spending cap

Gov. Mike Easley’s proposed $18.9 billion budget does not provide enough relief to taxpayers who made it possible. The governor could have returned the $1.1 billion in overcollections to taxpayers without jeopardizing future fiscal health. This would include ending the half-cent sales tax and 8.25 percent income tax rate set to expire in 2007, and providing a temporary quarter-cent sales tax refund. Removing the county burden for Medicaid would also ease the fiscal pressure local governments face to raise taxes to pay for schools and roads.

Gov. Mike Easley’s proposed state budget takes advantage of a $2 billion surplus to increase spending by $1.6 billion, according to a preliminary analysis by the John Locke Foundation.

Six weeks into fiscal year 2005-06, the General Assembly has a budget proposal from the conference committee. It includes $17.2 billion in spending (up 7.9 percent from 2004-05), over $700 million in higher taxes and fees, and $681 million in extra collections. This spending is well above the governor's spending cap. A constitutional tax and expenditure limit would provide the best insurance against permanent tax increases from reckless spending.

Gov. Mike Easley has proposed an annual cap on the growth of state spending in North Carolina that would be tied to personal income growth. In considering the idea, lawmakers should examine recent data that show state spending caps to be effective particularly if they rebate excess revenues to taxpayers and enjoy constitutional, rather than just statutory, authority. Without a spending cap, it is likely that fiscal discipline will disappear as the state’s economy recovers.

RALEIGH — Gov. Mike Easley’s just-announced state budget plan for the 2003-05 biennium includes an immediate $461 million tax increase and allows spending to grow by nearly 5 percent next…