It’s time to start worry again about the stalled NC budget

More than a month into the new fiscal year, Republican state lawmakers still haven’t settled on how to spend billions of dollars in federal pandemic aid and a surge in state tax revenues. And even when they do, it’s likely they’ll still be haggling with Democratic Gov. Roy Cooper to shape a budget he will sign.

“There’s no justification for it. We have more money than we’ve ever had,” Senate Minority Leader Dan Blue said. “We’re a long way from adopting a budget. I would be surprised if a budget were adopted in August. In fact, I’d be shocked.”

Republicans tout their prudent fiscal stewardship, but they’ve made a hash of the budget process. The last time around, they couldn’t even adopt a final budget after Cooper vetoed their offer. For the last two fiscal years, the state has staggered along with no comprehensive budget. Approval for essential and automatic spending has been authorized by a hodgepodge of “mini budget” bills.

The inability to pass a spending plan largely results from a Republican move to cut the governor’s leverage in budget talks. A 2016 amendment to the State Budget Act requires that when no budget is passed, the previous year’s budget continues. The change has the virtue of eliminating Washington-style government shutdowns, but it also removes an incentive for the Republicans to compromise with Cooper. If no new budget means state spending stays mostly frozen at the previous year’s level, that’s hardly a negative from the Republicans’ perspective.

While the budget process in being drawn out, it’s not being opened up to public comment nor is it responsive to the state’s greatest needs. The Senate has passed a budget bill and the House is expected to pass one in the next week or so.. How those spending plans are set generally leaves the public and the Democrats out. Even Republicans will be hard-pressed to amend it.

House Speaker Tim Moore and Senate leader Phil Berger have already agreed on the bottom line for the biennial budget – $25.7 billion for fiscal year 2021-22 and $26.7 billion for fiscal year 2022-23. The Republicans’ two-year total is $2.1 billion short of what Cooper has proposed.

In setting the bottom line first, Moore and Berger are following a formula that aligns state spending increases with the rate of growth in state population and inflation. The problem is that the formula is based on spending levels that were sharply reduced during the Great Recession. In many cases, state spending, adjusted for inflation, has not been restored to pre-recession levels since Republicans took control of the General Assembly in 2011.

As a result, the state is operating not only under the 2018-2019 budget, but effectively under budget levels from 10 years ago. The fiscal year 2008-09 budget, adjusted for inflation, was virtually even with what Moore and Berger propose for this fiscal year. Yet the state’s population and its needs have grown considerably in the time between.

Alexandra Sirota, director of the N.C. Justice Center’s Budget and Tax Center, said the Republicans’ rigid approach has locked in old budget cuts and ignored needs in education, public health and infrastructure. She said, “The need to invest in public services shouldn’t be left up to a formula.”

Under normal circumstances, Republicans might be happy to continue with “mini budgets” and minimal spending. But this year more than ever the state needs a real budget in order to quickly and fairly allocate some $5 billion in federal COVID-19 aid to those who need it most. That process shouldn’t get bogged down by absolute bottom lines and who knows what policy mischief may be thrown into the legislature’s final budget proposal.

“North Carolina needs a new budget now that helps us beat this pandemic, expands Medicaid, provides teachers long overdue raises,” said Cooper spokeswoman Sadie Weiner.

The pandemic has scarred North Carolina and increased the state’s long-neglected needs. Now, with state coffers bulging and federal relief in hand, North Carolina Republican should offer – or at least accept from the governor – a plan to move North Carolina forward.

This story was originally published August 6, 2021 at 4:30 AM with the headline "It’s time to start worry again about the stalled NC budget."