RALEIGH – Its’ been months now since Governor Roy Cooper vetoed a biennial $24 billion budget, demanding Medicaid expansion and huge spending increases be added. Due to his obstinacy, and the General Assembly’s refusal to cave, the State of North Carolina has long since entered a new fiscal year with a budget resolution still no where in sight. That has caught the attention of credit rating agencies.
Moody’s Investors Service noted in a weekly finance credit outlook report on November 6 that “North Carolina’s failure to pass budget is credit negative, though stopgap funding allays adverse effects.”
Currently, and thanks to years of conservative fiscal policy, North Carolina is one of only 12 states to have the top rated ‘AAA’ credit score. When Republican policies moderate spending, cut taxes, and spare almost $1 billion in surplus it tends to looks good to a creditor; when partisan pettiness from the mansion on Blount Street holds up a two year budget for months is looks sketchy.
The ‘stopgap’ funding is simply statutes that resume department resume department recurring funding levels at last year’s budget. One-time spending, however, does not carry over, and any changes are frozen.
From the Greensboro New & Record:
“[…] Moody’s was careful not to place blame on the budget stalemate in its analysis, though analyst Pisei Chea called it a sign of “governance weakness.”
The report was released a week after the Republican-controlled state legislature temporarily adjourned Oct. 31 without a state budget in place and no Senate attempt yet to override the June 28 veto by Democratic Gov. Roy Cooper. The next expected opportunity for a veto override vote in the session slated to begin Jan. 14. […]
Chea wrote that “although the state ended fiscal 2019 with a budgetary surplus of nearly $900 million, the lack of agreement on budget priorities amid a time of economic expansion and healthy revenue growth does not augur well for budgeting and strong governance during times of economic and revenue stagnation or declines.”
Chea noted the dispute between Republican legislative leaders and Cooper on spending priorities, “notably Medicaid expansion and teacher pay.” […]”
It makes sense that Cooper’s demands for Medicaid expansion and teacher pay would raise the eye brows of if a credit analyst. Expanding Medicaid would be signing up our taxpayers for an open-ended obligation and saddling our budget with unpredictable costs that usually balloon at the worst of times. It is precisely that kind of mess Republicans spent the better part of the 2010s cleaning up. Cooper wants to make even bigger, and it stands to have the same effect Democrats usually have on a state; cost us more money.
N.C. Senate Majority leader Harry Brown (R-Onslow) took notice of the Moody’s report, releasing a statement Friday blaming Cooper’s vetoes for putting “our state’s AAA credit rating in jeopardy”:
“We knew from the beginning that the governor’s Medicaid ultimatum would negatively impact the state and now our worries have come to fruition. Thanks to the foresight of Republicans, we’ve avoided a credit downgrade. While Gov. Cooper continues to play games with teacher salaries, the Republican-led General Assembly is working to ensure the state of North Carolina remains on a strong financial footing.”
The state legislature, in addition to passing the original budget vetoed by Cooper, have passed handfuls of mini-budgets that altogether amount to nearly 99 percent of the original and include items like teacher pay raises. Cooper has vetoed each one. How much damage will the governor expose the State to before he releases budget he’s holding hostage?