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More on the budget:
State acts to plug $927
million hole in state employees' health plan
Legislature
heeds NCCBI's call for a government efficiency study
State
starts the year with empty bank accounts
How the state divides $8.3
billion in education funds
A closer look at the
higher tax rate on the rich and not-so-rich
Detailing the salaries of
top government officials, who get no raise this year
Budget
refills two key reserve funds,
leaving Moore ‘cautiously optimistic’
state will keep its Triple A credit rating
 Education
was the most obvious winner in the $14.5 billion budget
finally adopted by the General Assembly last week. Among many
school programs funded in the budget are $25 million to reduce
class sizes, $93 million for teacher bonuses, $44 million to
help underachieving students pass end-of-grade tests, extra
money to boost community college instructor salaries, and $6.4
million to start Gov. Mike Easley’s More at Four
pre-kindergarten program.
Legislators also concentrated on rebuilding the state’s
financial reserves, which had been depleted by hurricanes and
expensive lawsuits over illegal taxes. The budget earmarks
more than $300 million for the state’s two primary savings
accounts, an amount that hopefully will persuade the New York
bond ratings firms to continue North Carolina’s Triple A
credit rating. One of the ratings agencies, Moody’s, had
placed North Carolina on its Credit Watch over concerns about
the state’s shaky finances.
Whether North Carolina will keep its sterling credit rating
won’t be known for sure until the state places a new bond
issue on the market. But observers believe the state took
several important steps to reassure the credit ratings
agencies, including:
 Depositing $181
million into the Rainy Day Fund, the state's main savings
account. That will lift the balance in the fund to more than
$330 million, depending on how Gov. Easley decides to
officially close the books on last fiscal year, when he drew
money from several accounts to plug an $800 million hole in
the budget.
Earmarking $125
million for the state's Repair and Renovation Fund, which pays
for maintaining state government buildings. With that money
set aside, the state won’t have to rob funds from other
accounts if the roof starts leaking on the Capital.
Funding the
state employee salary budget at 100 percent of anticipated
costs, rather than 98 percent as was seriously proposed during
budget negotiations between the House and Senate. Because some
jobs won’t be filled and others will be vacant for weeks or
months, it’s usually safe to fund salaries at less than 100
percent of anticipated costs. But doing so means little or no
reversions at the end of the year and less wiggle room if
revenues are below target.
Reserving $47.5
million for a new mental health trust fund to begin paying for
the expensive proposition of decentralizing the
state’s mental health services in favor of community-based
programs.
Depositing $40
million into the state's Clean Water Management Trust Fund for
acquiring important environmental properties.
Giving Gov.
Easley $15 million in industrial recruitment funds to be used
to “close the deal” with relocating or expanding
businesses.
State Treasurer Richard Moore (above, right) told us he
thinks the Triple A rating is safe. “Gov. Easley and the
legislature worked very hard to address the concerns that the
ratings agencies had regarding the budget, and I am cautiously
optimistic that the budget does that.”
Moore added that the budget “contains both significant new
revenue and significant cuts that appear to meet future
obligations of the state. The General Assembly acted very
prudently in putting $338 million in the state’s Rainy Day
Fund and $125 million in Repairs and Renovation Fund. These
contingent funds should help North Carolina through any tough
times ahead.”
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