Loading...
BYH to all people that make excuses for gerrymandering. Two wrongs don't make a right. Gerrymandering is wrong. It...

Steady state budgets winning the fiscal race

john hood

John Hood

Loading…

Monday, June 11, 2018

The recent legislative adjustments to North Carolina's 2018-19 state budget produced two main political controversies that we'll hear more about as we move through the campaign season to the November midterms.

One was about process. Rather than enact mid-course adjustments to the biennial budget by filing separate House and Senate bills, considering and enacting them through floor debate, and then appointing a conference committee to reconcile the two into a final conference report for an up-or-down vote, legislative leaders decided to skip all but the last step.

Democrats and some Republicans complained that this shortcut reduced their ability to shape the final outcome — by proposing amendments during floor debate, for example. Offensive comparisons of North Carolina lawmakers to North Korean dictators aside, this complaint had merit in my view.

The other controversy was about substance. Democrats charged that Republicans had shortchanged education and other priorities. Gov. Roy Cooper issued a statement condemning the revised budget plan and proclaiming that his own "proposed tax fairness for teacher pay along with forward thinking investments while saving responsibly." This political claim was meritless.

For starters, the term "responsible" should not be applied to Cooper's proposal, which contained a $1.5 billion spending increase in a single year, spent or allocated this year's General Fund credit balance down to zero, and left gaping holes in projected budgets for 2019-20 and 2020-21. "The only thing that saves it from being a completely irresponsible document," said my John Locke Foundation colleague Joe Coletti, "is the fact that it is all but completely irrelevant."

The governor's representatives stated that his higher spending would be financed by "freezing" scheduled tax cuts for corporations and "people making more than $200,000 a year." These statements were misleading. The extra personal and corporate taxes Cooper wanted North Carolinians to pay totaled $110 million in 2018-19, which is real money but represents only a small share of Cooper's $1.5 billion spending hike. Moreover, these extra taxes would apply to individual taxpayers with incomes starting at $100,000 — not exactly the corporate raiders and coupon-clipping plutocrats of the Left's fevered imaginations.

In recent decades, North Carolina Democrats have made a habit of enacting bloated budgets during growth years, thus pleasing the spending lobbies in Raleigh, and then raising taxes during recessions to make up the difference.

They did it in the 1980s. They did it again in the late 1990s. They did it still another time from 2004 to 2008. In each case, when recessions crimped revenues and boosted spending, Democratic legislatures resorted to tax hikes to fill the holes — mostly sales-tax hikes, by the way, although personal and corporate income tax also rose.

All the talk about how some state programs have yet to recover to the spending levels of 2008 (after inflation and population growth) misses the point entirely. That peak was the handiwork of Democratic governors and legislators who, as the hare did in his infamous race with the tortoise, had scampered ahead without foresight and discipline.

The Republicans currently leading the General Assembly are following a different approach. While also cutting taxes and regulations to make North Carolina a more attractive place to live, work, invest, and do business, they are increasing state spending gradually, keeping rough pace with annual changes in inflation and population while prioritizing K-12 education and public safety.

Because revenues have grown more rapidly than this steady pace of spending, the General Assembly has built up the first truly sizable savings reserve in state history. The sum of what will soon be a $2.06 billion rainy-day fund, $621 million in Medicaid reserves, and another $621 million in other reserves and credit balances represents a $3.3 billion cushion for when North Carolina experiences its next recession or disaster.

Other states aren't so well-prepared. Nor do they have as well-funded a pension fund. When a recession comes, North Carolina won't have to resort to panicky cuts or costly tax increases. Rather than frolic for political gain, true leaders focus on winning the race.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on "NC SPIN," broadcast statewide at 7:30 p.m. on Fridays and 12:30 p.m. Sundays on UNC-TV.

Loading…

Humans of Greenville

@HumansofGville

Local photographer Joe Pellegrino explores Greenville to create a photographic census of its people.

Op Ed

December 13, 2018

In the January 1953 edition of the magazine If: Worlds of Science Fiction, a fan of the genre from Texas, Marilyn Venable, made her debut as an author. “Time Enough at Last,” Venable’s story of a bookish man who survives a nuclear holocaust, made such an impression that Twilight…

john hood.jpg

December 13, 2018

Prosecutors investigating President Trump made big news recently, but it wasn't about Russia. Rather, in their sentencing recommendation for fixer Michael Cohen, lawyers with the U.S. Attorney's Office for the Southern District of New York wrote that in the final weeks of the 2016 campaign,…

Byron York

December 12, 2018

 

How appropriate would it be for a major publicly held American company to hire a person with a history of having publicly made the following statements and many others like them? (In the interest of brevity, I shall list only four.)

"The world could get by just fine with zero black people."…

Walter Williams

December 12, 2018

When I heard the news of the arrest in Canada of Wanzhou Meng, Huawei's chief financial officer, my thoughts turned to Al Capone.

Capone was targeted for running Chicago's underworld but was ultimately brought down for tax evasion. Canadian authorities detained Meng on what appears to be Huawei's…

LAKE

December 11, 2018

Here we are, two years later.

We've taken many, arduous, often tedious steps, only to return to where we began, having gone nowhere.

In late 2016, as Gov. Roy Cooper was preparing to take office, the General Assembly decided it would change the makeup of the Bipartisan Board of Elections and Ethics…

John Trump

December 11, 2018

Have the Republicans running the legislature gone soft?

Their lame-duck session has been lacking the fireworks I'd expected in the last hurrah of veto-proof GOP rule. The main agenda item was voter ID. And with a newly inked constitutional amendment to back it up, I fully expected Republicans to…

Colin Campbell

December 10, 2018

How should we respond to the urban-rural divide? The question has legions of politicians, scholars, journalists, and businesses scrambling for answers.

I respect their efforts. But I feel compelled to point out, respectfully, that the question is poorly conceived. Most people live in neither truly…

john hood.jpg

December 10, 2018

Orange County, California, Register

For too long, Congress has abdicated its constitutional obligations with respect to war powers.

On Nov. 28, the Senate took an important step toward reasserting this authority by voting 63 to 37 in favor of moving ahead on a resolution directing the removal of US…

December 10, 2018

It makes no political or geopolitical sense for President Trump to cozy up to the Saudis or Russians to the extent he has. It does make economic sense — for him, his family and his family enterprises.

Follow the money was the mantra used by Washington Post reporters Bob Woodward and Carl…

douglascohn.jpg

December 09, 2018

There's something uncomfortably sterile about life-expectancy rates.

When the Centers for Disease Control and Prevention reports that average American life expectancy shortened by a tenth of a year, as it did last year, it's forgivable if the problem isn't immediately obvious. Sure, we might have…

Robert Gebelhoff
324 stories in Op Ed. Viewing 1 through 10.
«First Page   «Previous Page        
Page 1 of 33
        Next Page»   Last Page»