Irresponsible Senate Budget Ignores Fiscal Realities

Higher Spending, Structural Deficit, Keys to Democratic Plan

Raleigh, N.C. – Senate Democratic budget writers this week unveiled their proposal for next year’s budget.  Their proposal would spend $18.989 billion in the 2010-2011 budget year, an increase of at least $450 million over actual state general fund budget spending in the current year.  Not counted in the Senate plan is about $1.6 billion in normally budgeted spending which is being covered by federal stimulus dollars.

Because the stimulus money and an additional $1.25 billion in last year’s “temporary” tax increases are both scheduled to expire by July 1, 2011, the Senate plan like Governor Perdue’s plan contains a structural deficit of at least $3 billion.  That deficit is not addressed, or even talked about, in the Senate Democrats’ plan.

The pattern established by Democratic leaders in North Carolina over the past seven years has been to increase spending in election years and to increase taxes in non-election years.  This has been done at least as far back as 2003.  If history is any guide and Democrats continue to control the General Assembly in 2011, significant tax increases are likely to top their budget agenda next year.

“This budget ignores fiscal realities and sets up families and businesses for massive tax increases next year at a time of continued recession and high unemployment.  By increasing overall spending this year the Democrats make next year’s problem even worse,” said Senate Republican Leader Phil Berger (R-Rockingham). 

House Republican Leader Paul Stam (R-Wake) added, “It takes some time to turn a battleship around.  Last week’s proposal that we freeze spending for next year at the current year’s level will help move us in the right direction.” 

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