Study: N.C. ranks 21st nationally in fiscal health | Eastern North Carolina Now

    Publisher's note: The author of this post is Kari Travis, who is an associate editor for the Carolina Journal, John Hood Publisher.

Mercatus Center researchers find N.C. handles current obligations well though study expresses concerns about long-term liabilities to government retirees

    RALEIGH     While North Carolina's fiscal health has seen marked improvement over the last three years, a recent study from the Mercatus Center at George Mason University shows the state faces worrisome long-term obligations.

    The Tar Heel State ranks 21st when compared with all 50 states and Puerto Rico, and gets good marks for lowering taxes and maintaining a balanced budget. But while spending for current programs is under control, the state doesn't have enough money set aside to cover a projected long-term debt of $72.5 billion in unfunded pension liabilities, Mercatus researchers Eileen Norcross and Olivia Gonzalez state in their report, "Ranking the States by Fiscal Condition."

    Other retiree benefits, including obligations to the State Health Plan, pose an additional long-term problem, adding up to a projected $25.64 billion. This amount -combined with the state's existing debt - totals 28 percent of all state personal income, according to the report.

    Three of North Carolina's four neighboring states rank higher on the chart, with Tennessee 9th, South Carolina 18th, and Virginia 19th. Georgia places 23rd, two spots behind North Carolina, also taking hits for long-term liabilities that amount to 31 percent of total state income, and its inability to keep current spending under budget.

    Terry Stoops, director of research and education studies at the John Locke Foundation, points to North Carolina's lack of balance in long-term savings as a driving force behind the projected funding gap.

    "North Carolina's commitment to state employee and teacher insurance is outpacing the amount of money we've committed to it, and if the state does not commit more money to addressing those liabilities, then we're in trouble," said Stoops.

    "The choice is either North Carolina will not be able to pay its full pension obligation, or it will have to commit a massive amount of tax revenue to address the projected shortfall," Stoops added.

    Though long-term debts remain a concern, North Carolina's overall fiscal ranking will continue to improve, Stoops said, noting that the Mercatus report is based on numbers that don't account fully for tax reforms implemented in 2013 by the General Assembly.

    To learn about North Carolina's 2016-17 budget plan, click here.