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Wed. Bad News & Bears
posted at 2009-02-18 23:59 | Last modified 2009-02-19 14:17
In today’s installment of the hit series “How Broke Are We?”, economic researchers from UNC-CH’s Kenan-Flagler Biz School told lawmakers NC may be in much worse shape than they’d thought.
Other economists have predicted NC would be positioned to ride out this recession more securely than other southeastern states. But Center for Competitive Economies Director Brent Lane said today the latest research doesn’t support that optimism.
Some of the lowlights:
- Remember those “21st century jobs that can’t be outsourced,” like biotech, telecom, and R&D? Whoops. They’re being outsourced after all – at least the ones that aren't being eliminated outright as the global economy circles the drain. Lane says NC’s in for a big hit in the tech sector.
- NC’s per capita income hit its high against the US average in 1997, and has been slipping in relative terms ever since. In other words, our income’s been growing, but not as quickly as the rest of the country’s – largely because the high-paid manufacturing jobs we’ve lost have been replaced by low-paid service jobs.
- Turns out our economic incentives programs aren’t exactly hitting the mark, either. (I’m sure this comes as a shock to my conservative friends.) Lane’s research says most of the new jobs created through incentives end up in urban areas, and 75% to 80% of them end up going to residents of other states who move here to take them. You can always argue the merits of attracting new talent into NC, but in terms of putting laid-off residents back to work, these programs are batting under 250.
The presentation was so relentlessly downbeat that at the end, Duplin Sen. Charlie Albertson asked plaintively whether there’s any good news for NC’s rural communities. (That’d be "no.") You can see the Center’s incentives study here.
How bad is it?
The (unconfirmed) word on the street tonight is that Governor Perdue plans to meet privately Thursday with Speaker Hackney and Pro Tem Marc Basnight. No word yet on the agenda, aside from the other rumor du jour, which is that the latest tax withholding numbers are coming in 16 percent off. If that’s true – and at this point, it’s unsubstantiated – the gap for next year’s budget could be a lot closer to $3B than $2B.
Stimulating?
Budget-writers also got their first public briefing today on how the stimulus package will (and won’t) be able to help patch the state’s shortfall. The good news is that the state should be getting somewhere around $1.7B in education funding in the very near future. The not-so-good news is that there’s all sorts of strings attached, and legislators and staffers are scrambling to figure out how they work.
According to today’s Fiscal Research briefing by Brian Matteson and Kristopher Nordstrom, the federal rescue package brings immediate funding for NC education as follows:
Fiscal Stabilization - Education: $1,142,800,000
Fiscal Stabilization - High Priority: $254,300,000
Title I : $169,200,000
Special Education: $162,500,000
Education Technology: $8,200,000
Homeless Assistance: $600,000
Total: $1,737,600,000
The last four categories follow current funding streams, while the first two (Fiscal Stabilization) come with restrictions. Here’s Nordstrom’s nutshell explanation.
Listen Now!
You can see the whole Fiscal Reseach Education powerpoint here.
Okay, and...?
The presentation left Senate budget chairs largely unmoved. Linda Garrou said they’ll move forward with the cuts they already know they need to make: any stimulus money “will be gravy.” A.B. Swindell was a little more upbeat about the federal money, but he says one-time help won’t be enough to fix structural shortfalls.
So it looks like cuts are on the way regardless, and that’s likely to mean job cuts, too. According to FRD, 90% of the money the state spends on education goes to personnel salary and benefits, so budget cuts of any real depth would pretty much have to hit the payroll.
Speaking of cuts
Senate Majority Leader Tony Rand is advancing a proposal to cap the number of session days for which lawmakers are eligible to receive expense checks. He says shorter sessions would benefit younger, working lawmakers who need to get back to making a living in a reasonable amount of time. And, he adds, a similar cap back in the ‘60s worked wonders to keep sessions down to around 120 days. Here’s a short Q&A with him.
Listen Now!
Others think it’s a shortsighted idea. Orange Dem Ellie Kinnaird says lawmakers these days have a much bigger job than their 1960s counterparts.
Listen Now!
Kinnaird says capping the per diem would only hurt rank-and-file lawmakers whose personal pockets aren’t deep enough to cover their own expenses should their (generally wealthier) leaders choose to let the deadline pass. The bill’s scheduled for second reading on the Senate floor Thursday.
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