Bill Would Put the Brakes on Spending by State Politicians

Lawmakers intent on padding the size of North Carolina’s state budget would have their hands tied under a bill introduced Monday in the state House.

House Bill 188, Taxpayer Bill of Rights (commonly known as TABOR), would call for a constitutional amendment requiring new General Fund expenditures to correlate with population growth plus inflation. A two-thirds majority vote of the General Assembly would be required to exceed the expenditure limit.

Supporters say the legislation is a way to rein in bureaucratic bloat and keep new spending levels in line with the state’s actual growth — in contrast to what they say has been a rapid expansion of state government in recent years.

“There is no limitation on the ability of politicians to try to win votes through spending other peoples’ money,” said Rep. John Blust, R-Guilford, chief sponsor of the legislation. “We are not capable of not spending the money, so we need a constitutional limit on that.”

Under the bill, if state government collects tax revenue beyond the expenditure ceiling, the extra dollars would go into an emergency reserve trust fund at the end of the fiscal year. If that amount surpassed 5 percent of the total General Fund appropriation for the prior fiscal year, the excess would be returned to taxpayers.

Because the legislation proposes a constitutional amendment, it would need a three-fifths majority vote in the House and Senate to pass, but Gov. Bev Perdue couldn’t veto it. If legislators do OK the amendment, it would appear on the ballot in November 2012 for final approval by voters.

The bill follows on successful tax or spending limitation campaigns in other states — most notably Colorado’s 1992 TABOR constitutional amendment requiring a vote of the people to approve any state or local tax increase that raised revenues by more than the combination of inflation plus population growth. Voters in Washington state in 2007 and again in 2010 approved an initiative requiring either a two-thirds vote of the legislature or a vote of the people to enact any statewide tax increase. (The 2007 initiative was repealed by the legislature and then passed by voters a second time.) Attempts in recent years to pass TABOR-like measures in Maine, Nebraska, and Oregon have not succeeded.

Democrats gave the bill a cool reception. “When you start putting artificial limits on what is basically our fundamental responsibility, I think that’s bad,” said Senate Minority Leader Martin Nesbitt, D-Buncombe.

Spending cap

The changes would kick in around mid-2013, meaning the bill wouldn’t help lawmakers fix the current $2.4 billion budget hole. Even so, Blust said the measure should be passed immediately to avoid future budget disasters.

“There needs to be a stronger leash by the public on what we do here,” he said.

Between the 1991 and 2011 fiscal years, inflation-adjusted spending has grown 1.5 times faster than population in the Tar Heel State. According to numbers from the governor’s office, Perdue’s proposed two-year budget plan would reduce spending by $1.5 billion compared to spending levels in 2008-2009. Republicans, however, are planning to make even deeper cuts.

Rep. Ric Killian, R-Mecklenburg, said the TABOR bill was the first of three pieces of legislation Republicans plan to introduce addressing fundamental fiscal reforms.

“This is an effort on our part to ensure that we address this not only for the time being, but in future legislative sessions,” Killian said.

Nesbitt claimed the bill would hamstring the legislature’s responsibility to make tough budgeting decisions.

“If we do our job properly down here — and the constitution says we’re the ones who are supposed to write the budget — you face the music, you face whatever the times demand, and you do the right thing for the people of this state,” he said.

Leadership priority

Republican leaders have indicated that bill doesn’t top their priority list, particularly given the number of constitutional amendments that could appear on the ballot in 2012.

“I don’t know that [TABOR] is something we’ll take up and vote this year or next year,” said Senate President Pro Tem Phil Berger, R-Rockingham. He added that Republicans don’t want to have a “California-style” ballot littered with proposed amendments.

Blust said he hadn’t discussed how the constitutional amendments should be ranked in terms of priority, but he indicated that TABOR is an idea whose time has come.

“Several of these ideas have been around for a long time, and they’ve been bottled up, and the pressure cooker is about to go off,” he said. “I still think these things are important to do.”

David N. Bass is an associate editor of Carolina Journal.