GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE RESOLUTION 2390

─────────────────────────────────────── 
Sponsors: Representative Miller.
─────────────────────────────────────── 
Referred to:  Rules.
─────────────────────────────────────── 

June 15, 1990

A HOUSE RESOLUTION TO INSTRUCT THE COMMITTEE ON FINANCE OF THE HOUSE OF REPRESENTATIVES TO PREPARE AND RECOMMEND REVENUE MEASURES NECESSARY TO BALANCE THE STATE BUDGET FOR 1990-91.
Whereas, the budgeted General Fund expenditures of the State for fiscal year 1989-90 exceed currently estimated General Fund Revenues for 1989-90 by over $500 million; and
Whereas, the Governor, the Office of State Budget and Management, and the State agencies and institutions over the last several months have taken actions designed to reduce that deficit, including freezes on filling State positions, curtailments of budgeted nonpersonnel expenditures, delays in payments to vendors for goods sold and delivered to the State, delays in the issuance of State income tax refund checks to taxpayers, and the postponement from June to July 1990 of salary payments to State employees for services they rendered in June; and
Whereas, most of the actions just noted will at best postpone some obligations from fiscal year 1989-90 to 1990-91, not resolve the problem of insufficient State income to pay current expenses; and
Whereas, the fiscal staff of the General Assembly now estimates that budgeted and otherwise committed General Fund expenditures for fiscal year 1990-91 will exceed estimated General Fund revenues for 1990-91 by $336 million, and $225 million of already approved capital improvements are at risk; and
Whereas, some of the pending proposals for responding to this fiscal problem require serious and long-term reductions in current levels of State services to the State's citizens, the dismissal of State employees, the postponement or reduction of legislative commitments to education, promised improvements in service programs such as the Basic Education Program, and the adoption of short-term financial expedients of uncertain effect and at best short-term benefit; and
Whereas, a State that ranks highest in the nation in infant mortality, lowest in the nation in manufacturing wages paid its citizens, and lowest in the nation in the Scholastic Aptitude Test scores of its high school seniors, cannot afford to break faith with its own people and its cities and counties by withdrawing or denying funds required to address those problems; and
Whereas, several federal mandates and program commitments and actions by the General Assembly in earlier years will result in substantial further General Fund expenditure increases in 1991-92 and later fiscal years amounting to several hundred million dollars, and in order to be in position to deal with those increases, the General Assembly must put the fiscal affairs of the State on a sound basis in advance of fiscal year 1991-92; and
Whereas, the financial problems that have been enumerated are in part the result of one-time financial miscalculations and temporary conditions, but reflect also the fact that this General Assembly over several years has made spending commitments to provide needed services to the people of North Carolina that it has not yet made adequate provision to finance on a sustained basis; and
Whereas, bond rating agencies are now critically monitoring the State's financial condition and practices and threatens to lower the AAA rating of our State bonds if we are unable or unwilling to pay our obligations in full and on time, an action that would materially increase interest costs to the State, impair the value of outstanding State bonds, and tarnish the invaluable reputation of the State for financial integrity; and
Whereas, if this session of the General Assembly does not confront directly and respond responsibly to this financial problem, it is probable that the worsening crisis will force the Governor to call the General Assembly into extra session later in 1990 to try to cope in the middle of the fiscal year with a problem that can be dealt with effectively only from the beginning of the fiscal year; and
Whereas, while the General Assembly, the Governor, and the State agencies and institutions must continue to make all reasonable and responsible efforts to avoid unnecessary expenditures of appropriated funds and forego new financial commitments that we are not prepared to meet, it is clear that additional State revenues will be necessary during fiscal year 1990-91 if the State is to have a balanced budget, avert a major financial crisis, and maintain the financial reputation of the State; and
Whereas, while it is not feasible in this session of the General Assembly to devise a long-term solution to the revenue needs of the State, short-term efforts using recurring revenue sources to do so are feasible and are essential;
Now, therefore, be it resolved by the House of Representatives:
Section 1.  The Committee on Finance is directed to examine the need for, prepare, and report and recommend to the House of Representatives not later than June 22, 1990, such measures as it finds necessary to increase State General Fund revenues for fiscal year 1990-91 to the extent that, in conjunction with reductions in budgeted and projected expenditures, a balanced General Fund budget will be achieved for fiscal year 1990-91.
Sec. 2.  The Committee on Finance is authorized to conduct such hearings with respect to (i) the revenue structure of the State and its productivity and (ii) the economies and other effects to be anticipated from projected reductions in current appropriations and in planned program expansions as it may find useful in carrying out this assignment.
Sec. 3.  The Committee on Finance shall also recommend legislation to effect the repeal, effective July 1, 1991, of all statutory exemptions, exclusions, deductions, allowances, credits, deferrals, refunds, preferential tax rates, or other devices, either stated or implied, which reduce the amount of tax revenue which would otherwise be collected by the State.
Sec. 4.  This resolution is effective upon adoption.