Big cuts in state budget - just a practice round for next year
The NC General Assembly adjourned early Saturday morning ending a “short” two-month session that convened on May 12. Legislators’ main task was to make adjustments to and approve a state budget for the 2010-2011 fiscal year. The $19 billion budget was signed into law on June 30, which is the first time since 2003 the budget has been finalized prior to the beginning of the new fiscal year. (Link to State Budget). The adopted budget closed an estimated $800 million gap by cutting more than 3.3 percent of funding slated previously for use in this year’s budget.
Perhaps the best thing to say about this year’s budget is that it could have been worse. Like states across the country, North Carolina is suffering the effects of a downturn in the economy and growing unemployment, which has impacted funds available to pay for state programs and services.
Education and health and human services spending account for the largest expenditures in the state budget, so going into the session, people feared massive teacher layoffs and enormous cuts to social service and health related programs. In the end, 1,600 teaching jobs were saved through the use of lottery money, and the university system was hit with $70 million in reductions, which is less than previously anticipated. Local boards of education and the university system were given authority to implement furloughs if needed.
While there were some deep cuts to the Department of Health and Human Services, including the elimination of numerous positions across several agencies and $50 million in cuts from in-home care services for Medicaid recipients, additional funding ($40 million) was added for mental health services.
In addition to these changes, the budget also includes contingency measures to eliminate an additional $518 million from the 2010-2011 budget if the state does not receive funding for the Federal Medical Assistance Percentage (FMAP) by January 1, 2011.
By comparison, California lawmakers are still at odds over how to close their $19 billion deficit for the new fiscal year. While they continue to negotiate, Governor Arnold Schwarzenegger has ordered the state’s 240,000 employees to be paid at minimum wage. In addition, 1,100 legislative aides and gubernatorial appointees had their pay suspended on July 1.
While North Carolina’s legislators are breathing a brief sigh of relief that they managed through this year’s budget decline, there is already talk about the $3 billion shortfall anticipated next year when federal stimulus dollars and some state taxes are set to expire.
So as a group of tired legislators left town on Saturday morning, many were headed home to raise money and prepare to run in tough races for re-election – just for the opportunity to come back again in 2011 and face even tougher times.
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