Archives: John Hood

A new plan from N.C. House Democrats to increase state and local taxes by another $633 million in FY 01-02 would further damage North Carolina's already weakening economy. If passed, the tax hikes would push North Carolina's tax burden higher than the national average for the first time in history, and 12 percent higher than the regional average. Our tax burden would far exceed those of such states as California, Illinois, Maryland, Massachusetts, and Pennsylvania.

A plan to increase North Carolina's sales tax by up to one penny, with a corresponding reduction in tax reimbursements to local governments, could endanger the state's economic recovery and threaten tens of thousands of jobs. No change in expected revenue growth or threat to the state's bond rating would have consequences severe enough to justify a $400 to $800 million tax hike on families and businesses whose tax burden is already the highest in the Southeast.

Author Doug Bandow looks at the ways in which government intervention into the provision of electric power has harmed consumers, and he recommends ways to make the system more competitive. (62 pages-not available online.)

Homeownership is a vital component to a stable society and a thriving economy. It is a well-known presumption that owning a home gives an individual a stake in his or her society. For example, according to a recent study by scholars at the University of Chicago and Harvard University, homeowners are 10 percent more likely than renters to work to solve local problems. Another consideration is that homeownership is also the most common form of savings for the average working family. A home is typically the largest investment most families have. By Jonathan C. Jordan and Michael Lowrey

Budget negotiations between the House and Senate typically lead to higher spending, as each side accepts all or part of an item the other wants. Another approach would be to accept only spending common to both budgets, a "reverse logrolling" that lets government expand only when a consensus exists to do so. For FY 2000-01, this approach would save nearly $200 million for future state employee benefit reforms and raise operating spending by only 3.8 percent.

The North Carolina House is debating its version of a 2001-03 state budget this week. Although imposing only a $6 million tax hike in contrast to the $233 million tax increase included in the Senate budget House leaders still managed to increase General Fund spending by 4.4 percent in the coming fiscal year, relying on increased collections of delinquent taxes, interagency transfers, and debt-service savings to balance the books. Now the budget battle really begins.

Putting the House's FY 2000-01 budget into proper perspective requires careful consideration of how spending should be measured and how it has changed over time. Furthermore, proposed changes in how the payroll and teacher bonuses are budgeted are more than just accounting gimmicks. They represent a net reduction in state savings. The bottom line for taxpayers: if current trends continue, state leaders will be setting the stage for tax increases in the near future.

Some state lawmakers are discussing a plan to give local governments the authority to raise their sales taxes by up to 1 penny while simultaneously eliminating state tax reimbursements. While it is true that many counties are raising property taxes this year, most have not been starved for revenue during the 1990s. More importantly, the state can give the same assistance to localities without raising taxes by increasing flexibility and assuming more responsibility for Medicaid.

The FY 1999-2000 budget approved by the House Budget Committee would increase operating spending by 5.6 percent, despite talk earlier in the session of a state fiscal crisis. Although the budget does include some good ideas — such as raising tuitions and covering rising costs in the state employee health plan with existing retirement reserves rather than increased taxpayer support — it also brings back a number of old, bad ideas such as $12 million in discretionary slush funds in Human Resources and Cultural Resources eliminated just last year.

The N.C. Senate is debating its budget proposal for FY 2001-03. For all the furor about "severe cuts" in the plan, it would increase total General Fund spending next year at nearly the same rate (4.7%) as Gov. Mike Easley's budget (5.2%), including a 15% increase in health and human services spending vs. Easley's 16.2% hike. Both offer a stark contrast to the Changing Course budget prepared by Locke analysts, which would essentially hold spending constant while cutting taxes.