Gov. Roy Cooper’s recent budget grows spending a preposterous 11.6% and proposes $4.7 billion in new debt. It also serves as a good reminder that we are only one election cycle away from fiscal insanity at the state level.
Fortunately, the conservative majority at the state legislature is unlikely to take Cooper’s wish list seriously. It shouldn’t, except as a threat of what North Carolinians will suffer if we lose our current culture of fiscal responsibility. We need to consider making this culture permanent regardless of the party in power.
Most recent transplants to North Carolina will probably list job opportunities, quality of life, and the state’s natural beauty as reasons they’ve relocated to the Tar Heel State. They certainly were at the top of my list. Most probably don’t know the back story of North Carolina’s economic renaissance, and that’s what really brought most people here.
A decade ago, North Carolina was on a trajectory to look more like New York or Illinois. We were economically stagnant with one of the worst business climates in the nation. We were shedding jobs at an alarming rate, which resulted in the eighth–highest unemployment rate. Our median household income couldn’t keep pace with the national average.
Even with one of the nation’s heaviest tax burdens, the Democrat-controlled state legislature proved it couldn’t be trusted with taxpayer dollars and was in constant need of a cash infusion. The budget, which ballooned 40% in just eight years, was a disaster, with shortfalls close to $3 billion. We had no reserve to speak of. We were massively in debt because it had grown a whopping 230% between 2001 and 2013. Our teachers went three straight years without a pay raise.
Fed up with legislative irresponsibility and disrespect for taxpayers, voters made bold moves. After giving conservatives a legislative majority in 2010, they replaced a big-spending Democrat in the executive mansion in fall 2012. With conservative government came a culture of fiscal responsibility and respect for those of us who pay the bills. We continue to enjoy the benefits in our state today.
The conservative majority wasted no time ushering in a historic tax reform package that included elimination of the progressive income tax structure and the nation’s 11th–highest marginal tax rate. Our current flat tax rate of 5.25% is 33% lower than the old top rate.
Tax reform also reduced the corporate income tax rate from 6.9% to 2.5%. The one-percentage-point reduction in our state sales tax — from 5.75% to 4.75% — has saved North Carolinians more than $1 billion annually.
The state debt has shrunk 35%, while our rainy-day fund has grown from a paltry $150 million to more than $1.2 billion. In addition, the conservative majority has made significant investments in education through expanded opportunities for low–income and disabled students and teacher raises for five straight years. That streak ended when Cooper vetoed the sixth pay raise in 2019.
Since conservatives took charge, the business tax climate ranking jumped 28 spots. Capital investments and people – like you and me – have been pouring into North Carolina. Prior to COVID, we were growing jobs faster than the national average. Poverty rates were declining as median household income was increasing.
This legislative culture made budget surpluses the norm, which allowed us to weather the COVID economic crisis better than many states. Rather than forcing North Carolinians into a government–dictated health insurance scheme, our conservative majority expanded affordable health care services through telemedicine, providing more choice for patients at the time they needed it most.
All North Carolinians have benefited from nearly a decade of this voluntary culture of fiscal responsibility. Conservative lawmakers trust us to keep and invest more of our own money. They pay off state debt, set money aside for a rainy day, and provide more educational and health care choices.
Our current legislative majority would be wise to protect future generations and enshrine their culture of fiscal responsibility into the state constitution with a tax and expenditure limitation (TEL) amendment. This measure would limit government spending growth to inflation plus population unless N.C. voters approve otherwise. It gives those of us paying the bills some voice in the size and scope of government we want and for which we are willing to pay.
Our recent polling shows that over 58% of likely N.C. voters support such a measure. Once passed, the popularity only increases with voters. After nearly three decades and millions of voters moving into the state, shifting it politically, Colorado’s Taxpayer’s Bill of Rights enjoys over 71% support. Even though it’s a far–left state, the support crosses all ideological, racial, and socioeconomic boundaries.
We can’t control Cooper’s spending and debt fantasy, but we can heed the warning of what could happen if we lose our fiscally responsible culture at the state legislature. A TEL amendment is the appropriate response.
Amy Cooke is the chief executive officer of the John Locke Foundation and publisher of Carolina Journal.
This piece originally appeared in the April print edition of Carolina Journal.