Heard in the Halls is an email service of NAMI North Carolina to provide updates on state legislative and policy issues. Heard in the Halls is produced for community advocates at least monthly and more frequently during sessions of the General Assembly. To be added to the Heard in the Halls list send a message to heard@naminc.org with just "subscribe" (no quotes) in the subject. Because of the variety of e-mail servers, Heard in the Halls is sent in plain text and as a formatted attachment.

May 9, 2002

Although the General Assembly will not convene until May 28^th , the Appropriations Committees are already in full swing. Their task: to deal with what appears to be the worst state budget situation in history. Each succeeding projection surpasses the previous one for the most dismal forecast of the state’s economic situation. The numbers are staggering but here is how they shake out.

The most recent projection has the state running a deficit of $1.5 billion for the current fiscal year that will end June 30^th. Last February the Governor took extraordinary measures to deal with the looming crisis by seizing $1.2 billion from state agencies and funds, including $37.5 million from the Mental Health Trust fund. The most current projections, taking into account substantially lower tax collections in April, require the state to find another $300 million to balance the budget for the current fiscal year. The new fiscal year that begins July 1^st is even worse. The most recent projected deficit is $2 billion.

How did we get into this mess?! The current crisis happened for a number of reasons that have occurred over the last 5-6 years:

• The General Assembly approved tax cuts in the mid-1990’s resulting in $1.5 billion a year in lost revenues
• North Carolina survived two major hurricanes and no new revenue was raised to pay for the recovery
• The state lost two lawsuits that drained over $1 billion from state coffers
• The state’s tax code is outdated because it is based on manufacturing, a sector that has largely left the state
• The national economic downturn has resulted in lower that expected April tax collection

There are three ways the General Assembly and Governor can respond to the budget crisis. They can:

• Cut spending
• Delay or reorder previous spending priorities
• Raise taxes and close tax loopholes

Governor Easley has asked for "options" from state agencies for program cuts between 8-11%. For the Department of Health and Human Services (DHHS), that amounts to $280 million. Included in that amount are $60 million in cuts to community mental health programs. (Additional cuts will impact the mental health system if the $129 million in "options" to reduce Medicaid are enacted). The Secretary of DHHS has termed that level of cut "catastrophic." Despite that dire characterization, the DHHS Appropriations Committee is required to come up with an additional $50 million in funding cuts for the Department for a total of at least $330 million.

Let’s put the proposed amount of reduction in perspective. The total amount of state dollars in the MH/DD/SA community system (excluding funds committed to the former Willie M. and Thomas S. programs) is $180 million. A reduction of $60 million will take over 1/3 of the state funds out of the system, funds that pay for individuals who have no other source of support. An additional $15 million could be lost in federal funding as a result of this cut. If these cuts are enacted, a system that is trying to reform itself won’t have a system left to reform.

With such a dismal outlook, you would expect legislators to frantically look at other options (mental health services aren’t the only programs facing massive cuts). There has been some discussion regarding the second option, delaying or reordering previous spending priorities. This involves shifting resources committed to other purposes to help fill the budget gap. For example, funds could be shifted from one or both of the highway funds, the Clean Water Trust Fund, or tobacco settlement funds. Others have suggested eliminating programs, for example, the Global Transpark. While there are reasons not to take money from these funds, doing so would not impact direct services to people in need. At this point however, no one is committing to any of these options.

Very few legislators are talking about the third option to deal with the budget crisis: raising taxes and closing tax loopholes. Especially in the House, the "T" word paralyzes the leadership in both parties facing an election year and control of the chamber. This, in spite of the fact that most people recognize that failing to raise new revenues will have dire consequences on the people and economy of our state. In this case, apparently, political expediency trumps political leadership.

What you can do:

• If you have a relationship with your legislator, talk to them now. Urge them not to make the cuts being proposed and instead consider other options to deal with the budget crisis.

• Write letters to the editor of your newspaper about your concerns that the impact of proposed budget reductions will decimate the mental health system.

• NAMI North Carolina has joined with a very large coalition of health and human service organizations under the theme "Save North Carolina, Invest in Our People". Rallies by various constituencies will be occurring throughout the first few weeks of the legislative session. Coalition 2001 will hold its Rally Day on behalf of people with mental illness, developmental disabilities, and substance abuse addiction on June 4^th at the General Assembly in Raleigh. Save the date and plan to come. We need a large turnout and people to tell their stories to legislators. More information will follow.

• Be alert for alerts. Watch for alerts through Heard in the Halls that will let you know the most effective time for you to make your concerns known. When you get an alert, respond!

Together, we have a lot of work to do this session to convince legislators to save the services people with mental illness require. They need to hear from us. They need to be encouraged to do what is right. They need to be reminded that they were elected to serve the best interests of the people of our state and that it is time to Save North Carolina, Invest in Our People.