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Proposal to limit future state spending moves forward

Posted May 9, 2013

Money generic, dollars

— North Carolina would put constitutional limits on the growth of state spending under a bill that cleared the House Government Committee Thursday.

The measure, which has only begun a long legislative journey, would ultimately have to be approved by voters in order to become law.

Often called a Taxpayer Bill of Rights, or TABOR amendment, such measures are favored by political conservatives who say lawmakers cannot be trusted to set aside money in flush times in anticipation of downturns in the economy. 

"Within the last 20 years, we've had three budget emergencies, the latest being probably  the worst," said Rep. John Blust, R-Guilford, the measure's lead sponsor. "Each time, the genesis has  been same. We had good years. We had the fat years where we spent 'the whole thing.'" 

States throughout the country have used different routes to limit spending, including both laws and constitutional amendments. Blust argued that a simple law would not be enough, since state budget-writers could choose to ignore it in any particular year. Only an amendment to the North Carolina constitution, he said, would keep legislators in check. 

Under his bill, the growth of state spending would be limited to a calculation based on inflation and the state's population growth. Any taxes raised that exceed that spending limit would be plowed into an emergency reserve fund or returned to the taxpayers. Lawmakers could grant themselves an exemption to the spending limit with a two-thirds vote of the House and Senate.

"This moves spending in the right direction," said Rep. Bert Jones, R-Rockingham, the measure's co-sponsor. "If there's one overriding issue that I hear over and over and over again from the people who sent me here, it is that government needs to spend within its means." 

Becki Gray, vice president for outreach at the conservative John Locke Foundation, held up a chart to show that, over the past decade, spending has grown much faster than either inflation or population would account for. 

"This illustrates to you how out of whack this has gotten," Gray said. 

But Tazra Mitchell with the liberal N.C. Budget and Tax Center said lawmakers should be trusted to make decisions on the budget. 

"The flawed formula doesn't take into account costs like education and health care that rise faster than inflation," Mitchell said.

The end result of a TABOR amendment, she said, could be cuts to government services such as education. She pointed to Colorado, where voters had to roll back TABOR requirements after cuts to services proved too draconian.

Meanwhile, Vance Holloman, North Carolina's deputy state treasurer, worried that a TABOR amendment could hurt the state's AAA bond rating, which makes borrowing cheap.  

Dallas Woodhouse, state director for the conservative Americans for Prosperity, said other states have used TABOR with will impact. 

"It doesn't slash spending at all," Woodhouse said. "Rather, it places a reasonable limit on how fast government can grow."

He cited Oregon and Utah as two states where TABOR had been successful. He pointed out Utah has a AAA bond rating, just like North Carolina.

However, Utah's TABOR measure is a state law, not a constitutional amendment. That gives the state more flexibility to respond in case of a fiscal crisis. 

"This bill seems to not trust the voters and people of North Carolina," said Rep. Paul Luebke, D-Durham. If the legislature is overspending, he said, voters should choose different lawmakers.

Blust said he didn't agree. 

"We already have some constraints," he said, pointing out the state constitution forbids the state from passing a budget with a deficit. 

Other Republicans said they ran on TABOR.

"My constituents expect me to vote for it," said Rep. Rayne Brown, R-Davidson.

The bill next goes to the House Finance Committee and then on to the Appropriations Committee. Once it gets to the House floor, it would need to earn a three-fifths vote in order to go to the Senate. Should the Senate also approve the measure, voters would have final say over whether TABOR should be added to the state constitution.

20 Comments

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  • Bendal1 May 10, 7:29 p.m.

    So what happens when a series of devastating hurricanes hits the state in one year? Flooding in WNC and the coast, property damage throughout the state, and the Republicans just wring their hands and point to that amendment prohibiting any effort to raise revenue to deal with the disasters. Don't hand wave this away either; in the 2000's we had several years where multiple hurricanes hit this state. This is just another ALEC-born conservative effort to destroy state government to the benefit of their fat-cat masters.

  • josephlawrence43 May 10, 12:22 p.m.

    tailed: "cutting taxes on wealthy by 50%"? You must not be reading the same proposal I am. No Where did/do I see any mention of cutting taxes on the wealthy by 50%. Please provide an available reference/source. Or is this just some more of the libertard crying wolf in an effort to maintain their habit of tax and spend???

  • tayled May 10, 12:12 p.m.

    Let's pay the politicians minimum wage. That's a spending cut I can get behind.

    Good idea, make them punch a time clock too!

  • bill0 May 10, 12:12 p.m.

    "Any taxes raised that exceed that spending limit would be plowed into an emergency reserve fund or returned to the taxpayers."

    I think we've heard this tale before. Remember when Bush decided to cut checks to every US taxpayer because we collected more in taxes than we spent? A year later, the economy tanked and we were STILL left with big deficits.

    The only way that TABOR actually works is if you set aside a big rainy day fund for temporary spending.

  • Mon Account May 10, 11:59 a.m.

    Law: yes. But for the love of all that is good, they need to stop treating the constitution like a notepad.

    The marriage amendment was bad enough (that'll be an expensive thing to undo) and now this? Set it as law - it's already been shown to be effective!

  • tayled May 10, 11:57 a.m.

    They're going to bankrupt the state after enacting all this unconstitutional madness, cutting taxes on wealthy by 50%, saddling the poor and middle income with financing the state on SALES TAX --- AND LAST BUT NOT LEAST A Constitutional state spending cap???

    Madness is not the word for it. I call it greed. This new proposed tax "cut" sounds good at first read, but look into the shell game that would go on. Imagine you are a first time homebuyer. Now, with this new tax plan, you would pay a service charge to your realtor, another service charge to the appraiser, a service charge to any independent inspector you might want to have look at your prospective house (and that's a good idea too). Then, at closing, you would have to pay yet another service fee to the lawyer, who is making money hand over fist already in the deal. Trust me, I know this. I've worked for lawyers who charged as much as $500 for their half and hour worth of "work" at a closing that they usually delegated to an oeve

  • madeuce2010 May 10, 11:53 a.m.

    Let's pay the politicians minimum wage. That's a spending cut I can get behind.

  • wraluser May 10, 11:45 a.m.

    This is a bad idea and just blatantly a ploy to get the uninformed thinking that the GOP is doing something. Hopefully this will die when it sees the light of day. The GOP will be this states undoing...

  • wafranklin May 10, 11:23 a.m.

    Colorado tried this trash in 1992, and it totally ruined the state until the finally undid it. The rightwing has been working hard to find another bunch if unenlightened to impose it on themselves, and looks like they succeeded. Very few if any other states have done this to themselves. Pope and his friends want us to put our hands behind our backs, be handcuffed and thrown in the water, with injunctions to Swim. You know that that will do. Oppose this. Blust means ill to all of us.

  • rasengineers May 10, 10:28 a.m.

    How many people are able to buy a house or a car and pay cash? Many businesses depend on borrowing to smooth out otherwise unpredictable cash flow. Likewise, for government, be it federal, state, or local, borrowing is necessary to fund infrastructure and other construction projects. The NC constitution already controls borrowing and spending by requiring the budget be balanced. Tying spending to some pat formula based on population growth and inflation is a gross oversimplification of the problem.

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