Opinion

Editorial: Before more tax cutting, legislature must fund unmet obligations

Thursday, March 2, 2023 -- Are we "collecting more money than we're needing?" No, not even close. There are vast needs the legislature is obligated to provide that are going, and have gone, unmet.

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North Carolina Legislative Building
CBC Editorial: Thursday, March 2, 2023; editorial #8830
The following is the opinion of Capitol Broadcasting Company
State Senate leader Phil Berger says he wants to take some of this year’s more-than-predicted state revenue collections and cut the “tax burden.” That is his top priority.

“As long as we are collecting more money than we're needing to appropriate, that extra money — some of it needs to go back to the people and reducing their tax burden is one way to do that.”

Are we “collecting more money than we’re needing?” No, not even close. There are vast needs the legislature is obligated to provide that are going, and have gone, unmet. It is the duty and obligation our state Constitution requires of all branches of state government to meet: Providing a quality public education to all the state’s children and making sure those kids can get to school; Assuring that all citizens are healthy and safe; Making sure that higher education “as far as practicable” is “free of expense.”

For whom is taxation a “burden,” as Berger terms it?

Not the state’s businesses. The corporate income tax rate has dropped from 6.9% in 2011 to 2.5% this year. A decade ago the money from corporate income and franchise taxes was 10% of state tax revenues. Today it’s down to 8%. At the same time collection of sales and use taxes – the most unfair form of taxation since those with the least ability to pay must spend a greater share of their income on those taxes – has increased from 28% of revenues to 32% of total tax revenues.

When the responsibility of taxation is spread fairly and the people’s money is spent on meeting the state’s well-being – it is NOT a burden. It is an obligation we all take on to the benefit of us all, making our communities better. To the degree taxation is a burden, it is because of the shift-shaft resulting from the way the legislature has, in recent years, gone about cutting taxes on businesses.

A deeper look suggests that the “surplus” might not be as big a windfall as is being touted.

The “increase” in expected revenues appears to be more a case of low-balling the earlier estimates. For example:

Actual individual income tax collections in fiscal 2022 were $17.6 billion and in the current state budget estimated to be $15.5 billion – a 12% drop. The new revised estimate has individual income tax collections estimated at $16.7 billion resulting in a $1.2 billion “surplus.” Corporate income and franchise tax collections last year were $2.5 billion yet the estimate in the current budget was set at $1.8 billion. The revised estimate is now $2.5 billion – a $700 million “surplus.”  Those two sources alone account for about two-thirds of the estimated surplus.

Now, current state revenues are on track to match last years.

One reality is that the legislative leaderships’ repeated refusal to adopt a major bond program to finance critical projects for local schools and other public facilities means taxpayers will be forced to pay MUCH more now to pay for those important needs than if the borrowing had been approved a year or two ago.

The state budget is not a Monopoly game of play currency and toy buildings. It is about real money, living people and important needs and priorities for the people of the state.

Berger’s vision of what is critical for state spending includes only “addressing our state’s workforce needs and providing additional tax relief to our citizens.”

This comes from someone who has led efforts to reduce the employee benefits of state workers and public school teachers and front-load pay scales so more experienced state employees and teachers have scaled-down opportunities to increase their pay.

It is past time that North Carolina met it’s obligation to school children by providing the resources to give all access to a quality education – as the state Constitution promises and the courts have ordered.

If Berger’s truly concerned about the state’s workforce he’d lead the effort to restore the worker benefits he’s cut and adjust the lowest-in-the-nation minimum wage of $7.25 an hour to a true living wage of $17.00 an hour.

And then there is the failure, for at least the last quarter of a century as state courts have determined, to adequately provide for the constitutionally-mandated needs of our school children.

While the legislature seems obsessed with fringe issues – easier access to guns, stricter limits on abortion and pot – and tax cuts, it might see the opportunity of the “excess revenues” to clear away some of the smoke and take care of long-overlooked and essential needs.

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