The following editorial appeared in the April print edition of Carolina Journal:
Gov. Pat McCrory’s initial budget may not be a visionary document, if by “visionary” you mean maintaining North Carolina’s path of reckless spending and regulatory overreach.
Fortunately, the new governor appears to believe Tar Heel State residents would be served better by competent and frugal management than highfalutin schemes. In large part, his budget delivers.
After years of weak or negative growth, the state’s General Fund revenues are projected to grow about 4 percent in each of the next two years. That’s enough to keep up with basic needs, offer modest pay raises for teachers and state employees, and fill some gaping fiscal holes, particularly in the areas of Medicaid and infrastructure repair. But it’s not enough to fund major new spending initiatives — and McCrory didn’t propose any.
The idea that a new governor might be willing to make his reputation on cleaning up the messes left by his predecessors, rather than create new signature messes of his own, may seem novel in political terms. In practical terms, in benefits extended to North Carolina taxpayers, it is a welcome idea.
McCrory’s proposed budget is about $50 billion for the 2013-14 fiscal year, including $20.6 billion in General Fund programs (funded by the state’s income and sales taxes, for the most part) plus highway funds, federal funds, and other accounts. While the General Fund budget would rise modestly over the previous year, the overall budget would shrink a bit.
Over the next two years, the governor’s plan would shore up the state’s fiscal position by more than $1.4 billion through a combination of enhancing the state’s formal cash reserves ($600 million), repairing the state’s physical assets ($367 million), and leaving some General Fund money unspent in case of emergencies ($463 million). If past governors and legislatures had budgeted in a similarly conservative fashion, North Carolina governments wouldn’t have experienced as much fiscal turmoil during the recent deep recession and weak recovery.
The two biggest signs that there’s a new sheriff in Raleigh may be McCrory’s decisions to a) steer $65 million away from Golden LEAF to the General Fund, and b) cut $10 million from the Rural Economic Development Center. Golden LEAF has used money from a national tobacco settlement for targeted economic development grants. The Rural Center has done the same using money from the General Fund. Both remain outside the oversight of taxpayers.
Golden LEAF and the Rural Center have strong support among economic developers and local elected officials across the state. But any projects these groups underwrite that are worthy of taxpayer help — and there aren’t many — should be vetted by the public through their elected officials in the normal process of appropriating state money.
Unfortuntately, the governor’s budget continues far too many other corporate welfare programs, including the One North Carolina Fund. But his budget team wisely considers the long-term fiscal health of the state a priority. And that is a bold shift indeed.