by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
I hoped, when Gov. Cooper declared a public health emergency March 14, that he was also planning ways to reduce spending to offset some of the lost sales and income tax revenue. I kept hoping as scores of progressive groups called for higher taxes and the depletion of the state’s rainy-day fund to pay for new spending, heedless of the looming gap between revenues and existing commitments. I kept hoping as State Budget Director Charlie Perusse told the House Select Committee on COVID-19’s Working Group on Continuation of Government Operations “At this time, no [hiring or other] restrictions are being instituted.” I kept hoping as we at the John Locke Foundation joined with 27 other free-market think tanks to gain states flexibility for the billions of dollars they will receive through the Coronavirus Relief Fund. I kept hoping as the COVID-19 committee working groups made their recommendations. I kept hoping as the number of North Carolinians to successfully file unemployment claims passed 700,000, while thousands more could not get through the Division of Employment Securities’ website and phone system to file their own claims.
I kept hoping that Cooper would not force large and immediate budget cuts on state agencies or higher taxes on North Carolinians who were already struggling to work and earn money to pay their bills.
I gave up hope last Friday afternoon when Cooper unveiled his proposal to spend $1.4 billion from the CARES Act’s Coronavirus Relief Fund to get state government to the end of June. At least $418 million of the request is for expenses that are not allowed under the law or under Treasury Department guidance interpreting the law. “In the event CRF funds cannot be used for an item or part of an item,” the request states with emphasis in the original, “this package recommends using other federal funds to the maximum extent allowable, and then setting up a reserve within the General Fund for remaining expenses.”
Cooper has no plan to reduce government spending on anything. Our request for Congress to provide states flexibility to offset lost revenues at the state and local level and provide relief for taxpayers caught short on cash was based on a presumption that North Carolina would continue to budget prudently and responsibly with what it already has and with any federal assistance. The governor should provide better stewardship .