MEDIA RELEASE: House budget is an inadequate fix for state's growing budget pressures

Proposal relies on one-time money, says report, rather than raising recurring revenue to fund public investments

RALEIGH (June 7, 2012) – The North Carolina House's $20.3 billion budget proposal is an inadequate and temporary fix for the state's growing budget pressures, said a new report, and fails to fully restore cuts made to key public investments in last year's budget.

The new budget proposal for fiscal year 2012-13 increases total state spending by $338.7 million over the continuation budget, yet it only does so by relying heavily on one-time money rather than raising recurring revenue, said a new report from the Budget & Tax Center, a project of the NC Justice Center. The increase would restore just one fifth of the $1.7 billion cuts made to state investments in education, health, public safety, and infrastructure last year.

The increases are temporary, the report said, because the majority of new money in the House budget is taken from one-time sources. Despite some minor restorations in funding for state-supported institutions and infrastructures, the House budget fails to reverse course on a biennial budget that resulted in fewer teachers in classrooms, skyrocketing tuition rates for university and community college students, higher costs for accessing courts, and crumbling roads.

"When compared to state spending before the Great Recession, the House budget reflects a tremendously diminished baseline state budget," said Brenna Burch, a public policy analyst with the Budget & Tax Center and author of the report. "The budget falls woefully short of what is needed to spur a strong and sustainable economic recovery for North Carolinians in communities across the state."

In order to meet one-time and recurring state obligations – such as paying off the Medicaid shortfall and offsetting the loss of federal recovery dollars for education – the House's proposal would raise $815.6 million in gross General Fund availability, including the $479 million credit balance and various non-tax revenues and fund transfers. By relying on this one-time money rather than raising revenue, the budget fails to address North Carolina's growing structural deficit or provide long-term relief from recurring budget pressures in key areas of state investment, the report said, particularly education and human services – both of which will face sizable budget gaps going into the fiscal year 2013-15 biennium.

The report warned state leaders against letting short-term political and fiscal concerns trump longer-term solutions for the state budget.

"This budget constitutes yet another missed opportunity for meaningful change," Burch said. "Should the Senate's approach to their budget be similar to the House plan, the damage done by last year's budget will continue to impede and delay North Carolina's recovery from the Great Recession."

FOR MORE INFORMATION CONTACT: Brenna Burch, Public Policy Analyst, brenna@ncjustice.org, 919.865.2176; Jeff Shaw, Director of Communications, NC Justice Center, jeff@ncjustice.org, 503.551.3615.

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