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.

Gov. Beverly Perdue is trying to expand on some old ideas to close a proposed $3.4 billion budget gap for North Carolina next year.

Her spending plan recommends more than $200 million in savings by giving agencies less than 100 percent of their expected allotment to pay workers.

State government usually spends a little less than 100 percent because it’s not always at full employment. A few percentage points are used to pay for temporary workers, unexpected high utility bills or workers compensation claims.

Perdue said it’s time to pull back that money to its actual use for regular salaries to give the public a more accurate picture of how taxpayer dollars are spent.

Legislative leaders are not thrilled with the idea, saying it gives wiggle room for agencies when money is tight.

RALEIGH, N.C.  – North Carolina’s correction secretary has to sign off on a big purchase of cheese as part of the state’s belt-tightening efforts.

Correction Secretary Alvin Keller must personally approve all spending of more than $25,000. Waiting for his approval Thursday was a $68,000 requisition for a delivery of sliced cheese to feed some of the prison system’s 40,000 inmates.

That’s one example of the cost-cutting steps state government agencies are taking to control spending and save $930 million by the end of the budget year in June.

Gov. Beverly Perdue’s office on Thursday released a partial list of steps some state agencies are taking. Most are unlikely to be noticed by North Carolina taxpayers, like Keller approving big purchases.

By Kim Genardo
NBC17

RALEIGH, N.C. — State agencies continue to slash budgets and it could have an impact on keeping our highways clean.

The community work crew program could get eliminated to help the Department Of Correction meet its 2009-11 budget cuts.

“We’ll make every effort to try and keep those community work crews in place because they are so valuable to counties, cities and towns that use them for labor,” said department spokesperson Keith Acree.

The move would cut costs by $4.7 million and eliminate 127 correction officers’ jobs.

The DOC must reduce its 2009-11 budget by 7 percent or $90 million.

Other options include closing as many as seven minimum security correctional facilities, including Umstead in Butner.

The town’s Mayor Tom Lane said the correctional facility is a vital part of the community.

The inmates provide labor for state and local institutions.

“Our local water and sewer authority depends very heavily on their workers,” said Mayor Lane.

Winston-Salem Journal
This is no time for the taxpayers of North Carolina to be subsidizing tuition for out-of-state student-athletes on UNC campuses.

Not with drastic budget cuts being made across the spectrum of state services. Not with 7-percent budget cuts likely on our university campuses, cuts that will lead to larger class sizes, fewer course offerings and either layoffs or furloughs for faculty and staff.

Yet taxpayers are subsidizing out-of-state athletes because state Senate leaders established that system when they slipped a provision into the budget several years. The provision grants in-state tuition status to anyone receiving a full scholarship at a UNC campus.

The provision was never fully aired in public, as most budget items are. That’s because the Senate president pro tem, Sen. Marc Basnight, D-Dare, allowed it to be added to the budget during the final deliberations.

The provision, in short, is a windfall for the athletics-support groups at UNC Chapel Hill, N.C. State University and other schools with major athletic programs. The groups provide athletic scholarships.

When the schools recruit an out-of-state student, they can provide a full scholarship and pay only the in-state rate for that student. That in-state rate, of course, is far below the cost of the student’s education at one of our public universities. The taxpayers pick up the rest of the tab, just as they do for every other resident North Carolinian who attends a UNC school.

But there is a difference between major taxpayer support for a good student from Winston-Salem and a big subsidy for a linebacker from Ohio who may have never set foot inside our state before being recruited. The family of the in-state student has been paying taxes for years to support the UNC system. The Ohio linebacker’s family has been paying taxes to support Ohio State.

Rep. Pricey Harrison, D-Guilford, has filed legislation that by all rights should pass in this year of desperate budget-cutting. She wants to take away that special tuition break for out-of-state athletes. Her bill would continue a similar tuition break for out-of-state students on academic scholarships.

Harrison recently told the Journal that she estimates the potential state savings at $10 million a year. She also said that she has been informed by Senate leaders that they won’t even consider her bill.

That kind of arrogance infuriates the public and undermines public trust in government. There is no way that scholarships for out-of-state athletes should get precedence over the items being cut from our schools and universities. Yet, that is happening.

Sen. Linda Garrou is responsible, in large part, for putting together the state budget. It is time for her constituents to tell her to intercede with the big-time athletic supporters who run the Senate. Our schools and young people should come first, not linebackers from Ohio.

RALEIGH, N.C.  – Reality is setting in now that Gov. Beverly Perdue and the Legislature are getting their arms around North Carolina’s share of the federal stimulus package.

Even $3.7 billion won’t be enough.

That’s how much money Perdue’s office now says state leaders can expect at their disposal to narrow projected budget gaps through mid-2011 from the $6.1 billion in stimulus money heading to North Carolina. The rest of the money has strings attached, is earmarked for items like building roads, or won’t be available for a while.

The amounts are huge. But the federal money still won’t be enough to fill the holes completely in those state budgets, even when combined with huge state spending cuts.

Perdue’s office estimates the difference between projected revenues and expenses for the next fiscal year starting July 1 alone could be $3.6 billion before the budget is written, according to an administration document obtained by The Associated Press. That’s equal to 17 percent of this year’s $21.4 billion budget approved by the Legislature.

Even with what social justice advocates call a devastating level of cuts suggested, combined with the stimulus money, the document suggests the state would still be $500 million short of balancing the budget.

“We still have a tremendous hole to plug,” said Perdue, who will present her first budget as governor to the Legislature by mid-March. “We’ve got some hope in the air, (and) I can get us through this. But I don’t want anybody to be fooled. There are going to be tough, hard decisions made.”

State lawmakers said they always knew the stimulus wouldn’t solve all the budget problems.

“Some people are going to get hurt,” said Rep. Mickey Michaux, D-Durham, the senior co-chairman of the House Appropriations Committee. Save for protecting education and social services programs, “we’re going to just have to take an ax” to other agencies, he added.

Those preliminary numbers, shown to top Democratic legislators at the Executive Mansion late last week, could build pressure upon them to raise taxes to avoid further cuts.

“We’re going to have find a way to put revenues on the table, and that is with a document that supposes extremely deep budget cuts that I think would be felt in every community across the state,” said Meg Gray Wiehe, an analyst with North Carolina Budget & Tax Center. The outside group estimates next year’s budget gap could be $4 billion.

Some lawmakers are interested in raising cigarette and alcohol taxes but won’t consider broad increases to sales and income tax rates because it’s the wrong tactic in a slowing economy. Other federal stimulus money is designed to create jobs and give tax breaks.

“Obviously, large cuts are required and they need to be carefully considered,” House Speaker Joe Hackney, D-Orange, said of Perdue’s budget, but added: “We’re just very hopeful what the stimulus will do for us.”

But it will only go so far.

According to the document, Perdue will be able to use $781 million in stimulus money to close this year’s budget shortfall of $2.2 billion by June 30.

Next year, the governor estimates a $3.6 billion budget gap based on a revenue forecast of $18.8 billion compared to expenses of $22.4 billion. The Perdue administration envisions spending $1.7 billion in stimulus money. But with a suggested $1.4 billion in budget reductions, the plan would still be $500 million short.

A similar projection for 2010-11 – a $3.1 billion deficit with $1.2 billion in stimulus money and $1.4 billion in cuts – would leave the state an additional $500 million short again, according to the document.

Perdue’s office points out the broad budget cuts suggested in the document are options – nothing has yet been recommended.

They include reducing spending at most state agencies by 10 percent on average, with a 7.5 percent reduction for higher education and Department of Health and Human Services and a 4.5 percent reduction for the public schools.

“These … numbers have significant and really profound human consequences,” said Rob Thompson with the Covenant with North Carolina’s Children. The group is part of a new coalition called Together NC, which plans an event this week urging legislators not to use spending cuts alone to balance the budget.

Wiehe said it’s an opportune moment for legislators to consider reforming the tax code, creating additional revenues. A popular idea among many Together NC members is to change how multistate corporations are taxed based on an accurate percentage of their activities in the state.

The shortfalls have been “made much worse because we have an outdated revenue system that hasn’t kept up with the 21st century,” Wiehe said.

Michaux said finding cost savings in state government is paramount. While not endorsing the idea, he pointed out that increasing all public school class sizes by only one student each could save the state $170 million.

Raising taxes, Michaux said, are “going to be one of the last things in my mind that’s going to be considered.”

A bipartisan group of senators worked furiously in backroom negotiations on Thursday to cut the cost of the more than $920 billion economic stimulus plan, the NTY.

RALEIGH, N.C.  – Gov. Beverly Perdue is asking administration officials to find more cuts in the face of the $2 billion shortfall in the state budget, the N&O reports.

There’s just no rest for the tax savvy. So far this year, Congress has made more than 500 changes to the tax code, including 290 in the $700 billion financial rescue package passed in October.