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 Easley Wise to Budget Cautiously
by Tom Campbell
December 28, 2006
Governor Mike Easley knows first-hand how hard it is to run a state that is running low on money. Even as Easley was taking office in 2001 the state was facing a budget crisis; a problem not of his making, but one with which he had to deal with for most of his first four-year term. Reducing agency budgets, borrowing from trust funds, hiring freezes, and delaying whatever expenditures he could, Governor Easley juggled and struggled as chief administrator of the budget. The state revenue picture started improving, even showing handsome surpluses in 2005, but Mike Easley had learned from his early years in office.
Now the two-year budget process is about to begin again and our Governor is advising caution. Because the legislature used one-time revenues to expand on-going programs and salaries, the state once again will likely find itself in a budget shortfall of as much as half a billion dollars. Governor Easley is aware that new spending will be required for teacher and state employee pay increases, enrollment growth in public and higher education, as well as huge infrastructure needs, mental health improvements, and highway maintenance, just to mention a few of the growing requests. There is widespread speculation that a major bond package will be put to voters next year to address some of the more urgent needs, but those borrowings will increase the annual debt service requirements from the state budget.
So Easley is advising agency heads to be prepared for budget cuts in preparing next year’s budget. He is keeping a careful eye on budget forecasts for the coming biennium, knowing the predicament overly optimistic expectations created early in his administration. And the Governor is saying that he will not propose major new initiatives. Easley is approaching the budget he will present to the legislature in February with modest expectations in both expenditure and revenue growth. The Governor is determined not to leave his successor with the same budget crises he faced upon taking office.
Students of history will note that North Carolina’s economic patterns are cyclical. The beginning of each decade typically starts with recessionary downturns for as long as three or four years. By the middle part of each ten-year cycle the economy has stabilized, with strong revenue growth into the latter years. By the end of the decade the heated economy is beginning to cool down and the cycle repeats itself.
Having learned from history, Mike Easley is apparently determined not to repeat it. He is to be highly praised for such a common-sense approach. It is much easier to spend surplus funds than to cut operating budgets in mid-year. Our legislators would be well-advised to follow our Governor’s wise budget approach.
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