Three years ago this week, former Governor Bev Perdue went on YouTube to announce that the state’s expected budget deficit for 2012 would only be $2.7 billion. At the time, this was accepted as good news.
To the address this startling budget shortfall — among the highest in the nation — liberal advocacy groups insisted that the General Assembly raise taxes as a solution. They predicted that cutting spending would “put tens of thousands of public-sector and private-sector employees out of work, negate federal economic recovery efforts, and prolong the current recession in North Carolina.”
But the newly-elected majority took a different approach: they cut taxes, reduced spending, and began to root out the waste and bloat of a state government mismanaged by others for over a century. So what happened? Contrary to the dire predictions, the sky didn’t fall. And in just a few short months, North Carolina’s budget deficit of $2.7 billion was completely erased.
(The state’s $2.7 billion deficit was in addition to the $2.8 billion debt which North Carolina taxpayers also owed to the federal government because of the state’s badly managed Unemployment Insurance system. Legislation passed last year by the General Assembly will reform North Carolina’s Unemployment Insurance system to pay off this massive UI debt by the third quarter of 2015. For more information on those reforms and why we owe an additional $2.8 billion to the federal government, please click here.)