This week’s “Daily Journal” guest columnist is Chad Adams, Director of the Center for Local Innovation and Vice President for Development at the John Locke Foundation.
North Carolina and South Carolina share a great deal of geographic diversity, tourist destinations, and rich history. However, their recent fiscal management policies and respective governors have taken dramatically different approaches in managing their budgetary duties. Nothing more readily points out those stark differences than the Fiscal Policy Report Card on America’s Governors from the CATO Institute.
Simply put, in the South one would be hard pressed to make a case for two more diverse approaches to responsible governance than those of Mark Sanford of South Carolina and Mike Easley of North Carolina. Sanford has been a fiscal maverick dedicated to saving taxpayer money while continually focusing on making his state a better place to do business. Easley has seen record increases in spending surpassing the spending of his neighbors on almost every front. Sanford has battled a legislature controlled by his own party – pulling them towards tax cutting. Meanwhile, Easley has largely pandered to his legislature, also controlled by his own party, sometimes competing to increase spending.
In tax policy, Sanford fought to reduce income taxes by a whopping 33 percent over 10 years. That endeavor eventually led to a 29 percent reduction in the top tax rate. Meanwhile, with a $2.4 billion surplus Easley was still unable to remove temporary sales and income taxes that were supposed to be removed in 2003. The only reduction the Easley administration could muster was ¼ point of the sales tax and 1/8 point of the top tier of the income tax. Neither cut reduced the increases he championed previously. Even more astounding was Easley’s reversal on his campaign promise to reduce the corporate tax rate by 1/10 of a point.
Another stark difference is the effect these governors have had on the personal incomes in their states. Sanford’s tireless dedication to limited government has led to a state that runs on only 6 percent of the average citizen’s income. Easley sits atop a state that takes 7 percent of the average citizen’s income to do the same job. That single percentage point means a 17 percent difference in what it costs to run a state based on personal income. In real dollars North Carolinians pay about $600 more per person per year to keep the government running.
Most importantly, Sanford has kept his eye on understanding that government spending cannot continue to outpace inflation and population growth. Through philosophically driven efforts, South Carolina’s growth in spending has been close to inflation, whereas North Carolina’s spending has far outpaced inflation and population growth through most of Easley’s tenure.
Under Easley, state spending has grown 18 percent in just the past two years, while Sanford has been focused on creating a $151 million tax rebate. Sanford is also looking at ways to cut property taxes. To be fair, North Carolina property taxes are a function of local government. Still, Easley has done nothing to stop local government from paying a portion of Medicaid expenses as North Carolina is still the only state forcing such irresponsible governance.
Easley has shown very little concern for tax rates, taxpayers, or even tax policy. In fact, he’s largely absent on any form of tax debate – having never really challenged his legislature to be more responsible. Sanford has continually pushed for more fiscal responsibility and accountability even while creating ever more open policies. North Carolina’s leadership seems to be concerned about openness only at the end of federal and/or state investigations or after in-depth work at the state auditor’s office.
Meandering back to Dickens, in many ways it is “the best of times, the worst of times,” but regardless of the state you’re in, Mark Sanford continues to put Mike Easley at the back of the porridge line when it comes to looking after the taxpayer’s interests.