According to a report by the National Conference of State Legislatures, North Carolina is on pace to have, by percentage, the third largest budget deficit in the country. Behind only Nevada (32%) and New Jersey (26%), North Carolina faces an impending 20.3% budget deficit. The Conference estimates, in real numbers, the deficit to be $3.8 billion as reported by the News & Observer.
In addition to the expiration of temporary tax increases instituted in 2009 and the stimulus funds drying up, the state must also take into account public school enrollment growth and needed funds for the state’s pension and health plans. While the picture is bleak, a recent Civitas article (find it here) puts North Carolina’s budget in perspective.
The new GOP controlled General Assembly must take on the monumental task of bringing North Carolina’s budget back down to reality. However, this crisis presents an opportunity. Because the can cannot be kicked further down the road, so to speak, the budget requires a sober and realistic assessment of priorities. Republicans have the opportunity to set a new baseline for appropriations.
This fiscal crisis gives Republicans an opportunity to hit the budget reset button. In doing so, new (and lower) spending baselines will be established. Republicans might also consider a constitutional amendment that limits budget growth to population growth plus inflation, thereby limiting the growth of government long-term. Further, the new majority might also consider setting aside larger sums of money in a rainy day fund so that budget gaps could be filled more easily in the future. This would certainly be a responsible move. The dire circumstances of today may prove beneficial in the long run if responsible steps are taken to ensure long run fiscal sustainability.