By the Numbers 2002: What Government Costs in North Carolina Cities and Counties is a publication of the Center for Local Innovation, a division of the John Locke Foundation. Its purpose is to inform North Carolinians about their local governments and promote debate and discussion about the future of city and county fiscal policy in North Carolina. It is not intended to advance or impede legislation before local, state, or federal lawmaking bodies.
According to state economists, North Carolina will face another budget deficit in FY 2001-02 of between $450 million and $900 million. The state's economy, weighted down by high taxes and poor public services, continues to lag behind the rest of the country. Unlike last year, policymakers cannot exempt such big-ticket items as Floyd relief, tobacco-settlement funds, universities, Medicaid, and bonds from scrutiny - and they should consider repealing last year's tax hikes.
Responding to Gov. Jim Hunt's call for $830 million in emergency hurricane relief, state lawmakers have nearly drained the state's rainy day fund. Calls for state tax hikes or a new borrowing binge have only been put off until the 2000 legislative session. But state leaders have no one to blame for the coming budget crisis but themselves. As national data reveal, North Carolina has hiked spending far more rapidly than the average state with little regard for the long-term impact.
A report released last week by the North Carolina Progress Board contained hundreds of long-term goals for the state. But the text was overshadowed by the comments of board member and UNC-W Chancellor James Leutze, who said the report showed North Carolina would never make it to the top tier of states without tax increases. Leutze's remarks were ill-timed and ill-informed but reflect the conventional wisdom about taxes and social progress. It’s wrong.
posted December 6, 2001 by Don Carrington, John Hood
North Carolina's 1998-99 state budget grew by between 10 percent and 11 percent (depending on the measurement used) compared with the national average for state budget growth of only 5.4 percent. This follows a similar pattern last year. Growth in spending on Medicaid and education fueled North Carolina's exceptional budget increase. Overall, North Carolina spends more of its budget on education and correction, and less on Medicaid, than the average state. This mostly reflects differences in responsibilities given to local government.
posted November 30, 2001 by Jon Sanders, John Hood
Author Jon Sanders studies professor salaries across the United States and finds that the pay of North Carolina's college and university professors, when adjusted for cost of living, is comparable to the pay of faculty in other states. (Not available online.)
Three new studies should give North Carolina policymakers pause about the state's current economic development policy. A Kenan Institute survey of international firms throws cold water on the notion that selective tax breaks for big business are an effective means of creating jobs. Along with two other reports, it suggests a different growth agenda: improve core public services such as roads and schools, tackle electricity restructuring, and reduce and reform taxes for everyone.
The lengthy budget negotiations between House and Senate this year resulted in a compromise that gave the Senate its spending priorities this year and the House its tax cuts in future years. Overall, when accounted for correctly, the state General Fund budget will top $13.1 billion in FY 1998-99, representing an 11 percent increase from last year. Spending growth outweighs tax cuts in FY 1998-99 by a ratio of 25 to 1 — but the picture improves somewhat in the out years, when House-sought cuts in sales and inheritance taxes are phased in.
Summary: The University of North Carolina Board of Governors has proposed a capital spending plan calling for nearly $5 billion over the next decade to modernize and expand the system. To pay for it, UNC wants the authority to raise funds by the issuance of two kinds of bonds that would not be subject to voter approval. While there is undeniable need to renovate academic buildings, taking care of the worst needs over the next four years would cost about $1.1 billion and could be handled through the existing budget process if repair and renovation were made the top university priority. The need for a large-scale construction program is dubious and does not require the use of non-voter-approved bonds.
State lawmakers will consider today a revised tax and spending plan for the 2001-03 biennium that promises to shove an already teetering economy, buffeted by layoffs and the prospect of war, into a full-blown and painful recession. Its massive tax hike will fuel a healthy increase in wasteful state spending and help to push the state’s tax burden well above that of Massachusetts, California, and all the Southeastern states — and higher than the national average for the first time.
