RALEIGH — When Gov. Bev Perdue took office Jan. 10, 2009, the state was facing a record unemployment rate of 11.2 percent, and a nearly $3 billion budget deficit. Pledging a new beginning for the Old North State in her inaugural speech, Perdue said North Carolinians “deserve a state government that works for them, not against them,” and promised a government that would be more accountable, efficient, and transparent.

Two days after taking office, Perdue signed Executive Order No. 5, establishing the North Carolina Budget Reform and Accountability Commission, charged with making state government more efficient and effective. The commission’s goal is to consolidate and streamline state services and programs to reduce costs and ensure established public goals are being met without sacrificing core services.

To date, the commission has made several recommendations adopted by the General Assembly that should save millions of tax dollars annually over time. But it’s been difficult for the public to learn much of the commission’s work. And with the state facing multibillion-dollar deficits for years to come, critics say BRAC must get much more aggressive if it is to live up to the goals Perdue articulated initially.

With the exception of the state budget director and governor’s policy director, who serve as non-voting ex officio members, BRAC members are appointed by the governor; members include residents from the private sector, local government, and academia. The State Budget and Management Office and the Governor’s Policy Office provide professional, administration, and staff support services to BRAC.

In March 2009, Perdue announced initial appointments to the commission, including co-chair Norris Tolson, the president and CEO of the North Carolina Biotechnology Center, former secretary of the North Carolina departments of Revenue, Transportation, and Commerce, and a retired Dupont executive. The other co-chair is Hilda Pinnix-Ragland, vice president of corporate public affairs with Progress Energy, chair of the State Board of Community Colleges, and past auditor with Arthur Andersen & Co.

Other members include Dan Gerlach, president of the Golden LEAF foundation and former senior budget advisor to Gov. Mike Easley; Norma Houston, former chief of staff and general counsel to State Senate President Pro Tempore Marc Basnight and lecturer in public law and government at the School of Government at the University of North Carolina at Chapel Hill; Charles Sanders, retired CEO and chair of Glaxo, Inc.; Curtis Clark, global director for regional and local government with IBM and former deputy state controller for information resource management; and Ron Penny, chair of North Carolina Central University’s department of public administration and former director of the North Carolina Office of State Personnel.

A budget reform commission is not a new idea. The state has had several dating back to 1973. Easley formed a similar group in 2002. Yet despite budget reforms, state government employment in North Carolina from 2003 through 2008 rose at a non-seasonally adjusted rate of 13.2 percent and the state’s debt more than doubled during Easley’s eight years as governor.

Since Perdue became governor, rather than making structural cuts to the budget, the General Asembly has used more than $1 billion in federal stimulus funds, hiked sales, corporate, and income taxes by $1 billion, and introduced a host of new fees and raised existing fees to close its fiscal year 2009-10 budget shortfall.

With lawmakers saying the state faces a $3 billion budget shortfall next year, North Carolinians may feel justified if they’re experiencing a sense of déjà vu.

BRAC’s activities

Apart from some media reports of BRAC’s activities, scant information is available on the section of the governor’s website devoted to the commission. A year and half since the commission was formed, the website fails to provide reports of its activities or even a list of members, but it does link to the executive order establishing the group and a list of meeting dates with an agenda attached for each. The site lists the “next meeting” date as Wednesday, May 10 (which already has passed), but CJ has learned that another meeting is expected to take place in October.

The site also includes a web form for individuals to submit ideas for review.

After several unsuccessful attempts to reach BRAC’s co-chairs, Norris Tolson and Hilda Pinnix-Raglund, Carolina Journal contacted Mark Johnson, a spokesman for Perdue. “BRAC’s reports and recommendations have resulted in significant legislation,” said Johnson, citing as examples the state’s reform of the Alcholic Beverage Control system, its sale of underused state aircraft, the elimination of the special project required for high school seniors to graduate, and changes in state procurement and contract rules to promote greater transparency and competition.

Commission member Gerlach, of Golden LEAF, shed light on BRAC’s recommendations for reforms in North Carolina’s Department of Health and Human Services. Gerlach said BRAC recommended the state invest in new technologies to detect fraud and abuse in Medicaid, which has long been one of the fastest growing parts of the state budget, and estimated savings of $37 million in the first year. Although House Bill 190, the legislation incorporating these recommendations, died in committee, the fraud and abuse software provisions were adopted by the General Assembly in the FY 2009-10 budget bill and are expected to generate recurring cost savings.

Gerlach said the General Assembly also adopted BRAC’s recommendation to cut overall Medicaid expenditures by expanding care management services to include palliative care, which reduces the severity of symptoms of chronic diseases and avoids costlier emergency care.

Three other recommendations from BRAC were considered key issues for the short session of the General Assembly by the North Carolina Center for Public Policy: deploy new computer software to uncover Medicaid fraud; consolidate the state’s IT operations; and privatize custodial services in prisons.

Perdue vowed to cut the state’s nearly 400 boards and commissions. Earlier this year, she submitted to the General Assembly a list of 48 for possible elimination or consolidation, but Johnson said the legislature took no action. The legislature’s decision to reform the ABC boards rather than privatizing them led some critics to say it’s impossible for lawmakers to cut government if they refuse to eliminate boards.

The large presence of government insiders on BRAC leads some to question the commitment of members to dramatic, permanent cuts in the size and cost of state government. Brian Balfour, budget and tax policy analyst for the John W. Pope Civitas Institute, told CJ that BRAC’s efforts are laudable but would have a minimal fiscal impact. Earlier this year, Civitas recommended 10 specific measures to streamline state government and administer programs more efficiently.

Possible redundancy

In 2007, the General Assembly created the Program Evaluation Division, a separate unit in the legislature charged with examining whether government services are being delivered effectively and lawfully.

A recent WRAL-TV story highlighted the division’s successes in ABC reform, education, the sale of state aircraft, and state contract rule reforms that resulted in significant legislation. BRAC claims these same proposals as achievements.

State Rep. James Crawford, D-Granville, one of the co-chairs of the Program Evaluation Division, told CJ this group conducts in-depth examinations of eight to 10 state programs each year, whereas BRAC is supposed to review all of state government.

Crawford said more work is needed because lawmakers will have to cut a minimum of 12 to 15 percent in the next fiscal year before the state can balance its budget, and no lawmakers want to talk about raising taxes when they’re running for re-election.

Karen McMahan is a contributor to Carolina Journal.