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Tuesday: 'Lough blow
posted at 2009-04-28 23:39 | Last modified 2009-04-28 23:48
(Update: Scroll down for raw audio and doc links.)
Governor Bev Perdue started her announcement today with some bad budget news. April 15th revenue collections were far lower than expected. Everything dropped - from personal and corporate taxes to sales and payroll.
"We are a billion dollar shortfall more than we had anticipated in this tax period. And that means for me, as the governor of North Carolina. I’m gonna do what I’m mandated to do constitutionally."
The state constitution requires the governor to balance the budget by the end of the fiscal year. That means Perdue has to find another billion dollars by June 30th - and that's on top of the more than two billion dollars she’s already cut this year. The governor says she’ll cover the added shortfall with $350M from the state’s rainy day fund, $400M in federal recovery money she'd planned to use for 2010, $200M-ish from various trust funds, and $65M from furloughs.
"I am, through executive order, implementing a flexible furlough program, beginning may first and ending June 30th, to balance out this fiscal year. That means for state employees and teachers, we start with point five percent – a half percent of everybody’s salary for this fiscal year. "
Numbers and Figures
Half a percent for an employee making $50K a year amounts to a $250 cut. For someone earning $30K, it's $150. The deduction will be taken out of May and June paychecks. Perdue says she knows it’s very short notice.
"I think it’s hard for them to be told that they have to give up a hundred and fifty bucks, because if they’re like a lot of North Carolinians, they budget so finely around their obligations. I was a realist, though… This is all I can do. We needed to make a decision and let folks know what we were doing to balance our budget and that’s what I did
In return for the pay cut, workers and teachers will get ten hours of leave to use between June 1st and December 30th. So it's not exactly a furlough, technically speaking - it's more like a pay cut with a little bonus leave down the road as a sweetener.
The order was something of a surprise, since Perdue has consistently said she doesn’t like furloughs. As recently as last month, she said she’d prefer to make strategic permanent cuts to balance the budget. But when asked why she'd changed her mind, Perdue was quick to point out she'd never said "never."
"If you look at the language I used on furloughs and on classroom size, I was very careful, because I knew there would very likely come a time where I’d have to consider ‘em. And it isn’t over now. Don’t you all think it’s over now, because we’ve got a long way to go until North Carolina has fully recovered. And we all know that, and I knew that, and I’m very careful with what I say.
I was very direct to say I thought it was the easier way out initially, that we ought to make some tough choices and go in and look at other alternatives. But I never once said I would veto them or publicly fight against them."
Reax
The furlough order provoked only muted protests from advocacy groups. Sheri Strickland is president of NCAE. Her group is scrambling to make sure teachers know what to expect. She says ten-month employees will suffer the biggest impact because the entire cut will come out of their final checks in May.
"You know, we have to say that we hate it. We do. We hate a lot of these very difficult decisions that are having to be made right now. But – no one is gonna lose their job as a result of doing it this way, nobody’s gonna be without benefits. So I think it does seem to be a reasonable way to have everybody take a small hit."
SEANC wasn’t happy, either. They’ve been lobbying hard against furloughs. SEANC liaison Ardis Watkins says it'll hit lower-wage workers especially hard. But, borrowing one of Perdue's favorite expression, Watkins said the ballooning current-year deficit didn’t leave the Gov many options.
"The shortfall was so much that it looks to me like she’s gonna grab money from anywhere she can find... We’re not pleased that furloughs would be a part of that, but it is what it is."
In terms of protecting public services, Watkins says, furloughs are better than permanent cuts, but she says they’re not a viable long-term strategy – and SEANC will fight to keep them out of next year's budget.
"The bottom line is, as long as we’re spending money on things – on Bald Head Island beach re-nourishment, on buildings at universities – things that are not absolute necessities, it makes no sense to send working North Carolinians home, keep them from being productive and putting more money in the tax coffers, so that we can spend more money on things we don’t need."
Many state lawmakers don’t agree. The Senate budget included a provision allowing agency heads to use furloughs to save money. House lawmakers are considering their own slate of furlough proposals for next year. And the Governor says she could order another round of cuts if tax revenues don’t stabilize.
Extras
Perdue's executive order is here. You can also read the memo her budget chief Charlie Perusse sent out to state agencies.
The raw audio of Perdue's prepared remarks is below (7:48).
Listen Now!
And here's her question and answer session (9:53).
Listen Now!
Comments? Drop me a line.
