Local Politics

N.C. budget picture rosier than other states'

Posted June 17, 2008 5:42 p.m. EDT
Updated June 18, 2008 10:45 a.m. EDT

— 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.