Heard on the Street Posted: Thursday, March 12th, 2009 Waiting for the budget
It’s been pretty interesting reading the media reactions to Governor Perdue’s State of the State speech. Most are consistent in saying that Perdue’s speech was filled with platitudes and short on specifics, leaving everyone to wait until next week when the Governor releases her budget for the year beginning July 1.
The Governor boldly announced that even in the tough economy we face she will raise per pupil expenditures in public schools, a statement that brought legislators to their feet during the S.O.S. address. She also promised to reduce duplicative and unnecessary testing, pleasing parents and teachers alike. Republicans were quick to respond with their own budget priorities, including a call for not raising taxes.
We did find her remark about “political talk show posturing” to be interesting. Wonder who the Governor could have been talking about? Be sure to catch this week’s NC SPIN to get our panel’s reaction to her speech. Read My Spin for our reaction to her speech.
Nowhere to run, nowhere to hide
North Carolina’s economy is suffering, as evidenced by the latest unemployment report showing 9.7 percent of us are without jobs, the highest levels since 1983. Dell Computer, the manufacturer that got 300 million dollars in economic incentives to locate in Forsyth County has announced layoffs are coming. Economists agree that we will see somewhere between 11 and 14 percent unemployment in North Carolina before this crisis ends. More and more are starting to call this a depression.
Governor Perdue raided the Rainy Day Fund yesterday, earmarking $250 million for the gaping deficit in the State Health Plan and about $450 million to cover budget deficits this year. Many are criticizing Perdue for the action but she is mandated to balance income and revenues before June 30th and has to get money wherever it is available. Budget cuts take a while to take effect.
State Budget Director Charlie Perusse reports that state revenues are $1.2 billion below projections at the end of February and are expected to exceed $2.2 billion by year’s end. Budget analysts predict next year’s state budget must cover a projected 3 billion shortfall but some admit this may be optimistic. The real story won’t be told until after the April 15th personal income tax returns are counted. Seasoned observers are predicting that the rapid decrease in revenues to the state portend a huge drop in personal income, leaving the state with as much as $4 billion in revenues below this year’s forecasts.
Perdue is supposed to make remarks about her budget on Monday, prior to a Tuesday release. She has promised to make tough decisions and after so much buildup should be prepared to follow through on her rhetoric.
We keep hearing that her budget will propose tax increases on cigarettes, beer, wine, and liquor. Senator Basnight has publicly supported these increases. The House is strongly opposed to them, setting up what could be a budget fight…the last thing this state needs in economic crisis. Most observers don’t believe these increases will provide much more than about $400 million in new revenue, leaving next year’s budget with a big hole.
One thing is sure. The biggest single expense for the state is people. There will be employee reductions and they will be significant.
We are being led to expect a budget of about $18 billion, even with federal stimulus money this is optimistic. So we wait ‘til Monday’s speech and Tuesday’s budget from the Governor.
North Carolina hasn’t had a Governor more experienced that Bev Perdue. She has served many years in the legislature, been in the inner sanctum of putting together the budget in the Senate and even served on conference committees that negotiated final documents. She pretty much knows how the current leadership in both houses thinks and works. It will be interesting to see how she plays this with her former colleagues. We will get a very early read over some key issues (like the in-state tuition for out-of-state athletes), the UNC budget and other pet projects of leadership.
Golden Leaf to be gilded?
Legislation has been introduced to divert money from the Golden Leaf Foundation to help offset the state’s budget problems. As discussed above, the state will be looking for pots of money not critical to the welfare of the state and the Golden Leaf Foundation has not made such a dramatic impact on the state’s economy that it qualifies as essential. Many believe it has been little more than a political slush fund and is ripe for using in time of need.
State Health Plan cost increases
If the current state budget crisis wasn’t enough the deficit in the state health plan adds to the problem. A bill before the Senate would add $250 million to the current budget deficit and $600 million over the next two years. The plan also proposes raises in co-pays and deductibles.
The Senate is rushing to enact the bill before the end of the month, even as questions are being raised about the costs associated with processing claims, the profit made by Blue Cross Blue Shield and the salaries and bonuses of key execs of the organization.
State Employees are not happy with the measure and are letting their representatives know it. They claim they have received paltry pay increases in recent years while their costs associated with health insurance have risen more than their increases.
Look for a discussion on this topic on next week’s NC SPIN.
Supremes rule in favor of Pender County
The U.S. Supreme Court ruled that the legislature’s splitting of Pender County violated the “whole county” clause of our Constitution while not fulfilling the intent of the Voting Rights Act calling for majority minority districts. Lawmakers created a district with 39 percent minority voters. The Court says that majority means more than 50 percent.
Look for more interesting discussion on this topic on this week’s NC SPIN.
Superintendent lawsuit coming
The challenge to the state over the duties and responsibilities of the State Superintendent of Public Instruction will be formalized soon. We understand a lawsuit will be filed challenging the action of Governor Perdue in naming the same chair for the State Board of Education and the Chief Executive Officer of public schools. This will undoubtedly be a lengthy case with plenty of appeals but may end up forcing the state to clarify the role of the Superintendent.
Fetzer running for GOP
Former Raleigh Mayor and NC SPIN panelist Tom Fetzer has announced he is making a run to be the next Chair of the North Carolina Republican Party. He threw his hat in the ring when his choice for party chair, Wilmington’s Woody White, withdrew citing family considerations. Early response to Fetzer’s announcement has been positive. He is a seasoned campaigner who is highly articulate, very energetic, and can bring people together, as he did as Mayor of Raleigh. Fetzer also has charisma and knows how to raise money.
Employee Free Choice Bill introduced in Congress
One of the most significant pieces of legislation to come before Congress (aside from the bailouts and set asides) is the Employee Free Choice Act. The Triangle Business Journal article reports on how North Carolina businesses are opposing the legislation. We talked about it on NC SPIN last week. The legislation will now move to debate.
Commercial vs. recreational fishing
For many years there has been growing animosity between commercial fishing and recreational fishing interests. The bait is appealing and the issue may be hooked and ready to reel in, to use fishing vernacular. Scott Mooneyham, with Capitol Press Association, has a good column on the matter.
This week’s funnies
Even in bad times we need a chuckle. Here are two from Charlotte Observer’s Kevin Siers and one for from the N&O’s Dwane Powell. Enjoy.
http://www.charlotteobserver.com/kevinsiers/story/586385.html
http://www.charlotteobserver.com/kevinsiers/story/580795.html
http://www.newsobserver.com/opinion/powell/ ");
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