J. Peder Zane

NC budget is a fiscally responsible Goldilocks document

Flanked by members of both houses, Speaker of the House Tim Moore, left, and Senate Pro-tem Phil Berger unveil their budget agreement.
Flanked by members of both houses, Speaker of the House Tim Moore, left, and Senate Pro-tem Phil Berger unveil their budget agreement. cseward@newsobserver.com

The General Assembly’s new budget displays a remarkable lack of ambition.

It doesn’t promise to turn North Carolina into Shangri-La, where everyone has a great job and great health care as they groom their kids for the Ivy League.

Thank goodness.

For too long – i.e. forever – politicians have promised us paradise and delivered disappointment. It is hard to pinpoint exactly when but, during the last century, as the federal and state governments ramped up spending, regulation and services with relentless vigor, we left the land of possibility, landing firmly in the zone of diminishing returns.

Even if you believe that government programs have made a positive difference, it is hard to argue that buckets of new money will solve the problems that buckets of old money have not.

North Carolina’s 2015-17 budget, which will spend about $21.75 billion per year in state money, recognizes the limits of government. Balancing revenues and outlays, it is a budget rather than a spending plan.

Passed with bipartisan support, it is informed by the idea that the state is not the prime engine of economic growth. It acknowledges that instead of attempting to solve all the world’s problems, government must run its own house responsibly and effectively.

The budget works toward this by increasing spending about 3 percent, roughly in line with the growth of population and inflation. This Goldilocks approach – not too much government and not too little – should, but certainly will not, debunk claims that the GOP is bent on dismantling state power.

This responsible approach is especially apparent in the budget’s efforts to replenish the state’s rainy day fund. Currently, North Carolina has about $652 million in this reserve, a miniscule amount given almost $22 billion in annual obligations. The budget aims to kick in another $450 million.

This dovetails with the GOP’s derided decision a few years back to slash unemployment benefits in order to repay the $2.5 billion debt to the federal government it inherited from the Democrats.

Neither effort is sexy. Neither will buy many votes for the party. But they are the right, responsible thing to do. When the next recession hits – and it will – North Carolina will be in a better position to continue providing essential services. It will be less likely to impose the draconian cuts Democrats were forced to make back in 2009. (Yes, such cuts could be mitigated through broad-based tax increase, but neither our people nor our politicians have shown an appetite for that.)

Particular aspects of the budget that reflect the partisan divide have been criticized by the left, but in most cases GOP legislators seem driven more by fiscal responsibility than knee-jerk ideology.

Dramatically limiting state support for light rail projects in Durham and Orange counties recognizes that we do not have the population density to make the $1.5 billion plan worthwhile. For the seeable future, buses are a smarter investment.

Allowing the renewable energy investment tax credit to expire may be the best thing to happen to the green sector. Replacing the crutch of state support with the free market’s prod is our best hope of developing cheap, efficient renewables. It also addresses the fact that these well-intentioned subsidies have become a form of crony capitalism, sopped up by big corporations.

Increasing funding for opportunity scholarships is another wise move. Taking a step back from the partisan debate, providing a tiny amount of money ($25 million in 2017, from a state education budget of about $12 billion) to a tiny cohort of students (perhaps 6,000 out of a total of about 1.7 million) unhappy with their school choices is a worthwhile experiment.

Finally, the separate plan unveiled Friday to reform Medicaid is consistent with the fiscal responsibility that is the hallmark of the biennial budget. As an entitlement, Medicaid costs can be hard for states to forecast and control. This plan, which shifts risk from the state to health care providers, should provide more financial stability. In fairness, it is too soon to tell what impact this will have on health care so it bears vigilant scrutiny.

Ironically, this GOP-crafted budget is a valentine to big government. The best way to restore faith in our institutions is to make them affordable and effective. This budget doesn’t get us there, but it is another step in the right direction.

Contributing columnist Zane: jpederzane@ jpederzane.com.

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