The Fiscal Research Division at the General Assembly in Raleigh recently released its October General Fund Revenue Report & Economic Outlook. The report is easy to read and can be found here.
What is most interesting in the report’s analysis is that in addition to the expected $3.2 billion budget shortfall facing the next General Assembly as a result of Recovery Act funding drying up and the sunset of taxes imposed in 2009, budget pressure will also be felt from growth in public school enrollment and Medicaid. Further, the report notes that additional funding for the State Retirement Plan may be required pending an actuarial review and that the State Health Plan is estimated to require $572 million over the next two fiscal years to accommodate anticipated growth and maintain current benefits.
What the report means politically is that the real budget crunch resulting from the recession could occur in 2011 as opposed to 2009 and 2010 when President Obama and the Congress essentially bailed out states with the stimulus bill. Things could get very interesting, and perhaps ugly, in Raleigh next session. Perhaps our elected officials should not have used deficit spending by way of Washington, DC to kick the can down the road because that road appears headed towards a fiscal dead end — reality is on its way.