If Raleigh Budgeted More Like N.C., Taxpayers Would Save Millions

Unsustainable rates of growth in government spending is a problem at the federal and state levels. Lawmakers in most states, both blue and red, are growing government spending at an unsustainable rate, more rapidly than population growth and inflation. Yet a number of states have demonstrated over the past decade that fiscal restraint and conservative budgeting is an achievable goal.

In the decade from 2014 to 2023, total state outlays (both state funds and federal transfer funds) in six states (Alaska, Colorado, North Dakota, Oklahoma, Texas, Wyoming) grew at a slower pace than the rate of population growth plus inflation, also referred to as the fiscally sustainable growth rate (SGR). In another six states (Louisiana, Massachusetts, Montana, North Carolina, Ohio, Rhode Island), state spending (state funds only, not including federal transfers) grew at a slower pace than the SGR. Yet even in states where lawmakers have practiced sustainable budgeting, runaway spending by local governments remains a challenge.

North Carolina is one of the states where lawmakers kept growth of state spending over the past decade below the rate of population growth plus inflation. While state legislators in Raleigh, led by Senate President Pro Tempore Phil Berger (R) and Speaker Tim Moore (R), are practicing budgetary restraint, local officials in Raleigh are not.

Take the new FY 2025 city budget recently proposed by the Raleigh City Council, which totals $1.44 billion. That represents a nearly 12% increase from the current budget.

If the Raleigh City Council were to craft a new spending plan that instead grew city spending in line with the rate of inflation and population growth, which is 6.56%, they would need to enact a budget that spends $1.36 billion next year, not the proposed $1.43 billion. A new city budget that grew in line with population growth plus inflation, which the General Assembly down the street has demonstrated is attainable for more than a decade, would save Raleigh taxpayers more than $66 million next year.

Basic math demonstrates that Raleigh officials could provide signifiant relief to taxpayers through more sustainable budgeting. As Senator Berger, Speaker Moore, and their colleagues have demonstrated for years, meaningful taxpayer savings doesn’t not necessitate drastic spending cuts or a slashing of services, but more modest rates of growth.

By keeping growth in state spending below the rate of population growth plus inflation, North Carolina has realized repeated budget surpluses at the same time lawmakers have returned billions to taxpayers through rate-reducing income tax reform that has brought the state’s top income tax rate from 7.75% down to 4.5% in the matter of a decade. Thanks to this fiscal restraint on the part of the North Carolina General Assembly, state government is much trimmer in size than was the case a decade ago.

“For several decades – from the mid-1970’s up until the Republican takeover of the General Assembly in 2011 – North Carolina’s state budget hovered between 6% and 7% of the state’s economy,” the NC Budget Center, a progressive outfit, reported in 2021. “Thanks to big tax and spending cuts enacted by the General Assembly, state outlays began to plummet, reaching their nadir during the current fiscal year at around 4.54% of the state’s economy.”

The NC Budget Center and other progressive organizations bemoan the fact that, relative to the size of the North Carolina economy, state government is now much leaner than it was prior to the 2010 GOP takeover of the state legislature. Yet, proving the adage that beauty is in the eye of the beholder, many others, including most North Carolina legislators, view that same trend as one to brag about, particularly on the campaign trail.