The 2009-10 budget marks a continuation of North Carolina’s dysfunctional “spend and tax” cycle: when times are good the state dramatically increases spending. When a recession hits, state leaders resort to tax increases – such as the $1.1 billion tax hike approved this year – to continue state spending.
- The 2009-10 budget will appropriate $20.7 billion (including $1.7 billion federal money) – up by a billion from the $19.65 billion actually spent in 2008-09.
- Even amid the recession, a budget of $20.7 billion will mark a continued, rapid escalation of state spending:
- Spending is up 30 percent in five years, and 45 percent in 10 years.
- Digging yet another budget hole continues a long-term trend of out-of-control government growth. Even after adjusting for inflation, per person spending in the 2009-10 budget will be:
- Up 12 percent over 15 years
- Up 25 percent over 20 years
- Up 82 percent over 30 years
Legislature Ignores Spending Reform
Reasonable observers would think that the second major “budget crisis” in the last nine years would serve as a warning for legislators to break the status quo mentality of “spend and tax” and instead enact some meaningful spending reform. Regrettably, no such action occurred this session.
- A clause calling for “zero-based budgeting” included in the Senate budget bill was cut from the final budget. A zero-based budgeting approach would simply call on state agencies to rank the importance of their activities in order to better prioritize state spending.
- Three different bills calling for a form of a “taxpayer bill of rights” never made it out of committee. Such bills seek to smooth the growth of state spending, aggressively setting aside surplus revenue during flush times to save for the next downturn or natural disaster (as well as returning a portion of surplus revenues to taxpayers).
- North Carolina taxpayers can expect state lawmakers to continue to raise taxes in future recessions in order to finance continued spending growth.
Spending Priorities: Are These Appropriate During a “Budget Crisis”?
- $10.3 million for aquariums
- $11.1 million for tourism, film and sport development
- $17.5 million in statewide program grants for local cultural activities
- $8.6 million for NC Arts Council
- $2.9 million for NC Symphony
- $13.9 million for Public TV
- $10 million to subsidize in-state tuition rate for out-of-state athletic scholarships
- $1.1 million for a botanical garden at UNC-Chapel Hill