Editorial: Wishing away stagnant state revenues keeps critical needs unmet

Posted November 23, 2017 10:24 p.m. EST
Updated November 23, 2017 10:28 p.m. EST

CBC Editorial: Friday, Nov. 24, 2017; Editorial # 8240
The following is the opinion of Capitol Broadcasting Company

Today is “Black Friday” for retailers around North Carolina – a hopeful time to end the year on a prosperous note.

The seasonal optimism was echoed in an opinion column by N.C. House Speaker Tim Moore in the Washington news publication, The Hill: “North Carolina is the bellwether for tax reform – we can learn a lot from them.” The headline may be spot-on, but not as Moore intends.

As Moore’s column was rolling off the press, North Carolina’s leaders got some troubling information – facts -- from the State Controller’s office about red ink in the state budget.

For the first third of the new fiscal year, collection of personal income, corporate income and sales taxes were $34.2 million LESS than the same four-months a year ago. All revenues – tax and non-tax – are about the same as a year ago.

Those are key indicators of economic activity and growth for the state. More importantly, they foretell how well the state is positioned to address critical needs the legislature delayed dealing with last session, as well as new issues requiring attention.

Improving teacher, school administrator and state worker pay; meeting the legislature’s class-size reduction mandate without firing scores of classroom instructors; maintaining and improving critical infrastructure; increasing access to health care; improving working conditions and security in state prisons – it all hinges on the state’s ability to pay.

The state’s flat-lining revenues combined with another $500 million in already-mandated revenue reductions, make meeting those needs dubious. Even the much-ballyhooed $1.8-billion “rainy-day” fund won’t be of much help since the demands for new spending and investment are on-going expenses and the fund supports only a one-time injection of money.

North Carolina may indeed be a “bellwether for tax reform,” as Speaker Moore’s column boasts. But the lessons “we can learn” from the state’s experience aren’t those to be followed. They are a warning to be heeded. Much like what has already been seen in Kansas, North Carolina is closer to a budget crisis than an explosion of economic growth.

There’s hardly a national comparison where North Carolina doesn’t just lag its peers, but trails much of the nation. The state is a basement dweller in public school student spending along with teacher and school administrator pay. North Carolina’s rebound from the Great Recession has been tepid at best, while neighboring states have seen more robust and faster recoveries. The cleanliness of our rivers, drinking water resources for vast regions of our state, has been neglected.  Chemicals dumped, coal ash spilled, all demand attention.

The vast majority of middle-class wage-earning families have seen higher costs of health care, added sales and use taxes and stagnant wage growth actually INCREASE their tax burden regardless of cuts to state income taxes.

A policy that boasts low corporate taxes and low wages is a recipe for economic stagnation.

If North Carolina is truly to be a “bellwether,” it is time for legislative leaders to stop the P-R fairytales. They should instead pursue policies that provide for a top quality public education, well-paid knowledgeable workers, empowered consumers with more cash to buy things and infrastructure investments to improve the safety and quality of life for citizens.

Ignoring and sugar-coating the reality of unsound and failed policies just keeps North Carolina stuck in ever-deepening hole. It is time for state leaders like Speaker Moore to stop digging.

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