Courage should be in the budget
By Chris Fitzsimon
RALEIGH It's understandable if you are confused about how things are going in North Carolina and what's likely to happen with the economy and state budget next year. How could you not be?
In just the last few days, headlines have proclaimed that the stock market has reached a 15-month high and that manufacturing activity is increasing. Prominent state business leaders said earlier this week that things are looking up for 2010 as confidence in the economy is beginning to return. Sounds promising.
But the headlines also brought news that foreclosure filings in North Carolina climbed in 2009 to a record 63,341, almost 10,000 more than in 2008 and a staggering 45,000 more than just 10 years ago. The state unemployment rate hovers near a record 11 percent, and that's the average. It's more than 13 percent in many counties.
The chief economist at the General Assembly still expects slower-than-projected state revenue collections to create another budget shortfall this summer that could rise to several hundred million dollars. And that's after accounting for the $427 million raised by settling tax disputes with corporations in the state. That program was expected to bring in $150 million.
Then there is the $2.5 billion budget cliff facing the state in 2011-2012 as the federal stimulus dollars run out and a temporary tax increase expires.
That is the backdrop as 2010 begins. Add in the looming November elections and an understandably anxious electorate, and you have a recipe for extreme caution among officials, many of whom aren't prone to bold action in the best of times.
There is a growing consensus among lawmakers that one part of the solution to address this year's shortfall and the approaching budget cliff won't happen this year. Long-overdue tax reform will be pushed back to 2011 at least, despite the fact that expanding the sales tax base to services could raise more revenue to prevent further rips in the state's already tattered safety net.
RALEIGH It's understandable if you are confused about how things are going in North Carolina and what's likely to happen with the economy and state budget next year. How could you not be?
In just the last few days, headlines have proclaimed that the stock market has reached a 15-month high and that manufacturing activity is increasing. Prominent state business leaders said earlier this week that things are looking up for 2010 as confidence in the economy is beginning to return. Sounds promising.
But the headlines also brought news that foreclosure filings in North Carolina climbed in 2009 to a record 63,341, almost 10,000 more than in 2008 and a staggering 45,000 more than just 10 years ago. The state unemployment rate hovers near a record 11 percent, and that's the average. It's more than 13 percent in many counties.
The chief economist at the General Assembly still expects slower-than-projected state revenue collections to create another budget shortfall this summer that could rise to several hundred million dollars. And that's after accounting for the $427 million raised by settling tax disputes with corporations in the state. That program was expected to bring in $150 million.
Then there is the $2.5 billion budget cliff facing the state in 2011-2012 as the federal stimulus dollars run out and a temporary tax increase expires.
That is the backdrop as 2010 begins. Add in the looming November elections and an understandably anxious electorate, and you have a recipe for extreme caution among officials, many of whom aren't prone to bold action in the best of times.
There is a growing consensus among lawmakers that one part of the solution to address this year's shortfall and the approaching budget cliff won't happen this year. Long-overdue tax reform will be pushed back to 2011 at least, despite the fact that expanding the sales tax base to services could raise more revenue to prevent further rips in the state's already tattered safety net.
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