Surplus on the Way for North Carolina

Easley came into office five years ago facing large state defeicits. Now it looks like he will acheive a budget surplus for the third straight year. (article here).

While numbers still are being finalized, the General Assembly's fiscal researchers said the state has collected $213.7 million more than the $9.8 billion needed so far for the spending year which began last July and ends in June. After the first three months of the fiscal year, the state reported $71 million more in collections than projected.

Why the turnaround? Among other things, the economy has taken off during the Easley administration.

North Carolina's economy recovered from the 2001-02 recession later than the national economy, the report said. Job growth was sluggish, likely due to losses in traditional manufacturing industries such as textiles and furniture.
But the amount of payroll withholding taxes, a key indicator in job growth, has turned the corner in recent months and is ahead of expectations, the fiscal analysts said. Corporate income taxes also are running above projections in part due to strong product demands.

Now the million dollar question: What to do with the money? Right now it looks like the winners may be state employees, who have been left out of pay raises in the recent years:

Combined with the current level of overcollections, the additional money could about pay for routine annual expenses not included in the budget, such as teacher bonuses and repairs and renovations of state buildings.

"It's going to take that much to cover the structural increases that we're going to have," Crawford said.

Legislators who return to Raleigh in May to adjust the budget's second year also face other demands.
State employees also will be pressing for higher raises compared to this year. Gov. Mike Easley has unveiled a teacher salary initiative that will cost $150 million per year for the next three years.

Comments

Will be an interesting debate.

Wingers will wring their hands and lament the state taking "their" money. Progressives will argue for making smart investments in the future and strengthening our reserves.

With the Bush government saying "screw you" to states while driving more and more money into military spending and fear mongering . . . I'd say we're going to find ourselves needing every penny we can get to foster the common good here in North Carolina.

Good point.

The state employees have been waiting long enough.