increase

House members approved a $20.3 billion budget for fiscal year (FY) 2007-08, up 7.6 percent from FY 2006-07; 1.5 times the 5.1 percent combined rate of inflation and population growth. Proposed spending is $1.4 billion ($158 per person or $632 for a family of four) higher than in FY 2006-07. Nearly all of the increase is in K-12 education, even though dropout rates have been increasing.

Defenders of North Carolina’s fiscal policies over the past two years argue that the state’s massive increases in sales, income, business, and other taxes were just part of a national trend. But the available data put North Carolina near the top in tax increases over the past two years, with more than $1 billion in annual fiscal impact. The state’s quick recourse to higher taxes may be one reason why its economy has been trailing the rest of the region and nation since mid-2001.