Local Politics

N.C. budget picture rosier than other states'

Posted June 17, 2008
Updated June 18, 2008

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— The slowdown in the national economy is trickling down to state budgets, and lawmakers from coast to coast are struggling to plug holes in their spending plans.

California's $22 billion budget gap, for example, is bigger than North Carolina's entire state budget. With housing woes and no income tax, Florida is working to fill a hole in its budget of more than $4 billion.

Likewise, Tennessee has no income tax and is looking to eliminate 2,000 state jobs through buyouts to balance its budget. Virginia and South Carolina also face shortfalls.

Meanwhile, North Carolina is finishing its fiscal year with revenue millions of dollars ahead of projections.

"We rank very well in there. A lot of states are not giving anything. A lot of people are laid off. They're not being able to give anybody raises now," Senate Majority Leader Tony Rand said.

Dan Gerlach, the top economic adviser to Gov. Mike Easley, said the state tries to keep its budget and tax forecasts conservative.

"We've had stronger job growth than other places. We're not immune to national issues, but certainly, our conservative budgeting has led us. We'll probably end with a surplus with other states deep, deep in debt," Gerlach said.

Still, Easley's critics said they don't see such a conservative stance in the way North Carolina spends tax money.

"I think the problem with that is that we continue to take more money out of the private economy than other states generally do," Senate Minority Leader Phil Berger said. "I think that hurts our overall economy. It may be good for state government, but I don't think it's good for the private economy."

Lawmakers said they don't plan on raising taxes this year.

If the state's economy falters, lawmakers also can tap an $800 million reserve fund as needed.

14 Comments

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  • dplowman Jun 18, 2008

    They did not say anything about lowering income tax now did they?
    Just think what they could do with all the revenue that off shore drilling would bring to NC. That way the governer could tax the rich oil companys. Its time for a tea party people to get our so called elected leaders back on track

  • Leonardo Jun 18, 2008

    whatelseisnew:

    If there's a surplus in the general fund, then either that money should be saved for lean years, or income taxes should be reduced. That extra money should NOT be used to build or maintain roads. That what gas taxes are for. Things get messy when you start mixing the general funds and the road funds.

    I'll repeat. Money for building and maintaining roads should ONLY be paid for through gas taxes, and gas taxes should ONLY go towards roads. Don't start moving money back and forth between funds. That's what happened in 2001 when money was diverted from the highway trust fund to the general fund, and it was a horrible idea.

  • Leonardo Jun 18, 2008

    whatelseisnew:
    It is sad that people like you accept the crafty lies of people like Bill Graham that money is being diverted from roads into the general fund. This only happened once in 2001, and has not happened since. What is happening is that gas tax money is being diverted from the 'new highway' fund into the 'existing road maintenance' fund. Sure, we could have spent money on existing highways, but it would have been at the expense of existing roads falling apart. But when Bill Graham talks about it, he purposefully talks vaguely about the 'diversion of money from the highway trust fund', which is technically true but purposefully misleading. He's trying to get elected after all.

    I don't understand people like you, whatelseisnew. I've told you this fact over and over, yet you never seem to investigate it to find out that I'm correct. Instead of doing a little investigation, you just keep spewing "the govmint is diversioning my's money, dagnabit!!!".

  • orange dude Jun 18, 2008

    Who cares about other states, we live in NC! The folks managing the our money here are very bad at it. We need to keep voting them out and hold them accountable.

  • whatelseisnew Jun 18, 2008

    Garnerwolf1

    I wish I knew where that fella worked. Being in the private sector does not mean that you get a raise every year. With any given business there are lean times, and good times. Plus, nowadays many companies do not hand out raises just because they had a good year or several good years. Typically, they establish a pay range, much as the State does. If you are near the top of that pay range, it is not likely you will get a raise. At that point you have to move up or perhaps change the field you are working in to go to one that pays more money. I have not seen a pay raise in over five years. The company I work for has been making record revenue and profits during that time frame. (and no I do not work for any oil companies). In the meantime, my tax burden has increased substantially. Perhaps you deserve a raise. Clearly, there has not been equity in the percentage of increases for all state employees.

  • Garnerwolf1 Jun 18, 2008

    Several years ago when the economy was humming along and the state coffers were bursting with dinero, the Legislature funded their pet projects and did not provide adequate raises then either. I can remember a private sector employee making the statement (in a church budget meeting no less) that he would resign if his employer gave him "only" a 4% raise. State employees got 1.5% that year I beleive. In bad budget years, the first thing to go are raises. The Legislature has balanced the budget on the backs of SEs for at least the last 20-25 years. And it certainly doesn't appear that that will change anytime in the next 20-25 years. And I agree that across-the-board raises are less than stupid

  • whatelseisnew Jun 18, 2008

    Leonardo

    Is is sad that people arrive at the type of conclusions that you have stated. This is why we end up in the kinds of messes that we will have to deal with and pay more money. They have diverted hundreds of millions of dollars away from roads for years. Had that money been spent on its intended purpose roads like 540 would already be built. Last year they had a substantial surplus. They new they had infrastructure needs and instead of spending at least half of that money on infrastructure, they grew the budget with one time money. So of course this year they have to at least spend that same level of money. I will never understand why folks like yourself, ignore what they are doing and just default to we must be taxed more. There is nothing to stop them from directing other revenue that comes from motor vehicles and use it for infrastructure. All they would have to do is to make the choice to do it, and cut some pork.

  • john60 Jun 18, 2008

    Go to Tennessee and see how some of their poorer counties maintain their rural roads. Basically, they don't; potholes, torn up pavement, narrow shoulder, really old bridges, they're all there. Dirt roads too, lots of them.

    NC has a big gas tax because the state handles the design, construction and maintenance of over 75,000 miles of roads; other than the cities and national parks, every road in this state is under NCDOT's jurisdiction. That's why our gas tax is so high, but a fair comparison to other states is to look at their gas tax AND their property tax burden.

  • xxxxxxxxxxxxx Jun 18, 2008

    And yet I heard a state senator on the radio this morning discussing the budget and employee and teacher raises and he bemoaned the fact that state revenues were so low this year. Hmmm, didn't I hear a few weeks ago that revenues were higher than projected? I believe this article says the same thing.

  • Leonardo Jun 18, 2008

    whatelseisnew: Roads are funded through gas taxes, not through the general fund. Since no one wants to raise gas taxes (and many want to reduce them), and the costs for road construction keep going up, there is a shortfall in the road construction fund.

    This is the way it should be. If you want better roads, you should pay higher gas taxes. If you want lower gas taxes, you should be prepared to deal with lower-quality roads and fewer new highways.

    And if you ask "how do other states do it with lower gas taxes", the answer is that other states have most of their roads under county jurisdiction, and those are funded from county revenue (i.e. property taxes). So those states with lower gas taxes either have higher property taxes or bad roads. There is no such thing as a free lunch.

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