Exaggerated Budget Deficit Exposed

September 25th, 2009 by

How The Democrats Raised Your Taxes Just Because They Could

Raleigh – A recent report by the State Controller provided an accounting for the total spending by North Carolina for the 2008-2009 fiscal years.  In a surprising revelation, the “gap” between the expenditures last year and the anticipated revenues for this year, without tax increases, was only $338 million.  This is in stark contrast to the Democrats’ constant assertion of a budget hole exceeding $4.5 billion for the current fiscal year.  Democrats increased taxes almost $1 billion to cover their exaggerated imaginary shortfall.

During the run-up to proposing a new state budget, the Democratic leadership issued warnings to teachers, mental health providers, state employees and other receptive groups that without massive tax increases essential jobs and programs would be slashed (“NC House Eyes Stark Spending Cuts”, N&O June 4, 2009). As recently as July, the News and Observer reported, “Revenue next year is expected to be more than $4 billion below what it would have taken to keep funding programs and services at recent levels, and Democrats have described the deficit as $4.5 billion or more.” (“The New Plan: More Taxes For All”, N&O July 22, 2009)

The State Controller reported 2008-09 total expenditures, including federal stimulus funds of $19,652,500,000.  According to the official General Assembly estimate, revenues for the upcoming year would have been $17,916,564,000 (without the tax increase) with an additional $1,397,863,857 in federal stimulus money for a total spending availability in 2009-10 of $19,314,427,857.  This leaves a difference or “gap” of $338,072,142.  Taxes were increased by Governor Perdue and the Democrats a total of $990 million.  This will provide $652 million more revenue than required to spend the same as during the previous year.

The recently adopted Democrat crafted budget anticipates spending $20,412,796,056 in the upcoming year for a robust 3.867 percent increase over the $19,652,500,000 in 2008-09 (see page 3 of 15 in the  report).

“In previous public statements and during floor debate, I presented to the House statistical information that the real gap between expenditures in 2008-2009 and planned spending for 2009-2010 was ultimately $1,008,727,709 (counting stimulus money) or $953,320,558 (not counting stimulus money),” said House Republican Leader Rep. Paul Stam (R-Wake).  “Now that accurate numbers have been ascertained from the Office of the State Controller and the General Assembly’s Fiscal Research Division, we now know the real gap was only $338 million.  This is far less than the $4.2, $4.4, $4.7 billion gap consistently proclaimed by Gov. Perdue and the Democrats allies.  Clearly, we could have balanced the budget without any tax rate increases simply by continuing the level of spending that had been in effect since approximately January 2009.”


“The Gap”

Counting Stimulus Money

State expenditures 2008 – 2009: $19,652,500,000*

Availability for spending without raising taxes and fees for 2009 – 2010: – $17,916,564,000**

Federal Stimulus – ARRA Funds for 2009 – 2010: – $1,397,863,857***

Total 2009-10 Spending – $20,412,796,056

  • An increase of 3.867 percent***

The Real Gap: $338,072,143

*2008-2009 Total Appropriation Expenditures, Office of State Controller (report of 8/31/09)

**Total General Fund Budget Revised Appropriation 2009-2010, SB 202, Conference Report Availability Statement, lines 15-27

***NC General Assembly Fiscal Research Division


Chart prepared by the Office of Rep. Paul Stam – 9/23/09