In his column on Monday, JLF head John Hood takes a different approach to analyzing the state budget:

As Democrats and Republicans debated North Carolina’s recently approved state budget, they devoted much of their attention to the income statement of state government. They argued about next year’s revenues and next year’s expenditures. What didn’t get nearly as much attention is how the budget affected state government’s balance sheet of assets and liabilities.

There’s much work to be done on the state’s balance sheet.

We may not have another Great Recession lurking around the corner, but the business cycle hasn’t been repealed. To reduce the risk of sudden budget shocks or tax increases during future economic downturns, state lawmakers should take precautions. The new budget bill is a start, nothing more. By the end of the 2014-15 fiscal year, it will have rebuilt state cash reserves (rainy-day fund plus other fund balances) to about $1 billion, or 5 percent of General Fund spending. Lawmakers should push that proportion up to least 8 percent as soon as possible.