From Civitas RALEIGH, N.C. – Substantial payroll cuts for state workers in the upcoming budget are likely unavoidable, according to the latest budget analysis by the Civitas Institute.
The Numbers Don’t Add Up
An examination of current revenue forecasts combined with state employee payroll data suggests state employee payroll is an inevitable target for cuts. Consider the following:
According to the annual Fiscal Research salary survey, budgeted base salary and benefits of state employees totaled more than $13 billion (as of Dec. 2008) – not including any state appropriations for the State Health Plan.
A revenue projection of $17.5 billion for FY 2009-10 leaves a difference of only $4.5 billion with which to finance non-payroll items (not counting federal stimulus funds and the use of various state trust funds).
By comparison, the salary survey indicated budgeted base salary and benefits in Dec. 2007 as $12.5 billion. The FY 2007-08 state budget totaled $20.7 billion, leaving a difference of $8.2 billion with which to fund non-payroll items.
“State employee payroll obligations are the largest single state expenditure,” observes policy analyst Brian Balfour. “With the latest revenue estimates pegging the state deficit at a massive $4.6 billion for the coming year, the harsh economic reality is that current employee payroll levels appear unsustainable.”
“The 0.5 percent cut in state employee salary recently ordered by Gov. Perdue is likely just the beginning. Extended mandatory furloughs, across the board pay cuts or substantial layoffs are likely on the horizon,” added Balfour.
Voters Will Reject Tax Increases
State budget makers have spent themselves into a difficult spot. State employees are a politically powerful group, but implementing tax hikes to help maintain current payroll levels will be widely unpopular at this time.
According to recent Civitas poll results, 68 percent of voters believe the General Assembly should “cut existing programs” in order to balance the current budget, compared to only 16 percent that replied “raise taxes.”
“The public is in no mood to have their taxes raised right now. Elected officials who support tax hikes will put their political future in jeopardy.” said Balfour.
May 13th, 2009 at 7:21 am
State employees are also voters! If given the choice of raising taxes or cutting state employee salaries, then I would vote for raising taxes. Raising taxes results in everyone sharing in the pain of this economic disaster, whereas cutting state employee salaries targets just one group. Just my 2 cents!
May 18th, 2009 at 9:26 am
The people of NC need to be reminded that their K-12 teachers and community college faculty are paid below national and regional averages. Furthermore, what message are we sending about our support for quality public education when our leaders and citizens would rather cut educational professionals’ salaries that are already below average rather than suggest some new or increased taxes?
Couldn’t we increase revenue through taxes on non-essentials and/or luxury items? For example, what about:
1. A 1-2% tax increase on luxury homes (over $750,000)
2. A slight tax increase on autos over $35,000
3. A 3-5% tax on restaurant meals
4. A significant tax on tobacco & alcohol
Such taxes would generate revenue that would help pay state employees AND they’re more than fair since citizens would only have to pay them if they chose. You don’t HAVE to buy a 35,000 dollar car; you don’t HAVE to smoke or dip; you don’t HAVE to eat out; beer and liquor aren’t necessities.
May 19th, 2009 at 9:57 am
NC state salaries are already far less than the national average. I am a teacher with a graduate degree and make 15K per year less than what I would make in VA. I’m having a hard time as it is getting by on what I make. Now that I need to give back part of my salary how am I going to continue to pay my bills? How am I going to pay back my school loans? I already work two jobs!
What I really want to know is why is it up to myself and state employees to repair what this state has done? Why not raise taxes and have everyone help share the burden. targeting one group because it’s easy is just wrong. Something needs to be done because next year they will try to take at least 5% of our salary, and if they do that then I will be out of a home! These things they don’t care about. they don’t care that I work 60 hours a week, have 2 jobs and a graduate degree and still don’t make 40K per year. After health insurance and taxes, what I bring home is just enough. they need to raise the quality of education, pay teachers what they are worth and invest in the future.
May 29th, 2009 at 8:04 pm
I agree with the previous comments. Why do state employees have to bare the brunt of the state’s problem? Teachers already work too hard for too little pay here in NC. Our public education system is only going to get worse. There will be a large amount of resentment within the system either consciously or subconsciously. Who is going to suffer…..the children. Beverly Perdue is turning her back on HER state employees. How much is her salary? I am sure the pay cut she is supposedly taking amounts to very little over all. I know that the state is in a bind finacially, but it is unfair to take away portions of salaries from one group. All should contribute! Not only will salaries go down, but our cost of living will increase greatly due to hidden taxes created by the Obama administration. I have heard that Perdue is considering cutting the pay of teachers by 10%. That is absolutely insane! I feel for those teachers living as single parents and having to survive financially here in NC.
May 31st, 2009 at 7:18 am
Agree with all of the above and more………..questions that should be asked:
1. A $2,000,000,000,000 shortfall? How could this have happened in one year?
2. Why is BCBS NOT being investigated – why is their contract with the state sooooo lucrative?
3. Why don’t the State workers and the Teachers join forces? Much more power in this group than alone – the NCEA needs to work with SEANC.
4. Why does everyone not share the pain? This also means that everyone enrolled in the state health plan should pay something – even $5.00/month…..a certain group of people should not bear the brunt of the costs. By the way, both my husband and I are state workers and will gladly pay something every month if it would help………
5. Am not so sure about any “hidden taxes” (sounds like FOX News) but how about an increase in taxes on expensive homes and autos – also increase taxes on those developers who have been well-paid over the past few years??
June 5th, 2009 at 1:47 pm
All the anxiety of these pay cuts and furlows is getting to be too much for me: I live from pay check to pay check and I don’t know how I am going to pay my bills off if my salary is reduced. It is not fair that we, State Employees, have to suffer financially to make the states budget balance. How much NC tax money was misused? How much greed? The economic crisis: I have done everything right and I won’t get anything from the stimulas package and now this. Also, I don’t think an all around tax hike is a good option, at the moment, considering most everyone is struggling, but taxing expensive homes and luxury items is not a bad idea: If one can afford to purchase these items then they certainly can afford to put in more money towards the state.