution to the fiscal mess most of the country inherited. Although I don't think she is claiming a "cure".
Funny, for a state that seems to take pride in meddling in other peoples' sin, they sure do get riled up when you mention a sin tax. The tax on cigarettes is a good move. It's time NC really made an effort. Not the lipservice we have become accustomed to. How long do we want to be known as that place that grows a crop that kills people?
The tax would keep nearly 90,000 North Carolina kids (the same kids she is trying not to adversely impact in this budget) from becoming addicted smokers. I can't argue with that.
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