Jan 4, 2011
The North Carolina Chamber of Commerce Economic Forecast Forum
North Carolina business leaders, state legislators, executive branch officials and lobbyists gathered Monday, January 3rd in Research Triangle Park for the annual North Carolina Chamber of Commerce Economic Forecast Forum. The Forum featured presentations on the state’s economic climate, including projections for 2011, and on how the North Carolina General Assembly plans to tackle the large budget shortfall facing the state in the next fiscal year.
State Budget Director Charlie Perusse, Sen. Pete Brunstetter (R-Forsyth) and Rep. (and former Speaker) Harold Brubaker (R-Randolph) provided an overview of the state budget picture. All agreed that the looming $3.7 billion gap would be addressed through budget cuts and that there would be no new taxes.
Over the last 18 months, North Carolina has lost 250,000 jobs and experienced about a 15% decline in revenue. To put that in perspective, during the last recession in 2000-01, the State only experienced a 2% decline in revenues. Perusse said that the state budget had been balanced the last two years by slowing down spending, budgeting for a conservative revenue forecast and the receipt of additional federal monies; all of which are one time adjustments and not a cure for the recurring structural problems that the state is experiencing.
Perusse did have some good news: North Carolina is continually ranked in the top five states to do business and maintains a AAA bond rating with all three rating agencies—an accomplishment shared with only 7 other states.
Rep. Brubaker and Sen. Brunstetter, likely House and Senate Appropriations Committee chairmen, talked about ideas to plug the shortfall and about how the budgeting process will work in the 2011 Legislative Session. Rep. Brubaker commented that it is time to rethink the role of state government. Instead of across the board cuts, he said that the Legislature will look at individual programs to see if they justify their appropriations—a zero-based budgeting approach. Sen. Brunstetter added, “There are no sacred cows at this point” and state employee layoffs are likely.
Sen. Brunstetter also announced that the Senate Finance Committee would be chaired by Sen. Fletcher Hartsell (R-Cabarrus), a Concord lawyer, and Sen. Bob Rucho (R-Mecklenburg), a Charlotte dentist. Senators Richard Stevens and Neal Hunt, both Wake County Republicans, will co-chair the Senate Appropriations Committee with Sen. Brunstetter.
Rep. Brubaker praised privatization as a worthy option for budget savings and Sen. Brunstetter, while cautioning that it might not work in many situations, agreed that if the private sector can do something better and cheaper than government, privatization should be considered. Perusse concurred stating that he anticipates that private options for prisons, mental health and ABC will be “touched on” in the Governor’s budget.
During his luncheon address to the Forum, Senate President-Elect Phil Berger (R-Rockingham) stressed that the General Assembly must align spending with revenue and keep spending below our state’s projected revenue ceiling. He agreed with and praised Governor Perdue’s efforts to cut spending during the remainder of this fiscal year to carry forward as much as possible into the next fiscal year.
In addition to spending cuts and no tax increases, Sen. Berger promised that Republicans will push tort, medical malpractice and workers compensation reform as well as streamlining government permitting and environmental regulations. He urged North Carolina businesses to unite behind this agenda, saying that such support would be needed to counteract the expected opposition from groups that want more government spending and think that our current environmental regulatory and tort systems do not need to change.