North Carolinians had much to celebrate over the Independence Day weekend. Unlike residents of, say, New Jersey.
Even though the Garden State had no budget in place, Jerseyites saw Gov. Chris Christie luxuriate on a public beach that was closed to, well, the public. Unless you were the governor — who has a state-owned residence near the beach — or part of his family.
Folks living in 10 other states also could sit around the campfire and share tales of fiscal woe. Their states had no budget as of July 1. But Tar Heels had a big reason to party: Our state budget was in place and fully funded before the budget year ended June 30. And the new budget became law without increasing taxes, adding debt, or cutting programs.
In fact, the General Assembly’s 2017-19 budget reduces tax rates, expands state savings, and allows spending to increase during each of the next two years.
This is not the case (as of this writing) in seven states. New Jersey wrapped up its budget earlier this week, after Christie’s public embarrassment. But Connecticut, Illinois, Massachusetts, Oregon, Rhode Island, and Wisconsin have not completed their budgets. Pennsylvania’s governor and legislature agreed on a spending plan, though the state’s revenues are $2 billion short of the amount needed to finalize the budget.
An eighth state, Michigan, doesn’t have a budget in place for 2018, but there’s less urgency because its fiscal year ends Sept. 30.
North Carolina’s routine absence of drama at budget time is one of the state’s underreported stories. Since Republicans took charge of the General Assembly in 2011, two of the four biennial budgets have come in on time — in 2011 and 2017, both under Democratic governors who had vetoed the original budget document.
Oddly enough, in 2013 and 2015, with Republican Pat McCrory in the Executive Mansion, budgets were late. It was mid-July before the 2013-15 budget became law. And the 2015-17 spending document languished until September before taking effect.
Even though the budgets were late, lawmakers weren’t like their counterparts in other states, scrambling to cut programs because of lagging tax collections. Instead, revenues were flowing in at a healthy pace while Republicans argued over how to spend a relative bounty.
Sure, our relative economic health, growing economy, and rising tax revenues have eased the state’s financial pressures immensely. But don’t take these benefits for granted. They’ve arisen, at least in part, because legislative leaders have insisted on sticking to a prudent fiscal path.
This is news, as in recent events. In 2010, the National Conference of State Legislatures ranked North Carolina’s budget gap as the nation’s fifth-worst and the worst in the Southeast.
Those budget gaps became surpluses when conservatives took charge of the legislature. This year, NCSL projected 22 states would finish their fiscal years in the black. The group highlighted North Carolina as one of seven states with “sunnier fiscal situations with economic growth and potential surplus funds.”
Legislative budget writers have insisted on spending restraint, keeping General Fund increases below the combined growth in population and inflation.
They’ve also done away with the “continuation budget,” a process used by executive branch Democrats that took the current year’s spending and added to it an estimate of the cost for new enrollees in Medicaid, new college students, and other expanded services.
Instead, legislative Republicans (and Gov. Pat McCrory’s budget team) based their budgets on growth in spending rather than services. It may sound like a distinction without a difference. But basing the budget on this simple change in assumptions could save taxpayers hundreds of millions of dollars in the coming years. And let the General Assembly pay for new Medicaid patients, more college students, and the like.
The leaner budget still allows a tax cut that will remove 90,000 middle-class North Carolinians from the income-tax rolls. It will let rainy-day savings reach nearly $2 billion.
The news may not be as, uh, sexy as seeing your governor sun on a largely vacant public beach. But it says they’re doing something right on Jones Street.