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New money in the state’s coffers this year?

by DG Martin

For those folks hoping that the NC General Assembly will appropriate money for their favorite causes this year, there is some good news and some bad news.

By the way, folks hoping for a legislative appropriation this year have lots of company. State employees and teachers are demanding the significant raises that have been impossible during the last few years. Other proposals for funding the growing needs of education at all levels were postponed during the last few tough budget years. The legislature has deferred state assistance for other cherished projects during the recent bad times.

All of them will be back on the table this year. Hundreds of other proposals for worthy programs and projects of local governments and non-profit groups will be on the table.

Now, what is the good news for these folks?

Speaking to a group of lawyers last week, Norma Mills, the chief of staff for state senate leader Marc Basnight, explained that state revenue receipts were coming in above projections ‘— about $200 million more than expected. In addition, there will be about $630 million available in funds that the legislature set aside last year to spend on ‘“anticipated needs’” for the coming budget year.

So, more than $800 million ‘extra money’ will be available for the legislature to meet the state’s needs. Surely this is very good news, especially after so many years of state government shortfalls and budget crises.

But then there is the bad news.

Part of the bad news has to do with the ‘“anticipated needs’” that the $630 million was set aside to meet. These needs are ones that the state legislature ‘traditionally’ funds even though it is not obligated to do so. Here are some examples: funding to meet the growth of students in the university and community college enrollments, bonuses for teachers who meet certain goals, upgrading the state’s information technology systems, setting aside some moneys in a ‘rainy day’ fund, minimal funds for repair and renovation of state buildings, some small salary increases, and other ‘anticipated needs’ that the legislature typically funds if it possibly can.

Put another way, all new spending proposals have a lower priority than these ‘anticipated needs.’

How much money are we talking about?

According to Mills’ estimate, the total is at least $740 million. So instead of the $800 million plus that seemed to be available for new spending, there may be less than $100 million to address such challenges as raising teachers’ pay to the national average, paying the increasing cost of Medicaid, meeting pressing transportation and infrastructure needs, and all unmet public safety, environmental and other state responsibilities.

‘“But, what about the lottery money?’” one of the lawyers asked Mills.

Mills acknowledged that there would be ‘new’ money from the lottery. But, she explained, the legislature is obligated to use that money for particular purposes, mostly for education. So the lottery funds, while they may help pay for specific state programs, are not available to the legislature to fund general programs.

In summary, according to Mills, those people hoping to persuade the General Assembly to approve new programs that require additional spending are probably going to be disappointed.

There are only three ways to get more money on the legislative table.

First, the revenues from existing taxes could be even higher than currently anticipated. It could happen if North Carolina’s economy continues to improve. But the experts are still very cautious. Higher tax receipts are not something anybody can count on yet.

Secondly, the legislature could get money for new programs by cutting back on existing spending commitments. Surely there are possibilities for savings. But, during the hard times of the past few years when the legislature had to make numerous cuts to balance the budget, it became increasingly difficult to find substantial savings.

The third possibility is for the legislature to increase taxes. Mills explained the realities of any possible tax increase this year: ‘“In an election year, if you’re not talking about cutting them, you’re not talking about them at all.’”

Bottom line: There will be some extra money in the legislative till this year, but probably not enough to fund your favorite project.

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