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Memo offers a glance at N.C. budget picture

Just before she left office, former Gov. Bev Perdue issued a budget for the upcoming two-year cycle. It's a document that was required by law but was largely symbolic as she left office and handed control to Republican Pat McCrory.

How symbolic? The document itself is no longer available on the governor's Web site. Still, it did provide a preview about the shape of the state's finances approaching a new year, budgetwise, including that Perdue's team saw room for pay raises and other expansions that were off the table in the worst years. McCrory, in his first news conference as governor, also said the state is looking at a small surplus heading in to budget season.

A recent memo from one state budget guru, Dan Gerlach, who was former Gov. Mike Easley's budget czar, adds a similar view of the overall picture. Gerlach now heads the Golden LEAF foundation, which administers tobacco settlement money.

He wrote to his bosses in December, after Perdue's budget proposal was made public, that "the beginning budget look is not as severe as in the past several years, but still is quite tight."

"(B)y appointing budget and finance chairs in advance of the legislative session," Gerlach wrote on Dec. 18, "the General Assembly signals that it wants to move quickly on budget decisions. The Governor-elect, therefore, needs to get his budget and legislative team in place to make sure the legislature does not outrun his powerful bully pulpit."

McCrory has since appointed businessman Art Pope to develop his budget and former state Rep. Fred Steen to carry out his legislative agenda.

Other insights from Gerlach, according to the memo:

* McCrory will begin with at least $450 million in a "credit balance," which Gerlach said is "significantly" better than past years.

* The estimate of "ongoing revenues is almost sufficient to meet the ongoing costs of operating government at current levels" in 2013-14 and "would be in surplus" in 2014-15. The ongoing costs include Medicaid expenses and increases in schools enrollment. He wrote that "public school growth would receive substantial more funds than in previous years for enrollment growth."

* The estimate of revenue collections "will probably end up being a bit higher, although the revenue growth rate may be reduced some -- still healthy."

* Perdue "underestimated expenses for pension and health care costs" in her budget plan, based on history, Gerlach believes.

--Staff writer J. Andrew Curliss


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