News: CJ Exclusives

House’s Budget Wasn’t Timely

Economy will continue to feel effects of taxes

RALEIGH — The North Carolina House has moved with uncharacteristic speed to devise a budget plan for the 2003-05 biennium, but a preliminary analysis by the John Locke Foundation questions whether the proposal is truly well-timed.

The Spotlight briefing paper, published Thursday, looked at state spending trends and potential budget savings not included in the House plan, which in its first year reimposes $384 million in “temporary” tax increases originally passed in 2001 and represents a 4.3 percent increase in authorized General Fund spending.

“North Carolina taxpayers are unlikely to welcome the House’s effort as timely,” said John Hood, president of the Locke Foundation and author of the new analysis. “With an economic recovery weak by historical standards and failing to generate significant job growth outside of government itself, North Carolina is in need of significant tax relief rather than another two years of tax increases.”

Hood compared the House plan to that proposed earlier in the year by Gov. Mike Easley. The differences, he concluded, were slight.

Moreover, Hood challenged the notion that the House budget was “responsible” based on the argument that its tax hikes helped to protect public education, prisons, Medicaid, and other core functions of state government. The Spotlight paper lists dozens of specific savings recommendations that do not affect these budget areas and yet add up to $384 million in FY 2003-04 and $489 million in FY 2004-05.

“By working harder to identify budget savings,” Hood said, “lawmakers could have avoided the tax increase without adversely affecting teachers, prisons, or other core services of state government.”