Spending & Taxes

For fiscal year 2015-16, the General Fund budget will rise 3.1 percent to $21.7 billion, below the combined rates of population growth and inflation. The following year, the budget will have an overall increase of less than one-percent.

By The Numbers provides information on how much local government costs in every city and county in North Carolina.

Between FY 2009 and FY 2014, 81 out of North Carolina’s 100 counties participated in economic development activities. Counties entered into 776 contracts worth nearly $284 million in incentives over the five-year period. Actual payments, however, totaled $144 million.

A reverse logroll for the 2015-17 biennium budget would greatly benefit taxpayers, leaving surpluses of approximately $383 million in the first year and $639 million in the second year. This allows lawmakers more flexibility to lower taxes or fund other priorities.

The John Locke Foundation is continuing its tradition, started in 1995, of offering an alternative to the governor’s budget recommendation. Consistent with prior years, this JLF budget focuses on core government. This budget spends less in both years of the biennium than the governor’s, and only increases spending by 2 percent from the last fiscal year.

The governor and Republican members of the state legislature are advocating for a host of new incentive programs and the extension and/or expansion of others. However, these programs are likely to harm consumers, investors, and entrepreneurs who are not privy to the subsidies.

Overall, North Carolina ranks 23rd in the nation and 5th among the 12 states of the Southeast in freedom. North Carolina ranks 16th in fiscal freedom, 18th in educational freedom, 36th in regulatory freedom, and 46th in health care freedom.

The North Carolina historic preservation tax credits sunset on January 1, 2015. State government should strive to keep the tax code clean. If lawmakers choose to enact a program to aid in historic preservation, a grant program is a better alternative than a tax credit.

Capital gains taxes penalize saving, investment, and therefore entrepreneurship, by imposing a second layer of taxation on equity investment. The most straightforward way to end this bias is to eliminate the tax on capital gains completely.

For fiscal year 2014-15, North Carolina’s General Fund budget rose 2.2 percent to $21.1 billion. It funded an average teacher salary increase of 7 percent, one of the largest pay raises for North Carolina teachers in a generation, and created a Medicaid contingency fund of $186.4 million.