Raleigh, N.C. – Crippling state debt and unsustainable monetary commitments are painting a bleak financial picture as the General Assembly returns to Raleigh this week according to a new study released today by the Civitas Institute.
State budget writers face an uphill battle as they deal with a $4.3 billion structural shortfall over the next 26 months. Civitas Institute Policy Analyst Brian Balfour cites several reasons for the financial crisis: $391 million below budgeted General Fund revenue for fiscal year 2009-10; $788 million less revenue available for the coming fiscal year than previously anticipated; and a $2.9 billion drop-off in revenue for fiscal year 2011-12 due to an end to federal stimulus funds and temporary state taxes.
“While lawmakers will blame the economy, make no mistake: the financial disaster that is North Carolina state government is completely of its own making. Long-term fiscal irresponsibility highlighted by out-of-control spending growth, stunning increases in debt spending and unsustainable financial commitments is to blame,” said Balfour.
The recent passage of federal health care reform will also directly affect North Carolina’s budget. Taxpayers will be saddled with an additional annual Medicaid burden starting at $245 million in 2017, growing to at least $490 million by 2020 due to legislation expanding Medicaid enrollment.
“President Obama’s healthcare reform bill comes with a hefty price tag for North Carolina taxpayers. The state’s Medicaid system is already growing at an unsustainable pace, and Obama’s plan will tack on another $1.4 billion of additional costs in just the four years from 2017 to 2020,” added Balfour.
Meanwhile, the state’s debt burden currently stands at $9.4 billion – or an average debt figure of more than $4,000 for a family of four. Unemployment benefit payments now have the state owing the federal government between $2 billion to $3.5 billion by the end of the year, with upwards of $153 million in interest payments starting in 2011.
For the full study click here or to schedule an interview call (919) 834-2099.