August 19, 2009 The N. C. General Assembly has adjourned. Before doing so they dumped the largest tax increase in history on the people of this state and imposed an economic burden on a struggling economy that is suffering under the highest unemployment burden in years.

The Democrat Leadership in the legislature and Gov. Beverly Perdue made much ado during the session about how dire the situation was. They were constantly issuing press releases about cutting expenditures. Then, in the final days of the session they “decided” that cutting would not be sufficient and they would have to raise taxes. And when the dust settled they had cut some spending and they imposed $1.1 billion in new taxes on us.

The reason we make partisan reference is simple: The adopted budget was passed by Democrats with no Republican “yes” votes. Democrats own this budget.

So we here at the Observer have spent the last couple of weeks studying the new budget. After considerable effort we were finally able to get the Governor’s Office to furnish us with last year’s budget so we could compare what was spent last year (FY 09) to what was approved for FY 2010. That exercise was eye opening. You can see the data by clicking here if you have MS Excel on your machine.

Here’s the summary. There was little cutting of expenditures and much increasing of revenue. The key smoke and mirrors game came with Federal funds. The bottom line can be simply stated: The FY 2010 budget appropriates $20.86 billion in spending for next year. That compares to $19,650,972,334 in estimated actual expenditures this past year. So where are all these “cuts” the Democrat Leadership kept talking about? We sought to find out.

The answer is two-fold. First, they usually talked about cutting “appropriated” funds for FY 2009. But remember, the Governor had already cut much of that in the mandatory rescissions she ordered when it became apparent revenue was not going to meet projections upon which the appropriations were based. Secondly, they played a shell game with Federal Stimulus money.

It gets complicated (we believe intentionally so) but you can see what was actually spent and what has been appropriated by department/agency in this spreadsheet. The FY 09 column was furnished by the Governor’s Office upon our request. The FY 10 and FY 11 columns are taken from S202, the budget bill that was ultimately passed.

If you scan the differences between last year and this year you find that some departments/agencies were cut, most notably Elementary and Secondary Public Education, Mental Health, Medicaid, and some others; but here’s the overall picture: More departments and agencies will be spending more next year than last. And that is especially true if you add back in the Federal funds that are being made available.

According to the Governor’s Office “Federal Recovery funds” total $1,375,000,000 in FY 2009-10 and $1,020,000,000 in FY 2010-11. Federal funds for Elementary and Secondary Public Education (Title I and IDEA Funds provided directly to LEA’s) totals $544,000,000 which could be used to offset state reductions (these monies have to be spent over next two years).” And the Governor has made public her position that local school systems should not have to lay off anyone, if they use these funds as she hopes they will and as the State Board of Education approved them being able to do. In a press release from Perdue’s office dated 8-12-09 she says the amount of Federal “recovery” funds will exceed $579 million, thus making up much of the “cut” in state funds.

So after all the talk was over, K-12 education came out pretty well off. And the Community Colleges will get nearly $70 million more next year than last while the UNC system will get over $130 million more. No cuts there. Not nearly as bad as the warnings had been.

But most interesting of all, the General Assembly increased its own budget by $3,509,668, a 7% raise in the first year and an additional $2 mil the second year. The Governor’s Office settled for a $83,062, or 1% cut.

Commentary

We just can’t help but feel we were duped by our leaders when they said they had made all these drastic cuts and had to raise taxes anyway. While we’re not budget experts it looks to us like what actually happened is that they threatened to make major cuts and then raised taxes to keep from having to do so. We just don’t see major cuts in spending, when you include all available revenue. And if the economy picks up as most economists predict that it will then things will be even better than all the doom and gloom talk led us to believe we were faced with.

So the taxpayers have been hit with a $1.1 billion tax increase, state employees will not get a raise and not many state agencies had to take any cuts. Most got increases. Not a bad gig if you are a tax and spend bureaucrat or politician.

The bottom line is: They will spend more next year than they spent this past year. In our book that means they made no cuts. Rather than do as thousands of us have had to do and cut our spending they just raised our taxes. Now we’ll have to make the cuts in our family budgets to pay all these new taxes. So what is wrong with that picture?

Here’s what we think is wrong with it:

Times are tough. They are likely to get worse before they get better. Everyone we know is cutting back. But State Government is not. Our leaders simply forced the cuts on the people. For those who are on fixed incomes, those who have lost their jobs, for those who have had their hours cut, for thousands of small businesses that have had to cut their budgets…generally for most of us…the “cutting” will have to be done in our budgets in order to pay the taxes to fund a state budget that actually was not cut at all. It seems to us that they should have cut their budget as much as they ask us to cut ours.

Bless us and save us.

Beaufort Observer Online Edition, August 19th, 2009