Raleigh, N.C. – The Republican-led General Assembly has consistently enacted balanced budgets since taking control eight years ago, keeping North Carolina on a responsible and sustainable trajectory.
At the same time, the legislature invested more in education than any other year in state history for six consecutive years, rebuilt the rainy day fund to exceed the statutory recommendation for the first time ever, and increased teacher and first responder salaries – all while cutting income tax rates.
After spiraling multi-billion dollar deficits, Republicans have responsibly rebuilt the state budget while cutting taxes and investing in education.
Senate Leader Phil Berger (R-Rockingham) said, “Private citizens spend their money better than government spends their money. By balancing the budget and keeping spending at responsible levels, we’ve returned billions of dollars back to the people, all while investing heavily in our education system.”
In the years between recessions at the beginning and end of the 2000s, Democrats in charge of the General Assembly increased spending by an average of 7.4% each year. In doing so, they laid the groundwork for historic and debilitating budget cuts in 2009 and 2010. They slashed teacher pay, cratered education funding, and froze first responder salaries to cover the budget shortfall precipitated by their reckless spending. The damage could have been mitigated with prudent budgeting in the years before the recession, but Democrats made the policy choice to spend instead.
Senator Andy Wells (R-Catawba) said, “The Democrats who controlled the state until 2011 apparently believed that good economic times would continue forever. They raised taxes and raised spending, squeezing more and more money out of the citizens of North Carolina. They saved nothing for a rainy day so when the recession hit, the state was completely unprepared. The results were disastrous.”
Further, Democrats irresponsibly underfunded the rainy day account, leaving them with fewer options to handle the economic downturn. The General Assembly created the account in 1991 and established a funding goal of eight percent of the previous year’s operating budget. Democrats met the eight percent goal zero times since the account’s inception. Before the recession, the account stood at 4.58% of the previous year’s operating budget, and it dropped to 0.71% by 2009-10.
When Republicans took charge in 2011, they immediately began the lengthy and difficult process of rebuilding the state budget. The General Assembly streamlined state government, consolidating and cutting waste and bureaucracy – all without raising taxes. They spent responsibly, restoring education funding and reinstituting regular salary increases for first responders and teachers.
The result has been a resurgence in North Carolina’s fiscal health. The budget continues to follow a predictable and sustainable trajectory, and the rainy day fund is one the strongest in the country. North Carolina has a “AAA” bond rating from all three ratings agencies, one of only 12 states in the country with that designation in 2017.
At the same time, tax rates are lower and the state catapulted in the business climate index from 44th to 11th. The number of people employed in North Carolina increased by 20.8% since 2011, compared to just 11.7% nationwide. N.C. State economics professor Michael Walden told the Winston-Salem Journal last year that “North Carolina has performed the trifecta of state fiscal management in recent years — cut tax rates, increased spending but at a frugal rate and fully funded the rainy-day fund.”
Senator Berger concluded, “In eight years, the Republican-led General Assembly cleaned up the budget, cut tax rates, invested record amounts in education, and built a rainy day fund that’s among the healthiest in the nation. We’ve charted a successful course, and the work isn’t over.”
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