According to The Charlotte Observer, the state's budget forecast has gone from optimistic and rosy to absolutely desperate in the space of eleven days.
First let me give you the good news as we once knew it. That version was reported on December 26th in an article by J. Andrew Curliss entitled "N.C. Tax Income Exceeding Plan, Commitments Loom: Easley purposefully used conservative collection figure"...
Nearing the halfway point of the state's budget year, it appears the government will bring in more money from taxes and fees than it had planned....
Receipts in the state's general fund budget were $130 million to $160 million ahead of the forecast over the first five months of the fiscal year, when about $7.1 billion was due to be collected, according to a legislative research budget report.
Curliss goes on to offer one tiny bit of caution when he reports that Rep. Jim Crawford, one of the legislature's chief budget writers, says that while the news that collections are ahead of pace is promising, there are no signs that the income will cover all of the predicted deficit.
Never-the-less, every legislator knows that it's far too early to tell because no final accounting has been made of the bulge in sales tax revenue that always occurs with the holiday season.
From there to the conclusion of the article is an upbeat discussion of the state's fiscal prospects. While new spending will be modest, Governor Easley is proposing a new earned income tax credit for the working poor that would cost between $70mm to $140mm a year. By all accounts, this proposal is being warmly received and chances for passage appear promising.
The only real tax question facing Raleigh this legislative session will be whether or not to extend the temporary one-quarter percent sales tax which, if allowed to lapse, "would return between $240mm and $260mm to the taxpayers." It is a foregone conclusion that the income tax surcharge levied on the state's richest citizens will be allowed to expire without a second thought.
OK, now let's move to January 6th and an article by Mark Johnson that is headlined, "N.C. Braces for Budget Shortfall: $500M shortage possible; Easley disputes likelihood." Suddenly the sky is falling and the state is smack dab in the middle of a budgetary "dilemma."
According to Mr. Johnson's report...
The size of the gap between revenues and planned spending -- what legislators call a shortfall -- is unclear. Legislative leaders are talking about a potential $500 million shortage, and the liberal-leaning N.C. Budget & Tax Center earlier projected as much as $1 billion.
Wow! Suddenly even those notoriously spendthrift "liberals" are sounding the alarm, and Geez Louise! They've been forecasting a $1 billion dollar shortfall!
Johnson quotes Sen. Tom Apodoca, the No. 2 Republican in the Senate, as warning that the Democratically controlled legislature is engaging in the same practice that created the financial crisis at the beginning of the decade.
Now we've moved right past dilemma, and it's fast becoming a full fledged "financial crisis." (Do you smell the smoke? Are those sirens I hear?)
Even our good friend Rep. Crawford who once reassured us about the promising pace of revenue collections seems to have lost all hope. According to Mr. Johnson's article, "Crawford and other General Assembly leaders predict that inflation and population growth will push spending about $500 million beyond any growth in tax revenue."
I probably don't need to mention that no where in Mr. Johnson's article is any mention of the governor's day dream; that tax credit for the working poor. Who would be so foolish to point out that embarrassing little detail when it's so obvious that our state government is suddenly insolvent.
After reading those two articles I'm left to wonder, as I'm sure every reader of The Charlotte Observer must wonder, have things really changed all that rapidly? Or have we been offered two articles, purported to be straight news, not opinion, not analysis, that are so wildly divergent that they don't even resemble each other.
With this huge disparity in treatment how is the reader supposed to know where the facts leave off and the interpretation begins? Is The Charlotte Observer making a good faith effort to provide the facts in a balanced way so that the rest of us can be confident we're well informed? Or is being a reporter for The Observer simply a license to provide spin and opinion masquerading as the truth?