Gov. Mike Easley announced his plan for next year's state budget Tuesday, and in doing so anticipated a state lottery for school funding.
The budget plan attempts to address an expected $2 billion shortfall for the next fiscal year. The budget crisis, stemming largely from an economic slowdown, has been called by some experts the state's worst since the Great Depression.
After instructing each state agency to reduce spending by 7 to 11 percent next year, Easley called for up to $726 million in cuts to state projects that would eliminate over 2,600 jobs--1,400 of which are currently filled--in the largest state layoff in years. In addition, Easley would cut $210 million from state highway funds and suspend $333 million in payments to city and local governments; to compensate, Easley offered them the option of raising local sales taxes by a half cent.
Another $250 million in revenue would come from the state lottery Easley proposed, but implementing the lottery--long-discussed but never seriously considered by the General Assembly--is far from realistic.
"If anyone says no to this budget, then they have a duty to specify how they will protect education," Easley told the press Tuesday. "I will work with anyone committed to protecting the classroom."
Some analysts said the proposal was a maneuver designed to shift blame for possible tax increases or deeper cuts away from Easley and onto legislators.
"He'll come out smelling like a rose," said Ted Arrington, professor of political science at the University of North Carolina at Charlotte. "They'll cut some programs, and he'll say, OI told you not to cut those programs.' Or they'll raise taxes and he'll say, OI told you not to raise those taxes.'"
Should the lottery not pass in the General Assembly, or should legislators call for a referendum, the government will have to make further cuts or raise taxes.
Alternatives include reducing part of Easley's educational agenda, rolling back a series of Republican-led tax cuts in the mid-1990s, and raising taxes on tobacco and alcohol--which are among the lowest in the nation. None of those options will likely be politically appealing to legislators, however, who face re-election in the fall.
Given the budget crisis and redistricting woes, "it's not wondrous why people don't want to run for the Legislature," said Thad Beyle, professor of political science at the University of North Carolina at Chapel Hill. "This is the reason why people say, OWhat the hell am I doing here?'"
If any agency was a winner in Easley's budget, it was education, despite $269 million in cuts. Easley hopes to add 600 new teachers, fund more pre-kindergarten programs, reduce class size, increase scholarships for child-care workers and fund more university-level financial aid.
Arrington said there were a series of non-related events that have contributed to the current budget crunch: Hurricane Floyd relief costs, the recession, higher-than-normal state growth, increases in the cost of Medicaid and two taxes--one on intangibles and one on taxing retirement benefits--that the state has to pay back.
Beyle added that the long-term, underlying causes for the weak state economy include the collapse of the long-reeling textile industry and hard times for the tobacco industry, as well. Furthermore, the state's high-tech investments in the 1990s have also taken a hit.
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