The Lincoln Tribune recently published this article of mine detailing the overly-optimistic revenue projections used by Gov. Perdue's office to "balance" her budget plan.
A few highlights:
In spite of an unemployment rate in North Carolina hovering around double
digits, the governor’s budget office projects increases in state income, sales
and corporate tax revenue for the coming fiscal year. For example, sales tax
collections are estimated to rise at a healthy five percent pace.
…
Note also that the state budget office doesn’t have a very good track record of
late. For instance, this time last year the governor’s budget proposal predicted
a 5.5 percent unemployment rate in North Carolina for 2009. Also predicted was a
“modest” 3.5 percent growth in General Fund revenue for the current fiscal year
– in stark contrast to the actual 6.3 percent decline being realized. Such
misjudgments are a large reason why state government is facing such massive
deficits.
…
According to the governor’s proposal, appropriations in fiscal year 2010-11 will
exceed state revenue by more than a billion dollars, with the hole to be plugged
by federal stimulus money. This one-time provision, however, produces a
structural deficit of at least a billion dollars as we enter fiscal year
2011-12.
…
Federal stimulus funds may provide a short-term bailout for the state budget.
The reality is, however, once the federal aid is gone, North Carolina will not
be able to sustain spending levels without significant tax increases.
digits, the governor’s budget office projects increases in state income, sales
and corporate tax revenue for the coming fiscal year. For example, sales tax
collections are estimated to rise at a healthy five percent pace.
…
Note also that the state budget office doesn’t have a very good track record of
late. For instance, this time last year the governor’s budget proposal predicted
a 5.5 percent unemployment rate in North Carolina for 2009. Also predicted was a
“modest” 3.5 percent growth in General Fund revenue for the current fiscal year
– in stark contrast to the actual 6.3 percent decline being realized. Such
misjudgments are a large reason why state government is facing such massive
deficits.
…
According to the governor’s proposal, appropriations in fiscal year 2010-11 will
exceed state revenue by more than a billion dollars, with the hole to be plugged
by federal stimulus money. This one-time provision, however, produces a
structural deficit of at least a billion dollars as we enter fiscal year
2011-12.
…
Federal stimulus funds may provide a short-term bailout for the state budget.
The reality is, however, once the federal aid is gone, North Carolina will not
be able to sustain spending levels without significant tax increases.
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