Raleigh, N.C. – Substantial payroll cuts for state workers in the upcoming budget are likely unavoidable, according to the latest budget analysis by the Civitas Institute.
The Numbers Don’t Add Up
An examination of current revenue forecasts combined with state employee payroll data suggests state employee payroll is an inevitable target for cuts. Consider the following:
“State employee payroll obligations are the largest single state expenditure,” observes policy analyst Brian Balfour. “With the latest revenue estimates pegging the state deficit at a massive $4.6 billion for the coming year, the harsh economic reality is that current employee payroll levels appear unsustainable.”
“The 0.5 percent cut in state employee salary recently ordered by Gov. Perdue is likely just the beginning. Extended mandatory furloughs, across the board pay cuts or substantial layoffs are likely on the horizon,” added Balfour.
Voters Will Reject Tax Increases
State budget makers have spent themselves into a difficult spot. State employees are a politically powerful group, but implementing tax hikes to help maintain current payroll levels will be widely unpopular at this time.
“The public is in no mood to have their taxes raised right now. Elected officials who support tax hikes will put their political future in jeopardy.” said Balfour.
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