John Hood wrote a great piece that the Wilmington Star News actually published (I know!). It explained how great of a position North Carolina is in financially…
North Carolina’s leaders have proven to be responsible stewards of taxpayer dollars. A new report from the state controller’s office showed that over the first three quarters of the 2017-18 fiscal year, North Carolina state government spent just over $16 billion for General Fund programs (such as schools and public safety) while taking in $16.6 billion in revenue.
That cash surplus of about $600 million is healthy, although not particularly out of line with previous experience. Fiscal analysts for the state legislature estimate that General Fund revenues are running just shy of $300 million above what was forecast when lawmakers passed the budget last summer. The rest of the cash surplus represents the fiscal cushion state lawmakers usually, and wisely, build into the state budget.
What if we head into a recession? In North Carolina, lawmakers have prepared us well. We have $1.8 billion in the state’s rainy day fund, plus half a billion in other reserves. A steep recession would surely translate into tight state budgets, but lawmakers won’t have to resort either to massive layoffs or stiff tax hikes. Other states aren’t so well-prepared. SN
This is very important because, according to pretty much every economist on the planet, The United States is headed for disaster. WaPo’s Catherine Rampell highlighted that the April 208 Fiscal Monitor report found “that the United States is the only advanced economy in the world expected to have its debt burden get worse over the next five years.” This is a major problem. The Wall Street Journal reported on Monday that an economic downturn could catch the U.S. unprepared…
That challenge exists across the country: Low unemployment has led to a recovery in state unemployment funds, but the recovery is mixed and incomplete. State unemployment trust fund reserves hit $55.2 billion last year, up substantially from $9.5 billion in 2010. Despite the rebound, more than half of U.S. states lack enough unemployment funding to be prepared for another recession, Labor Department data show.
Economists and policy experts say many states—including powerhouses like New York, California and Texas—are missing an opportunity to rebuild their funding during good economic times. Complicating their outlook, the federal government may not be in a strong position to help the next time the U.S. economy goes south, because federal budget deficits are approaching $1 trillion. WSJ
States like California & New York don’t even have a year of reserves if the economy tanks. Relying on the federal government was never a good idea but it is even worse now as yearly deficits reach a trillion dollars in good economic times. Just imagine what the U.S. government will have to borrow if tax revenues fall in recision. That will not be a good time to go running to the federal government for a check. Luckily, thanks to the foresight of the GOP, North Carolina won’t have to.