Budget negotiations between the House and Senate typically lead to higher spending, as each side accepts all or part of an item the other wants. Another approach would be to accept only spending common to both budgets, a "reverse logrolling" that lets government expand only when a consensus exists to do so. For FY 2000-01, this approach would save nearly $200 million for future state employee benefit reforms and raise operating spending by only 3.8 percent.
The North Carolina House is debating its version of a 2001-03 state budget this week. Although imposing only a $6 million tax hike in contrast to the $233 million tax increase included in the Senate budget House leaders still managed to increase General Fund spending by 4.4 percent in the coming fiscal year, relying on increased collections of delinquent taxes, interagency transfers, and debt-service savings to balance the books. Now the budget battle really begins.
State employees can't be blamed for seeking better compensation. All workers do. But to fulfill their responsibility to taxpayers, lawmakers should rely on solid data when evaluating pay requests. The vacancy rate in state government is highly exaggerated, for example, while the number of vacant jobs actually being advertised is shrinking rather than growing. Furthermore, national data suggest that N.C. state workers are competitively paid on average and cannot demonstrate the higher productivity that might justify higher pay levels.
Putting the House's FY 2000-01 budget into proper perspective requires careful consideration of how spending should be measured and how it has changed over time. Furthermore, proposed changes in how the payroll and teacher bonuses are budgeted are more than just accounting gimmicks. They represent a net reduction in state savings. The bottom line for taxpayers: if current trends continue, state leaders will be setting the stage for tax increases in the near future.
A recent report showing that many state university buildings are in very poor repair and warning of explosive UNC enrollment growth has led to a proposal that would allow the state and the university system itself to sell bonds without voter approval. There are strong reasons to doubt that this is the best way to solve the problem of building maintenance, and to consider redirecting existing funds and allowing more students to choose private colleges to reduce the pressure.
Some state lawmakers are discussing a plan to give local governments the authority to raise their sales taxes by up to 1 penny while simultaneously eliminating state tax reimbursements. While it is true that many counties are raising property taxes this year, most have not been starved for revenue during the 1990s. More importantly, the state can give the same assistance to localities without raising taxes by increasing flexibility and assuming more responsibility for Medicaid.
The FY 1999-2000 budget approved by the House Budget Committee would increase operating spending by 5.6 percent, despite talk earlier in the session of a state fiscal crisis. Although the budget does include some good ideas — such as raising tuitions and covering rising costs in the state employee health plan with existing retirement reserves rather than increased taxpayer support — it also brings back a number of old, bad ideas such as $12 million in discretionary slush funds in Human Resources and Cultural Resources eliminated just last year.
posted June 1, 2001 by Michael Lowrey, Don Carrington
North Carolina's Unemployment Insurance trust funds continue to be bloated due to overcharging workers and employers. A series of tax cuts during the 1990s has failed to bring the system under control. A new bill would cut the UI tax by 20 percent but impose a new tax of the same amount to fund unneeded administrative costs and community college items that, in some cases, constitute corporate welfare. A better answer would be to cut UI taxes and draw down the state's separate $200 million reserve for any needed college improvements.
The N.C. Senate is debating its budget proposal for FY 2001-03. For all the furor about "severe cuts" in the plan, it would increase total General Fund spending next year at nearly the same rate (4.7%) as Gov. Mike Easley's budget (5.2%), including a 15% increase in health and human services spending vs. Easley's 16.2% hike. Both offer a stark contrast to the Changing Course budget prepared by Locke analysts, which would essentially hold spending constant while cutting taxes.
The American Lung Association's recent report on ozone fueled a media frenzy in North Carolina, with repeated suggestions that the air in the Triangle and Charlotte was "more polluted than New York City's." The truth is far different. Due to a misleading grading system and a faulty and selective reading of data, the ALA report provides little useful information to North Carolinians about the quality of the air they breathe, and falsely suggests that pollution is increasing.
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