RALEIGH – Those who ignore history are doomed to repeat it.
Not exactly an original insight, I grant you, but a handy one for the current situation. Members of the General Assembly, including House Speaker Jim Black, are reportedly considering another half-cent sales-tax increase – taking the combined tax rate to 7.5 percent in most of the state – to pay for a package of state expenditures for hurricane relief.
This tax increase would be “temporary” (now, where have we heard that before?) and raise more than $300 million. And it would be on top of whatever tax increases lawmakers adopt for the fiscal year beginning July 1, increases that I’m told may range between $750 million and $1 billion on their own terms.
Residents of many Western counties are upset about how they’ve been treated by state politicians in the aftermath of Hurricanes Frances and Ivan last fall. I can understand why. Substantial property damage and loss of life followed the storms and their extensive flooding. But while hurricanes hitting Eastern North Carolina several years ago elicited an emergency legislative session within weeks and a relief package worth close to $1 billion, the western storms were much less of a galvanizing event in Raleigh. To add insult to injury, a ridiculously large portion of federal disaster relief already distributed since September has flowed into Piedmont and Eastern counties that were in many cases only lightly grazed by the hurricanes.
But regional grievances do not justify make a precipitous decision. Turnabout is not fair play, at least not to taxpayers. The fact is that the 1999 special session for Hurricane Floyd relief was hurried, poorly led, and inordinately costly to taxpayers. Hundreds of millions of dollars were rushed into an “emergency” fund only to sit unspent not just for months but for years afterward. As some warned all who would listen at the time, Eastern officials and interests had exaggerated the need and stretched the case for state assistance beyond its proper scope. Some of the problem was haste. Some of it was opportunism. All of it was avoidable.
Now, there is a real risk of just repeated the same mistakes. Some lawmakers supportive of a 2005 package are as much as admitting that current estimates of $300 million-plus in need are on the high side. Few seem willing to distinguish clearly between legitimate funding responsibilities of the state – such as repairing or replacing roads, bridges, and other state infrastructure – and those that, however tragic, are not.
Yet another round of debilitating tax increases is not the answer. Nor is emulating the flawed policies of the past that squandered tax money and (obviously) set a bad precedent for fiscal responsibility. Lawmakers can and should act quickly to tap rainy-day reserves to deal with last fall’s rainy days, but they should keep it simple and straightforward.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.