Sunday, May 16, 2010

North Carolina’s Fiscal Chickens are Coming Home to Roost

North Carolina's Fiscal Tsunami

As reported by Civitas

Brian Balfour May 10, 2010

North Carolina's dire fiscal condition will once again take center stage this spring as state lawmakers return to Raleigh to craft a budget for the coming 2010-11 fiscal year. North Carolina's financial woes, however, run much deeper than the daunting shortfall in next year's budget.

While lawmakers will blame the economy, make no mistake: the financial disaster that is North Carolina state government is completely of its own making. Long-term fiscal irresponsibility highlighted by out-of-control spending growth, stunning increases in debt spending and unsustainable financial commitments is to blame.

But just how bleak is the state's financial picture? Outlined below is a summary of North Carolina state government's economic crisis, a "fiscal tsunami" that threatens to overwhelm the state's already-overextended budget in the near and long term.

Dangerous Deficits: $4.3 Billion Structural Shortfall over Next 26 Months (as of May 1, 2010)
State budget writers are facing a real budgetary deficit of roughly $4 billion over the next 26 months. This number represents actual revenue shortfalls (compared to projections), expenses exceeding projections, and revenue streams that will disappear.

State Debt: $9.4 Billion and Growing Fast


North Carolina Owes $3.5 Billion to Federal Government - plus another $153 million in interest payments

Escheats Fund Dwindling: $535 Million Liability by 2012

$28 Billion Unfunded Liability for State Retiree Health Benefits

Pension Fund to Require $650 Million in Additional Funds Over the Next Two Years

State Health Plan: Costs to Rise by $2 Billion in Next Four Years
North Carolina's State Health Plan – which covers state employees and retirees - faces many financial challenges in the next several years.

Federal Healthcare "Reform" to Cost Millions
Federal healthcare reform legislation recently signed by President Obama will burden North Carolina's state budget with hundreds of millions in additional expenses.



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