Closing The Budget Gap
The Civitas Institute has identified roughly $1.1 billion in resources to help close the current State Budget shortfall. These recommendations serve as a counter – and as an addition – to the recently unveiled “Budget Management Plan” from the Office of State Budget and Management (OSBM).
Due to overzealous spending commitments and unrealistic revenue projections, North Carolina is facing a “budget crisis.” In short, the state budget spends significantly more money than is available.
Recent projections estimate the current year gap could grow as large as $1.6 billion. Fortunately, Governor Easley has had the foresight to preemptively take action rather than let the next Governor (Bev Purdue) inherit a potentially unmanageable budget hole.
The OSBM plan includes $1.2 billion in total savings and stopgap funds, an amount equal to the shortfall amount deemed “most likely” by prognosticators. The plan includes:
This is a good first step, but very well may prove to be insufficient to cover the massive budget shortfall. General Assembly economists predict the budget gap could end up as high as $1.6 billion based on the current revenue information. And if revenue continues to drop, even high-end projections could be understated. Moreover, shortfall predictions do not take into account an estimated $300 million required to fully fund the state health plan.
This Civitas Institute series will offer up more than $1 billion in specific funds, spending cuts and other measures designed to better brace the state government for a worst-case scenario budget hole. Some of these recommendations could serve as guidance for agencies searching for non-essential or wasteful spending to cut, and others still could be implemented should the OSBM plan prove to be inadequate to fill the budget gap.
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