Budget time again | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    The county and state budgets are no different from your household budget. Governments, other than the Federal Government, can not spend more than they take in. Budgets have to balance. That is, the tax payers have to produce enough money in the form of taxes to pay for what the elected officials intend to spend. North Carolina counties and municipalities are required by law to produce a balanced budget on or before June 30 of each year. The legislature and the governor are required to produce a balanced budget on or before June 30 of each year. All government budget years in North Carolina begin on July 1 and run through June 30.

    North Carolina provides oversight to counties and municipalities through the Local Government Commission. This commission came into being as a result of the Great Depression of the 1930's. Seems that some governments did not balance the books and went bankrupt. Same thing that is going on in Detroit. The local Government Commission has been successful in keeping county and municipal governments solvent. The result is that millions of dollars have been saved by the reduced interest rates paid on bonds that are sold when North Carolina governments need to borrow money.

    The Local Government Commission regulates accounting standards and minimum fund balances for counties and municipalities. The minimum fund balance is the amount of money the county or municipality is supposed to have in the bank at any given time. That amount is only 8 percent of the total budget. A little math tells us that 8 percent of the whole budget is also 1/12th of a year or one month. Obviously this is too low since most of the revenue, in the form of taxes, comes in during December and January of each year. Most governments use 20 percent as a policy minimum for unrestricted fund balance. At the moment Beaufort County has a 30 percent surplus or savings or fund balance.

    The Local Government Commission sends letters when they see a deteriorating situation. If the county or municipality cannot pay its bills or does not provide a reasonable explanation as to how they intend to deal with their money problem, the commission can take over that government and run it until adequate corrections have been made. There are cities and possibly counties in North Carolina who are on a "watch" list. Two examples are the Town of Princeville and the County of Chowan, They have had serious problems in the past.

    Beaufort County has had no problems and has and excellent credit rating.

    Our excellent credit rating does not mean there are not games played with the budget. The most common deception in county and city governments is the simple statement "We did not have to raise taxes this year". Most of us trusting souls would believe spending did not go up. Not so. Revenues go up almost every year. During boom years revenues go up a lot. The reason is, because of more spending during boom years, sales taxes increase and building permits and other fees go up. How many times has your friendly neighborhood local government said "Because of the increased sales taxes collected in this booming economy, we are reducing property taxes"? I have not heard it either.

    Sooner or later the economy gets bad enough with high government spending so that taxes have to be raised on property. That has not happened in Beaufort County because of the large fund balance we maintain. But, spending has gone up.