John Sanders discusses strategies for NC budget cuts

A new Republican leadership in the N.C. General Assembly paired with a budget crisis comparable to that of the Great Depression, has state institutions scrambling to cope with the expected decline in funding.

Former UNC School of Government Director John Sanders, who also helped reorganize and revise the state’s constitution in 1968, studied documents from the 1930s and reported on the state’s handling of extreme budget cuts.

Sanders said legislators could use the strategies used by legislators during the Depression in determining cuts this year.

Daily Tar Heel: Was the state running on a much different budget during the 1930s?

John Sanders: No, it’s just the other way around. The budget was a tiny amount compared to today, but proportionately it was similar.

And also, state government at the beginning of the period was not as extensive. For example, one of the things that was done in 1931 is the state assumed responsibility for operating the public schools of the state, and the county roads were the same way.

People realized that if you’re going to have public services, you’re going to have to pay for them. And if you’re going to have a viable state, you’re going to have to have public services, schools and roads among them.

DTH: Do you think the Republican leadership in the N.C. General Assembly will choose to handle the situation differently than the leaders in the 1930s?

JS: The attitude of the General Assembly in the 1930s and today is very different. They value tax reduction above all else. That means we’re guaranteed to have some substantial reduction from that source, as well as the depression and the termination of federal stimulus money.

I do not assume the legislature is likely to impose either continuation of the current sales tax — which is scheduled to expire this summer — or to impose other taxes. I think one of the problems is this is such a different experience, and it’s so big that nobody can really wrap their minds around it.

It’s like saying a 100-foot tsunami is coming, but nobody’s ever seen a 100-foot tsunami, so we don’t quite know how to deal with it.

DTH: Could the state cut salaries rather than positions, as it did during the Great Depression?

JS: Sure, at least judging from what was done in the ‘30s, and I think it could be done now. If everyone’s salary were cut 10 percent and everyone stayed on the job, then you’re doing the same activity at a lesser cost, and when the economy comes back, you can raise the salaries to where they were.

DTH: When does the legislature need to have a state budget finalized?

JS: The Republican leadership is talking about adopting a budget by June, but even in calmer times, the General Assembly hasn’t been able to get the budget adopted by June 30.

At some fairly early stage as a practical matter they’ve got to say, ‘How are we going to close this gap that is somewhere around $2.5 billion?’ A large part of it has to come out of payroll. The only two options are: either you let go of a lot of people, or you reduce salaries.

DTH: Education is usually the first part of the budget to be cut. Why do you think that is?

JS: It represents about three-fifths of the state expenditure, so there’s no way you can cope with the problem we have now without adversely affecting education.

(Former UNC-system) President (Erskine) Bowles suggested some time ago that one extremity the University might have to go to is closing down some institutions. This is separate from the budget issue now, but from the standpoint of members of the General Assembly, they may say, “Well, we’ve got too many institutions, why can’t we do it with 15 or 12?”

Now of course we could, but start proposing that any one of them be discontinued and suddenly it’s got a multitude of defenders.

In Orange County, for example, the University is the largest payroll in the county. It’d be like the closing of a major textile plant. But we’ve got what we’ve got and we’ve got to live with it, and I think as long as you or I are likely to be concerned with it there are likely to be 16 campuses.

Now if we were creating the University from zero, we might not choose to have 16 institutions, but knowing how the legislature works we might wind up with 85 like the community colleges.

DTH: The UNC-system Board of Governors is looking at unnecessary duplication among campus programs. Do you think that’s a good way to go about cutting back on costs?

JS: They’ve been doing that since 1931. One reason the original three universities — Chapel Hill, Greensboro and State — were merged was to eliminate some unnecessary duplication. Then in 1971 when the university structure was set up with the 16 campuses, again there was a methodical review of programs to see what was offered that could be eliminated. Duplication is characteristic in the eyes of the beholder, and I’m not saying it doesn’t exist. It’s like waste, fraud and abuse — it’s one of those routine phrases we use without having any specific meaning.

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