MEDIA RELEASE: Governor’s state budget takes a balanced approach to restoring state investment in education

New report shows governor’s proposal would raise $760 million in new revenue, investing 5 percent more than continuation budget

RALEIGH (May 18, 2012) – Although state spending would remain well below pre-recession levels under Governor Bev Perdue’s proposed state budget, her proposal would raise much-needed revenue and restore significant funding to North Carolina’s public schools, a new report finds, making an important first step towards restoring state investments in education, health, and public safety to pre-recession levels.

On May 10, Governor Perdue released her recommended $20.9 billion state budget for fiscal year 2012-13, including a ¾-cent extension of the state sales tax, which would raise a projected $760 million in revenue. According to a report released this morning by the Budget and Tax Center, a project of the NC Justice Center, the governor’s budget would use most of that new revenue to restore $562 million in funding to public schools – an amount greater than the $503.1 million “LEA Adjustment,” the current budget’s largest single recurring cut to public education.

The governor’s budget would be an important step towards restoring state investment in education and other vital services to pre-recession levels, the report finds. While the proposal represents almost a 5 percent increase over the $19.7 billion continuation budget, it would still spend 8.2 percent less than the last state budget approved before the Great Recession in 2007, when adjusted for inflation.

“This budget acknowledges the necessity of funding the educational needs facing young people and the future economy,” said Brenna Burch. “Considering the magnitude of the financial challenges facing North Carolina’s public schools and the Medicaid program this year, a budget proposal that raises new revenue deserves serious legislative consideration.”

The governor’s budget also includes $200 million in one-time money to address the current year’s shortfall in funding to pay Medicaid claims. While this amount fully addresses the 2011-12 Medicaid shortfall as estimated by the Office of State Budget and Management and the Department of Health and Human Services, the report said, the governor’s suggested funding increase for Medicaid in the next year falls $143 million short of the $243 million needed to meet program obligations.

“While the governor’s budget wouldn’t fully restore state investments to pre-recession levels, it would be a good first step in that direction,” Burch said. “In the meantime, it takes the state’s responsibility to serve all North Carolinians seriously by providing much-needed revenue to recommit to the investments that have made North Carolina great.

FOR MORE INFORMATION CONTACT: Brenna Burch, Public Policy Analyst, Budget & Tax Center, Brenna@ncjustice.org, 919.856.2176; Jeff Shaw, Director of Communications, NC Justice Center, jeff@ncjustice.org, 503.551.3615 (cell).

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