Local Politics

Sluggish economy could drag down state budget

Posted October 1, 2008

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— The national economic slowdown could produce a hole in the state budget as big as $2 billion, according to some analysts, creating an immediate challenge for the next governor.

"The next governor is going to have a very difficult time," said Charlotte Mayor Pat McCrory, the Republican candidate for governor.

Higher unemployment statewide will likely result in lower tax revenues. At the same time, budgetary requirements continue to increase, such as rising Medicaid costs and resolving a projected $200 billion to $300 million shortfall in the State Health Plan, which provides coverage for teachers, state workers and retirees.

"I think everybody in this state and the country is very concerned," said Lt. Gov. Beverly Perdue, the Democratic candidate.

Most lawmakers are hesitant to talk about projected financial problems because the election is less than five weeks away. Fiscal analysts at the General Assembly said the trends are not good, but they said it's still early to predict serious shortfalls.

Gov. Mike Easley last month ordered all state agencies to cut their budgets by 2 percent, saying he didn't want to handcuff his successor with the same budget difficulties he faced when he took office in 2001.

A 2 percent cut would save less than $400 million because public schools, Medicaid and some public safety functions would be exempt.

Perdue and McCrory said they support Easley's pre-emptive cuts, but McCrory called the move "too little, too late."

McCrory blamed lawmakers for side-stepping hard issues like the State Health Plan's finances, and he said he wouldn't do that.

"As governor, I'm going to have to make some really tough decisions, including slowing the growth of some much-needed government services and cutting in some other areas," he said.

Both candidates are short on specifics about meeting the financial challenges, in part because the shortfall projections keep moving.

"This is going to be a tough job, and I know that," Perdue said. "Any good leader understands these are precarious challenges that we face."

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  • enoughsenough Oct 2, 2008

    Get rid of more at 4, learn and earn and handouts like welfare and medicaid. U will see a huge difference.

  • GWALLY Oct 2, 2008

    oh and I forgot to say......we ain't seen NOTHING yet!!!!

  • GWALLY Oct 2, 2008

    well duh...!! Governments "produce" nothing...they rely soley on the "forced contributions" of TAX DOLLARS!!!!!!!!!!! Then they redistribute that "forced contribution" as THEY see fit!!!!
    Sooooooooooooo, if YOU don't contribute THEY are forced to (1) downsize, or (2) raise YOUR forced contribution in the form of a NEW TAX!!!!!!!!!!!!!!

  • dplowman Oct 2, 2008

    If they can cut this now why havent they been saving it all along? And yes cut the school budget as well. I think you could fire half of the state workers all the way from the top to the bottom and in two weeks you would not even notice a change.
    You would hear about how it would mess up the programs but I bet it would not make a hill of beans on the service the people of the state would get.

  • WHEEL Oct 2, 2008

    Im waiting to see how many State jobs "VOTERS" are really cut and not just moved around as in the Mental Health Division among others.

  • OLD PIRATE 2 Oct 2, 2008

    businesses has been hurting in NC because of the tax burden and regulatory burdens. Fees, fines, registration this and that all add up for small business. Its "late" in the game for the Gov. to start taking action but that's been his legacy. Since his wife is so smart, why hasn't she been helping him?

  • colliedave Oct 1, 2008

    Why is Education exempt? I am sure there is a great deal of fat that can be cut from the sacred cow.

    Why does the State need a Department of Cultural Resources? Couldn't we just axe the entire organization? I am sure there are other departments that aren't vital to running the State.

  • whatelseisnew Oct 1, 2008

    Easley exempted from the cutting torch the programs that need cutting. Education is a nice big juicy target that can be easily cut. Medicaid, not sure if they are prevented by Federal law from cutting that or not. Next you start wacking employees. That is where you save the most money, the quickest. Just be sure to start cutting at the top and work your way down. Fewer jobs will be lost that way.

  • Adelinthe Oct 1, 2008

    Ya think?

    It's raising Cane with everyone's budgets.

    Praying for us all.

    God bless.

    Rev. RB