Heard on the Street Posted: Thursday, May 7th, 2009 House action expected soon
We are told to expect the House version of the budget within the next week. Budget leaders are working hard trying to make revenues and expenses come together.
Fiscal analysts gave lawmakers the bad news Wednesday. April tax receipts were 40 percent lower than projected. That’s huge and speaks to the depth of this recession. The picture gets bleaker. Revenues for the fiscal year ending June 30th are expected to amount to only $17.7 billion. Lawmakers had passed a $20.1 billion budget. Simple math demonstrates how the enormity of the problems Governor Perdue has had trying to keep the budget in balance.
Then the analysts delivered really bad news. In putting together budgets for the next two fiscal years, analysts project revenues of $16.4 and $15.9 billion. Based on current spending levels for the continuation budget, experts project a deficit of $4.6 billion.
Lawmakers have the federal stimulus money to draw from, although $200 million of the anticipated $2.1 billion has already been used to balance the budget ending June 30th this year. There are not many other large pots of money from which legislators can draw to fix the problem.
House leaders have repeatedly said they don’t want to raise taxes in this recession year, but finding $2.5 billion in cuts is going to be tough. Some will say that Governors Easley and Perdue found more than $3 billion in cuts this year, but they forget that much of that came from Rainy Day Funds and other pools of money that are now empty.
A growing number of seasoned observers are saying we should not look for a final budget to be passed in time for the start of the fiscal year. This could add additional problems because a continuing resolution keeps spending levels as they are now, and those levels are greater than projected revenues.
This would be the perfect opportunity for our state leaders to reform and reorganize state government, consolidating unnecessary cabinet level agencies and eliminating duplicative programs while prioritizing what state government can and should be providing for our citizens. This was exactly what happened in the last great recessionary period, The Great Depression. But we don’t have the leadership today like Governor O. Max Gardner, who recognized what needed to be done, had the fortitude to make bold changes and sold them to North Carolina citizens.
For more discussion on the budget situation be sure to catch this week’s NC SPIN.
Hey buddy, can you spare a dime?
Governor Perdue and her team are sweating the June and July payrolls. Cash is tight….we mean REALLY tight and we might see even more cash-conserving belt tightening before year’s end, June 30th. And there’s no magic to the start of the new year. Revenues will not suddenly come streaming in on July 1, so it is highly probable the state will have serious cash flow problems throughout the summer.
ABC head fired
Governor Perdue fired Doug Fox, chair of the State ABC board for distributing racist e-mails. A growing number are saying this would be the perfect time to reform our state system of distributing and selling alcohol. The legislature has had proposals for reform but the prevalent attitude is “if it ain’t broke, don’t fix it.” Memo to state leaders: Our ABC system is broke. Fix it.
We hear the name of David Weinstein, Democratic House member from Lumberton, being raised as a replacement to Fox. The retired merchant would bring some experience to bear on our antiquated retail and warehousing system. The job pays $110,000 per year.
Blue selected
There were six candidates but Wake Democrats had no trouble selecting their choice to replace Senator Vernon Malone, who died unexpectedly last month. Former House Speaker Dan Blue was the dominant choice, selected on the first ballot. Blue has served 13 terms in the House, including being Speaker for three terms. He moves to a Senate that many believe is in need of reform and may see a change in leadership in the next two years. Has there ever been a person who served both as House Speaker and Senate President Pro Tem?
The Governor will formally appoint Blue to the Senate then Wake Democrats will gather to name someone to take Blue’s seat in the House. The field will be narrowed because the replacement must live in the 33rd House District.
Pension fund losses spell trouble ahead
When Treasurer Janet Cowell reported that the state’s pension funds lost $4.1 billion dollars in the first quarter of this year most observers were disappointed but understand that losses are to be expected in this economic environment. Few looked beyond the report to consider what this means to the state and to public employees in the future.
Prior to those losses, Cowell had been telling lawmakers they needed to add about $300 million to the pension funds to ensure we remain at the 100 percent funding level. This $4 billion loss means even more will be necessary. What happens if we don’t stay fully funded? North Carolina will have obligated to pay employees money we don’t have and if allowed to continue over a period of time the amount could grow larger and we would get in the same position with pension funding we are currently facing with health insurance premiums for retirees. The state now has an unfunded liability of some $24 billion with health insurance.
For more discussion on this be sure to read My Spin “Fix Pension Plans Before it’s Too Late.”
Did we hear correctly?
Teachers are really miffed about the one-half of one percent pay cut. We get that. So teachers in Wake County, supposedly with the blessing of the Wake School Board, seriously considered taking the 10 hour unpaid furlough on a school day, closing school for a day. The head of the Wake NCAE, Jennifer Lanane, said teachers could take the 10 hours during a teacher workday but teachers need that time. Are we to understand that it is less important to have a day of class instruction than a teacher workday? Is that what Lanane was saying? We hope not.
The State Board of Education wisely said Wednesday that teachers should not take their furlough time during school days unless they were able to do so during planning periods or other time not intended for them to be in the classroom.
Senate revenue package orphaned
The Senate’s revenue package is meeting with increased opposition as analysts learn more about the details and impact of this revision of the tax code. The Winston-Salem Journal wrote an interesting editorial, basically calling it what it is, a tax increase.
Lobbyists still rule the Senate
The Senate revenue package speaks to one of the big problems in government today, the influence of big lobbyists. As the Winston-Salem Journal editorial astutely says, the Senate’s revenue package taxes services used by consumers while not touching accounting fees, legal fees, or medical fees. Why? Consumers don’t have highly-paid, vocal advocates representing them.
This is the same reason why the bully bill and sex ed bills were pulled from the Senate agenda. Big lobbies raised a stink. And it is a good reason why the State Health Plan remains in control of the legislature. Big lobbies (especially Blue Cross) want it to remain there.
State Health Plan slammed
Last year Auditor Les Merritt issued a scathing condemnation of State Health Plan. It was basically dismissed as a political ploy from a Republican Auditor to a Legislature controlled by Democrats. New Auditor Beth Woods’ recent performance audit of the State Health Plan is even more damning. Her report said that administrators grossly underestimated claims expenditures and administrative expenses and engaged in a contract with Blue Cross Blue Shield without having it reviewed by a lawyer, a contract that allows Blue Cross to be reimbursed expenses while not identifying which expenses or how much was to be reimbursed. The report recommends that the Health Plan be taken from oversight of the General Assembly and be assigned to an executive level agency, such as the Department of Insurance.
The recommendation about moving oversight to a state agency isn’t new, causing many to wonder just why the legislature refuses to do what makes so much sense, removing themselves from the frequent, justified criticism by assigned the health plan to an executive branch agency. The only answer that makes any sense to this question is that someone obviously wants the legislature to continue to provide oversight. Who would that be? It certainly isn’t the state employees or their support group SEANC. It is hard to believe the legislators themselves want all this grief. Could it be someone with deep pockets, some organization with great power, who feels like they might have better control over legislators than a state agency like the Department of Insurance?
Was Allred serious?
The saga of Alamance County’s Representative Cary Allred has at least diverted attention from all the problems in the economy and with the budget. Allred was clocked by a trooper at 102 in a 65 and released with a warning.
What are the chances you would get off with a warning? Well you don’t have a legislative ID badge to flash. Arriving at the legislature Allred was accused of groping a page and being under the influence of alcohol, getting into an argument with the Speaker and even his own seatmate.
And to make matters worse, Allred gets a delayed speeding ticket. Read more about this on NC Blogger.
Ouch, you’re goring my ox now
Representative Skip Stam (R-Wake) has introduced a bill to save cities and counties money by relieving them of the obligation to publish legal notices for meetings and hearings in the local newspaper. Stam says these notices are buried in the newspaper’s classified section and anyone interested in learning about these public hearings could go to the city or county web site for the information. It might not amount to large dollars but it would save local governments money.
Guess who is opposing the bill? Yup, newspapers say their revenues are already down and this is a valuable service. Rick Thames, editor of The Charlotte Observer and president of the NC Press Association, said the notices should be put in a place where people are likely to see them. "You can have an obscure Web site with little to no traffic, and you can post a notice there. That doesn't mean the public is going to see it." He’s right, of course, but how is this different from buying these notices in the classified section of the newspaper?
Apex Mayor Keith Weatherly says his town got relief from the requirement to publish legal notices two years ago and saved $13,000 per year. He says nobody has complained about not being notified.
Now we know
For all those who may have wondered just what former Governor Mike Easley was doing in the eight years he served as Governor, Under the Dome reports he inducted more than 4,000 into the Order of the Long Leaf Pine. That’s about 10 people per week, more than one a day.
Did you get inducted? We didn’t either.
Too late on sex ed?
The legislature can debate sex education in school all they want but teens may be getting the information they need from their cell phones. The Adolescent Pregnancy Prevention Campaign of North Carolina has set up The Birds and Bees Text Line, promising to answer any and all sex questions submitted anonymously by teens. Sally Swanson told ABC news that the phone has not stopped ringing. But some parents might not be comfortable with their teens getting sex information over their cell phones from people they don’t know.
Go Canes
Stanley Cup playoff action has a growing number excited about the playoffs. One interesting phenomenon of the excitement has been the overwhelming demand for cowbells. The mantra during the games has been, “Gotta have more cowbell,” a takeoff on a hilarious Saturday Night Live skit featuring Christopher Walken. Cowbells are the rage.
Close ‘er down
Nothing is going to be happening this afternoon beginning this afternoon at 4. Don’t call. Don’t e-mail. Don’t come calling. The TV will be on watching Elizabeth Edwards talk to Oprah. See ya. ");
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