Proposal to limit future state spending moves forward

The proposed constitutional amendment would limit state spending increases based on population growth and inflation. Opponents say it could hurt the ability of the state to manage debt and deal with climbing health care costs.

Posted 7:11 p.m. May 9, 2013 — Updated 7:27 p.m. May 9, 2013

Mark Binker

RALEIGH, N.C. — 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.

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