Unemployment, DOT, and Budget Shortfalls
Many North Carolinians have felt the bitter sting of trying to navigate the Division of Employment Security to apply for unemployment benefits. Between March 15th and June 25th 1,667,403 unemployment claims have been filed in North Carolina. That number represents 1,094,270 difficult individual situations. The process has been very difficult for those impacted by the shutdown orders. The situation became so terrible that we saw Democrats openly joining Republicans to call on Governor Cooper to take action to improve his department. Unfortunately, many families are still suffering — and waiting.
NC DOT overspent $743 Million due to poor financial oversight, according to this report by State Auditor, Beth Wood. “The Department exceeded its Spending Plan because it did not ensure that spending estimates for preliminary engineering and operations and maintenance were based on cost estimates of the specific projects and operations scheduled for the year. Additionally, the Department did not use readily available historical spending data to estimate disaster spending.” Her findings were in line with what was also pointed out by a consulting firm. Governor Cooper initially rejected stronger financial oversight of his department, inclusive of Board changes and General Assembly involvement, but the GA was able to reach an agreement that is supposed to avoid a veto. The contractors who perform work for DOT provide a great deal of jobs and economic activity for our state. We need the infrastructure, and the cash flow it circulates!
Regardless of any opinions regarding a shutdown, the unintended consequences of the Stay at Home orders, and the closing of businesses are that we will collect much lower levels of sales taxes. Income taxes will also take a hit. I don’t think many people fully appreciate that we are facing hard times. We are fortunate to have a rainy day fund of $1.169 billion, and we hope to be able to avoid the layoffs, furloughs and cuts that were forced upon the state during the difficult 2008–2009 time frame. The great recession set us back by a decade. While we are better prepared (they had a $150 million rainy day fund then) it will be impossible to avoid all pain. This projection does not included the projected shortfall at DOT. When we include those numbers, the State of NC is facing a $5 Billion dollar budget shortfall. The information in the graphic above is taken from the consensus revenue forecast for the general fund.
