spending

North Carolina lawmakers are once again coming to Raleigh to grapple with a projected deficit exceeding $1 billion. A close examination of fiscal trends demonstrates that excessive spending, not inadequate revenue, is the cause and that the state budget continues to be bloated with wasteful or low-priority expenditures. Policymakers must show courage, be willing to apply fundamental principles, and target major areas of state spending for savings and reform.

In recent months, public officials have made a range of statements in an attempt to explain persistent state and local budget woes. Many of these assertions do not square with the facts. A collection of graphs and tables shows clearly that North Carolina government is out of line with neighboring states in spending, employment, and taxes. Moreover, revenue growth outpaced personal income growth during the 1990s, while debt service costs are projected to triple over 10 years.

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.