Research Reports: Spending & Taxes

Gov. Mike Easley and the General Assembly face half-billion-dollar budget deficits (at least) for FY 2000-01 and FY 2001-02. But the problem need not become a crisis. State leaders now have an opportunity to restructure government programs and rethink state responsibilities. Budget savings previously recommended by Locke analysts would yield nearly $600 million this year and $743 million next year enough to close the gap without raising taxes or increasing state debt.

North Carolina's 1999-2001 budget cycle presents state lawmakers and the Hunt administration with a fiscal challenge — planned spending increases exceed predicted revenues by hundreds of millions of dollars. Some lawmakers and the news media have blamed four years of tax cuts and recent court decisions. This is misleading. By far the biggest cause of the problem was excessive spending growth during much of the 1990s. If state leaders had exercised even modest spending restraint, there would be no fiscal challenge awaiting the state this year.

Health and human services has become an important government responsibility, second only to education in terms of budget authorization. The disability services system, which serves North Carolina's mentally and physically disabled, receives approximately 17 percent of the funds of the Department of Health and Human Services (DHHS), for a total of $1.25 billion in fiscal 1996. By N.N. Fullwood, Ph.D.