Potential State Budget Crisis Pushed by NC Mainstream Media is Unlikely, Says Fiscal Expert

The Insider reported recently about a Fiscal Research Division analysis showing the Senate’s “Billion Dollar Middle Class Tax Cut” would lead to $600 million shortfalls in three of the next five years.

Fiscal staff started from the assumption that state government would do all the same things the same way, just for more people. With these assumptions, spending would increase 4 percent to 4.5 percent each year, not far above the combined rate of population growth and inflation.

Legislators have not shown a willingness to grow spending so quickly.

take our poll - story continues below

Will you vote for President Trump in 2020 if he can’t get the wall built?

  • Will you vote for President Trump in 2020 if he can’t get the wall built?  

  • This field is for validation purposes and should be left unchanged.
Completing this poll grants you access to First In Freedom Daily updates free of charge. You may opt out at anytime. You also agree to this site's Privacy Policy and Terms of Use.

Trending: Tillis Says He ‘Hates Idea’ of Trump Declaring National Emergency on Border, But Then Lists All The Reasons That Justify It

The current biennium (July 1, 2015 to June 30, 2017) has annual spending growth of 2.6 percent. If legislators kept this pace, there could be a $145 million (0.6 percent of revenue) shortfall in fiscal 2018-19, which could be easily addressed with part of a potential $300 million cash balance from the previous year. Surpluses would grow to $800 million in fiscal 2021-22, excluding year-to-year balance transfers.

The cause of this $1.4 billion swing in fiscal fitness is a small change in assumptions.

In its focus on services, Fiscal Research followed the methodology to create the previous starting point for budget preparation, the continuation budget. In 2013, legislators decided the starting point each year should be the money already committed on a recurring basis, not the programs. This small, technical change to the budget starting point, focusing, as most families and businesses do, on dollars spent instead of services rendered, is another procedural improvement that has made state budgeting better for taxpayers.

This difference also provides an excellent example of why five-year projections can receive support from progressives and conservatives alike. Those projections should include base budget, continuation budget, the biennial rate of growth, and constant per-capita spending adjusted for inflation. The revenue side should also include a range of estimates, including a risk of recession.


(Source: https://www.carolinajournal.com/opinion-article/state-budget-crisis-unlikely-fiscal-expert-says/)

Have a hot tip for First In Freedom Daily?

Got a hot news tip for us? Photos or video of a breaking story? Send your tips, photos and videos to tips@firstinfreedomdaily.com. All hot tips are immediately forwarded to FIFD Staff.

Have something to say? Send your own guest column or original reporting to submissions@firstinfreedomdaily.com.


Join the conversation!

We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.


Please enter your comment!
Please enter your name here