Big cuts needed to close state budget gap

Legislators can't seem to find a way to close the $4 billion hole in the state budget, and recipients of state services and grants are screaming in protest over cuts that are painful but fail to close the budget gap. In the past few days, I've received e-mails at home from the state Arc, which provides services for the developmentally disabled, and from the Wilson County Mental Health Association. The MHA e-mail was the length of a short novel and included an attachment with the state budget cuts. Providers of services for the mentally ill and developmentally disabled are facing stark cuts in state spending. They offer a list of horror stories that might result: children without CAP workers to help them cope with their disabilities, group homes shuttered, stable mentally ill patients being set loose and becoming homeless, loss of services causing mentally ill and developmentally disabled clients to regress, lack of local services forcing patients into costly institutions. If the MHA protest is correct, social service agencies are being asked to absorb the bulk of the state's budget cuts, a far larger proportion than their share of the state's overall budget.

At around $4 billion, the state's budget deficit is about 20 percent of the total budget, but I was told this week that rumors circulating in Raleigh say the deficit could surge to $6 billion. There seems to be no end in sight. If the deficit grows to $6 billion, about 30 percent, the pain will be unbearable.

It should come as no surprise that tax increases are being proposed to close at least some of the budget gap. You might even wonder whether the severity of the budget cuts in human services were intended to pave the way for tax hikes. It wouldn't be the first time: In Washington, it's called the Washington Monument syndrome. If cuts are suggested to the federal budget, someone says, well, we'll just have to shut down the Washington Monument. Oh no! We can't do that! We'll raise taxes instead.

A $4 billion spending cut would reduce the state's budget to its size four years ago. And while some cuts would be painful, they should not be unbearable, if they are spread evenly throughout the budget (no sacred cows, not even prisons or public schools). North Carolina's spending has grown out of control over the past couple of decades. A pause would do the state good.

Some cuts would be relatively painless. The N&O today highlights a costly state policy that requires the state to pay for expensive drugs when cheaper generics are available. When you're trying to close a $4 billion (or $6 billion) gap, it takes a lot of cuts like that.

If more revenue is necessary to avoid unconscionable cuts, legislators should look toward expanding the sales tax to such untaxed services as lawn care, accounting, legal fees, advertising, etc. and cutting the sales tax rate. "Modernizing" the tax system has been bandied about for years without any action. Maybe now is the time. And beware "temporary" tax increases. As we've seen before, these "temporary" taxes have nine lives.