After a century of Democratic Party rule, Tar Heel State voters were in the mood for a change Nov. 2, electing the first Republican majority in the General Assembly since Reconstruction. It’s a historic opportunity for the GOP, but one tinged with apprehension due to an estimated $3.2 billion state budget shortfall next year.
The legislature’s long-time Democratic leadership bypassed the fiscal pain during this year’s short session by passing a $20.6 billion spending plan that relied partly on an extension of federal stimulus funds and more than $1 billion in expiring tax cuts. In 2011, the new GOP majority won’t have that luxury.
Legislative leaders expect cuts to every part of state government — without raising taxes. Even reductions to core services, such as transportation and public safety, will be in play. To accomplish its goals, the GOP will have a 31-19 majority in the Senate and a 68-52 majority in the House.
“If we’re going to do this right, then we can’t create artificial boundaries, things that can’t be on the table,” said state Rep. Thom Tillis of Mecklenburg County, a top leader in the GOP caucus. “We’ve got to look far beyond where past legislatures have looked to try and balance the budget and get to a more fiscally sound baseline,” he said.
That means bureaucracies will have to be slashed, Tillis said. “We’ve got to look at the nine governmental organizations that are receiving funding and find out how much of that is core versus something that we’re not able to afford right now,” he said.
Already, university-system leaders anticipate tuition hikes and potential closure of one of the 17 campuses in the system. Democratic Gov. Bev Perdue has shied away from tax increases, instead asking each cabinet-level agency to submit plans for 5 percent, 10 percent, and 15 percent cuts to their budgets.
Republican leaders say that tax hikes are off the table. “That will be a real challenge, and we have to do it because we’ve got to get our tax rates competitive,” said Republican House Leader Paul Stam of Wake County.
Stam’s counterpart in the Senate, incoming President Pro Tem Phil Berger of Eden, said the GOP plans to let the temporary taxes expire. That promise was part of Republicans’ 10-point released in September.
“One of the messages that the voters sent loud and clear was that we’ve got this problem not because the state taxes too little, but because the state spends too much,” Berger said. “I don’t know of anyone who’s out there in an elected position who’s advocated that we need to raise taxes.”
Stam said the incoming Republicans have heard voters in their distaste for excessive spending. “They want us to live within our means. They want us to be frugal,” he said.
On the chopping block
In addition to cuts to bureaucracies, budget experts say that lawmakers will have to cut loose some state employees.
“When looking at areas to cut spending, the unavoidable reality is that roughly 70 percent of the state budget is dedicated to salary and benefits of state employees,” said Brian Balfour, budget and tax policy analyst for the conservative Civitas Institute.
“I wouldn’t be surprised to see lawmakers consider furloughs, eliminated positions, and cost-sharing for health insurance and pensions,” he said.
Public education is another category lawmakers plan to trim. Combined with health and human services funding, it makes up 80 percent of the state budget. Even so, GOP leaders are signaling that they don’t want to cut teachers out of negotiations.
“We need to bring teachers to the table,” Tillis said. “Not the [N.C. Association of Educators], incidentally, but teachers to figure out how we get smarter about the way we do our budget decisions there.”
Squabbles on the horizon?
The day after the election, Perdue issued a statement saying she looked forward to working with the GOP in shoring up the state’s fiscal situation. But it might not be that simple, because Republicans have a veto-proof majority in the Senate and near-veto-proof majority in the House.
“It’s perilously close for her to being veto-proof,” said N.C. State University political science professor Andrew Taylor.
The North Carolina Constitution requires Perdue to propose her budget first. Then the General Assembly gets a crack at it.
Taylor said that Perdue could benefit from having Republicans as a foil. But in light of her poor polling numbers, she’ll need to invigorate her standing with the electorate as the 2012 election season gets underway.
“If she doesn’t do it quickly, there could be a [primary] challenge within the party,” he said.
Non-budget priorities
Although budget deliberations will dominate lawmakers’ attention next session, legislation blocked by Democrats in the past are likely to get a hearing, including bills to lift the cap on charter schools, exempt North Carolina from new federal health insurance mandates, and require a valid ID to vote.
At least two proposed constitutional amendments will be on the agenda as well — one to prevent the government from taking private for economic development purposes, the other to define marriage as the union of one man and one woman.
Redistricting is another task ripe for partisan bickering. Each decade, state legislatures are required to redraw district lines to reflect population shifts documented in the census. Republicans will have total control over the process next year because North Carolina is one of five states that doesn’t give its governor veto power over redistricting plans.
David N. Bass is an associate editor of Carolina Journal. Associate editor Anthony Greco contributed reporting to this story.