Saturday, August 17, 2013

How Is The North Carolina State Budget Like The US Federal Budget?

'Hey! I was only kidding! I thought
I was telling the truth!'
Both are deceptively misleading. Like almost all government budgeting.

We swear:

'If the US and state budgeting process was audited by some reputable private accounting firm under Generally Accepted Accounting Principles (GAAP), everyone would be going to jail!'

(That is presuming that every accounting firm is honest and truthful, mind you. Some of the largest accounting firms in the nation have succumbed to the same temptations of greed and falsification of documents at times. There are crooked accountants, you know)

However, assuming that we could be like Diogenes and actually find an honest accountant, what would they find digging into governmental accounting that was so 'misleading'?

For one thing, 'baseline budgeting'. The bane of all true public policy budget wonks.

We have written about this before. It seems as if baseline budgeting in DC has spawned progeny in North Carolina where they call it the 'continuation budget'.

What do both terms mean?

They both mean that if the current legislature basically does nothing but 'continue' existing policies, 'baseline' or 'continuation' budgets would look like their projections in coming years.

Imagine putting the budgets on autopilot. And then sending every elected member home. Forever. That is what our budgets would become in the future if baseline or continuation budgets are strictly adhered to: unstoppable expansions of budgets with inflation expectations built in annually.

Why would we ever need elections? Just set the budget on 3% annual growth, 5%, 10% and then go home. No need for any oversight. No investigations. No adjustments to priorities.

That is how silly using baseline or continuation budgets can really be.

Don't fall for the hype, hyperbole and sometimes outright hysteria you may hear on the evening news about the 'draconian' budget cuts by the Republicans now in full control of the North Carolina state legislature.

It is simply not true.

The media and activists who want more government spending at your expense love baseline and continuation budgets! Why? Simply because they give them the chance to howl at the moon and scream at the top of their lungs if anything is ever cut from those automatically inflated baselines:
'Those nasty and mean ole Republicans are cutting our budgets! They will throw children, old people and handicapped people out into the street where the wolves will devour them!

It sounds so good on the news channels.  It is an easy accusation to make. It appeals to the basic human instincts of 'unfairness!' and 'injustice!'

Those tirades are simply wrong. In some cases, in embarrassing ways. In many cases, it is just plain sad to see facts so dramatically distorted simply for political gain and posturing.

Take a good hard look at this chart detailing the differences between the 2012 budget, the continuation budget, the 2013 budget and 2014 budget and Governor Pat McCrory's proposed budget.

We dare you to find where the 'mean old Republicans' have 'eviscerated' the social safety net or 'bludgeoned the education budget to death!' or 'gutted' the transportation budget or any other function of state government. (Granted, the Cultural Resources funding for Roanoke Island, down 57%, looks like it means a lot more people are going to have to drive way out to Manteo to see 'The Lost Colony' from here on out)

North Carolina state taxpayer funding for education has gone UP, not down as naysayers want you to believe. Overall spending has gone up, not down, as critics would have you to believe.

What they are doing is trying to get you to believe that budgets have been 'cut' from the 'continuation' budget, not the actual spent dollars figures of 2012-2013! An increase of 1.7% from the previous year is not a cut, people! It is an 'increase' in every other walk of life. 

Except politics and government, of course.

We can have a civil debate about whether teachers deserve a raise or not. We can have a civil debate about whether our roads need to be repaved or the Rural Center needs to be funded. (It is not being funded due to millions being spent wastefully on crony projects in the past)

The one thing we do know beyond a shadow of a doubt is that the state has to get a firm rein on Medicaid spending growth as evidenced by the $500 million spent this year and $500 million allocated for 2013-2014 simply because Medicaid costs have grown that fast over projections just a year ago under the Perdue Administration.

Virtually every dollar that goes to Medicaid in supplemental fashion comes out of the budget primarily for education. That is the choice lawmakers face whether people want to admit it or not.

What we can't do is have people throwing mud who have simply never read the entire state budget. Budgets are designed to force decision-makers to make decisions and set priorities. Cameron Morrison wanted to be known as 'The Good Roads Governor' of North Carolina so they spent more money on building quality roads under his term. Terry Sanford was known as 'The Good Education Governor' of North Carolina so the legislature spent more money on public education under his Administration.

Choices had to be made as to how much money would be spent on each initiative. There is not an unlimited amount of money we can spend in the state since we can't make money up out of thin air like the Federal Reserve does in Washington. The Republicans in Raleigh are not going to raise the level of tax collection above what it is today relative to state GDP.

So there you have it. The stark naked truth about the North Carolina state budget. When the economy rebounds and more tax revenue flows into the state coffers, there will be time to argue about how much to increase these line-items in the budget.

Just don't lie about it is all we ask.





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