No question that’s a bad use of tax dollars, but it’s the reality in school systems and state agencies throughout North Carolina. If we want to end this practice, then state lawmakers need to come up with a way to change the state of North Carolina’s budget laws that require state agencies to return any money not spent in any fiscal year. It promotes wasteful spending, plain and simple.
This issue was in the spotlight recently in Haywood County when a school system employee set up a credit account with a local building supply firm. The money was put into the account, supposedly, to spend in the coming fiscal year instead of being spent on perhaps unnecessary items before the year ended. The matter is under investigation now to determine if any laws were broken by any school system employees, but it appears that at least one impetus for setting up the account was perhaps to get around the requirement to return unspent budget money.
The state law that forces agencies to return unused money is General Statute 143-18 and is titled, “Unencumbered balances to revert to treasury.” It’s easy to see why such a law was passed. Elected leaders did not want governmental department heads to request unnecessarily large amounts of money, not spend it, and then build up surplus accounts that could then be spent on lavish or unnecessary items in the next fiscal year. By forcing the return of unspent money, leaders could keep taxes down and start at a zero budgeting figure each year.
But it also has negative consequences, the main one being that it provides no reason for government employees to spend wisely.
“It doesn’t give agencies any incentive to save money because if they don’t spend it all, they number one lose it, but they also get penalized because people look at their budget and say, ‘You didn’t spend it all, so you must need less,’” said Gordon Mercer, the director of Western Carolina University’s Public Policy Institute.
In essence, the perfect system would be one that mixed a bit of entrepreneurial thrift with a dose of governmental even-handedness. As long as state and local governments offer no incentives for employees and agencies who are frugal, they won’t develop a culture of efficiency. Until we do develop that culture, we can be assured our tax money is not being spent as wisely as it could.
The first step is simply to begin thinking differently and to discuss this dilemma openly. As long as the wasteful spending of tax money at the end of the budget year remains everyone’s little secret, there’s little hope for meaningful change.