MEDIA RELEASE: Study: State spending could reach lowest level in 40 years

A cuts-only approach would be devastating to both state and family budgets, a new report from the NC Budget & Tax Center finds

 

RALEIGH (Sep. 21, 2010) – Given current trends, state spending could reach its lowest level in 40 years during this budget cycle, a new study finds.

 

The study, released today by Edwin McLenaghan of the NC Justice Center’s Budget & Tax Center, shows that a “cuts-only” approach—or even a majority-cuts approach—to the $3.3 billion revenue shortfall facing state government would drive state spending to the lowest level, as a share of state personal income, since 1972.

 

Such historically low levels of state spending would cause severe harm to North Carolina’s vital public structures, just when people need state services most,” said McLenaghan.

 

At the beginning of September, Gov. Beverly Perdue instructed state agencies to develop budget plans for the next biennium with cuts of 5, 10, and 15 percent. This would add to the more than two years of severe spending cuts averaging nearly 10 percent.

 

Across-the-board cuts of 10 or 15 percent would drive state spending to its lowest level since 1972. Even cuts of 5 percent would put state spending lower than all years save one in the past 40 years.

 

Protecting our critical investments in state services by reforming our tax system along with eliminating unjustified tax breaks and ineffective business incentives would help to ensure that the state has the healthy, well-educated and well-trained workforce necessary to pull North Carolina out of the recession,” said McLenaghan. “The alternative is fewer jobs and a blocked path to prosperity.”

 

With Recovery Act dollars and the state’s temporary tax package both expiring in the middle of next year, preserving state investments is especially essential now, he said.

 

The report is available online at: http://www.ncjustice.org/?q=node/605

 

For more information contact: Edwin McLenaghan, NC Budget & Tax Center, 919.861.1468; ; Jeff Shaw, Director of Communications, NC Justice Center, jeff@ncjustice.org, 503.551.3615.