MEDIA RELEASE: Perdue's budget shows "right priorities," but cuts will impact families and communities

Budget analysts: Perdue's budget shows "right priorities," but cuts will impact families and communities
The facts continue to show that a devastated economy, not public spending, is behind North Carolina's budgetary woes. The governor's budget, though not perfect, would maintain vital programs while cutting expenditures

RALEIGH (April 21, 2010) - Preserving critical state services that create jobs, educate children, and provide health care for struggling families is absolutely necessary for North Carolina - but a challenge during the current deep economic crisis.

Gov. Beverly Perdue's proposed budget, analysts say, in large measure rises to that challenge.

"In tough economic times, Gov. Perdue's budget reflects the right priorities," said Mejia. "Putting the needs of children and working families first is the right thing to do, both as a moral and a practical matter for creating jobs and rebuilding the economy."

One example: the "Back to Work Incentive Fund," which provides a $1000 per job subsidy to small businesses that add new jobs and then fill them with workers who have been unemployed for more than 60 days. This helps both businesses and jobless workers, boosting the economy at the same time.

The ongoing recession continues to make governor's job difficult, since an economic crisis has combined with an outdated revenue system to undermine the state's finances. Under the governor's budget, though, investments in the community college system would be maintained - an essential part of worker retraining for the new economy.

"We're in the midst of the greatest economic crisis since the great depression, and that has had a huge impact on the state's ability to meet citizens' needs," said Mejia. "We applaud the governor for working to preserve vital public investments, such as education."

Perdue's budget would prevent K-3 class sizes from increasing, a factor that studies show is essential to quality education. The budget does, however, include additional large reductions that will have to be made by local school districts and may result in layoffs and larger class sizes in higher grades.

Yet some ill-informed pundits argue that government spending is somehow creating the state's budget gap - a claim that experts say has no basis in reality.

Two years ago, before the economic crisis was in full swing, the state budget was $21.3 billion. In the ensuing years, population has grown - North Carolina's is one of America's fastest-growing states - but the budget is now a full $2.2 billion less than it was two years ago, more than half a billion dollars less when adding in additional federal assistance.

Taking a cuts-only approach would not just weaken the ability for public systems to respond to critical needs, said Mejia, but it would remove a critical economic stabilizer - government spending - during a time when neither consumers nor corporations are infusing much capital into the economy.

"If we tighten our belts any more, we won't be able to breathe," said Mejia.

Indeed, many cost-effective programs that are important for low-income families will be harmed by cuts. Some services currently available to Medicaid recipients, such as eye care and non-emergency dental care, would be eliminated - despite the fact that every dollar North Carolina spends on Medicaid generates a $4 federal match.

And though community colleges would remain open to new enrollment, tuition will increase for the second year in a row, creating access problems for working families.

"No one solution will be enough to solve the budget crisis," said Mejia. "We have to build on Gov. Perdue's proposals to preserve the important public institutions and services that benefit all of us."

FOR MORE INFORMATION, CONTACT: Elaine Mejia, 919.856.2176 (office); Jeff Shaw, communications director, NC Justice Center, 919.863.2402 (office), 503.551.3615 (mobile).