We are just a few days away from the beginning of the 2011 North Carolina legislative session. This session will begin with a historic transition of power. During the 2010 election, the Republicans gained control of both the House and Senate. This will be the first time in over 100 years that Republicans will be our states leadership and with that control comes the responsibility to balance the state budget.
The reality of this session is that regardless of which party was in leadership, our state is facing a $3.7 billion deficit. The budget deficit is over 15% of the state’s total fund expenditure.
So how did we get to a $3.7 billion deficit?
Several factors have caused this significant deficit. Let’s start with the “great recession”. Although multiple economists believe we have hit the bottom and are slowly coming out of it, our state revenue collections have been slow to respond. This is not just happening in our state but also across the nation.
Then there are policy factors that are adding to the deficit. This is the break down of those factors:
1. Federal American Recovery and Reinvestment Act of 2009 funds will expire with the 2010 budget. Total amount not recurring is $1.6 billion
2. The state sales tax and additional taxes that were passed during the 2009-2010 legislative sessions will expire on June 30, 2011. Totally amount not recurring is $1.3 billion.
3. Lastly, there are $300 million in one-time reductions and transfer of fund balances in the current 2010 budget. These one time reductions return to the continuation budget on June 30,2011.
The total of just these three policy factors had our state at a deficit of $3.2 billion.
In addition to these there are several other factors that have brought our state to the $3.7 billion deficit figure. These are the additional preliminary estimates on needed revenue:
$75 million for public schools-K-12 enrollment growth.
$190 million for Medicaid enrollment growth.
$89 million for higher education enrollment growth.
$181.6 million to maintain the current benefit levels and anticipated growth in the North Carolina State Health plan for state employees.
$304.9 million from the General Fund and $13.6 million from the Highway Trust Fund to the State Retirement System to increase the employer contribution to the national standards.
And finally unspecified appropriations will need to be directed at the Savings Reserve Account (Rainy Day Fund), Capital and Repair and Renovations Reserve Account, and Economic Development.
What are leaders saying about how to close the deficit?
Both Governor Perdue and the new Republican leadership are stating that there will be no new taxes offered to help close this gap and no extension of the current tax package.
Governor Perdue had requested all of the state divisions and departments to prepare budgets that reflected a 5%, 10% and 15% cut to their current budgets. In addition the governor has presented a plan to consolidate, eliminate and privatize specific sections of our state government.
The Republican leadership, in multiple news interviews, has pointed to the reduction of budgets through cuts, consolidation of government agencies, and “zero-based” budgeting (defending programs based on their effectiveness and fiscal responsibility.)
As the clock ticks down to the start of a new session, the cuts are most likely to be at least 15% -18% of the current budget.
What is the impact of cutting a budget by 15% to 18% for developmental disability services?
This budget year is critical with both long and short-term implications for people with developmental disabilities and their families. Reductions of 15% to 18% of our developmental disability budget would devastate supports and services. The cuts would be even deeper since a majority of our services are provided through Medicaid funding which receives a 66 % match from federal funds. For example if the state were to cut 50 million from Medicaid funded Developmental Disability services the actual cut would be close to 150 million.
In addition we are likely to see significant cuts in education specifically around teaching assistant positions. With the multiple plans to consolidate and cut services in public health and other social services, we will see a crisis compounded by multiple cuts that will affect the developmental disability community.
What can you do to help legislators understand the personal impact of the upcoming budget crisis?
Here is what we suggest.
1. Get to know your legislator. Make contact with him or her now, before session begins. If you receive services in this state, tell them your personal story.
2. Sign up for e-alerts from The Arc of North Carolina and for our upcoming bi-weekly publication, “Policy Partners” designed to provide more analysis and review of actions taken in Raleigh.
3. Keep up with The Arc of North Carolina Policy blog as we update daily the happening at the North Carolina General Assembly.
4. Follow us on Twitter at thearcnc. We will be using Twitter to get breaking policy news out to you directly from the General Assembly.
5. Participate in lobbying days at the General Assembly. Find out more about our lobbying efforts during the session by visiting The Arc of North Carolina web site.