NEW BERN – State Sen. Ed Warren (D-Pitt) let the fiscal cat out of the bag over the weekend by telling the Greenville Daily Reflector that, in the newspaper’s words, “a tax increase will probably be needed [this year] to keep teachers in the classroom and human service agencies functioning.”
Warren, chairman of the general government appropriations committee in the N.C. Senate, probably wasn’t supposed to say that – yet. Remember what happened last year? In early 2001, legislative leaders denied any intention to impose a general tax increase on North Carolinians. But then came weeks of scare stories about how, without new revenue, mental hospitals would depopulate, the prisons would be unlocked, and children would not receive an education (though you have to wonder how that differs from the status quo). After sufficient efforts to set up a false choice between reasonable taxes and necessary services, the state legislature enacted one of the largest tax hikes in North Carolina history.
Now they are saying, once again, that they have no intention of passing a general tax increase. But if you read closely, you are already seeing the outlines of a potential tax-hike deal. Senate leader Marc Basnight has opened the door to another “temporary” half-cent sales tax for cities and counties to make up for local revenues withheld by the governor. Other members are pushing a cigarette tax hike and the closure of more “business loopholes” in the tax code.
In his Daily Reflector interview, Warren let slip what is a widespread perception within Raleigh political circles. “We cut programs twice last year, and I support it to eliminate waste,” he said. “But there comes a time when you have to enter the real world” – and raise taxes rather than continue to find budget savings.
This is a warped view of the “real world,” if I may say so. The state’s General Fund budget was $14 billion in FY 2000-01. After all those budget cuts the senator is talking about, the budget is projected to be about $14 billion in FY 2001-02. That is not a “cut” in the real world, only in the Alice in Wonderland of government budgeting. Moreover, in the real world tens of thousands of North Carolinians have lost their jobs during the current economic slump, which has been made worse in our state with excessively high tax rates.
Many of them would probably like to visit Sen. Warren’s “real world,” where two rounds of budget-cutting would still leave the vast majority of them with jobs.