RALEIGH – Things have reportedly gone from mad to terse in the North Carolina General Assembly as lawmakers try to fashion a compromise budget.
While the two sides aren’t that far apart on spending totals, House leaders don’t like the Senate’s tax plan. The sentiment is reciprocated. Upon signing a stopgap measure to keep state government funded through mid-July, Gov. Beverly Perdue scolded both chambers for failing to agree on a budget plan and asserted that for every day the impasse continues, the state stands to “lose” $5 million in budget cuts and tax hikes not yet enacted.
This is one of those moments when political language diverges from standard English. The difference in vocabulary reflects an underlying difference in perception. To the political class, an inability to transfer more resources from the private sector to the public sector is a lost opportunity. To the rest of us, it is a found opportunity.
Using standard English, every day North Carolina taxpayers aren’t compelled to pay the higher taxes Perdue seeks, they save millions of dollars. As for budget cuts, the continuing resolution now in place limits spending to 85 percent of last year’s authorization. That also saves taxpayers millions of dollars a day.
Don’t get me wrong – I too think the House and Senate should have struck a deal by now. For one thing, it’s wrong to force North Carolina municipalities, counties, and school systems to adopt FY 2009-10 budgets without knowing precisely how the state’s budget will affect them. For another, the longer the General Assembly hangs out in Raleigh waiting for a breakthrough in budget negotiations, the greater the risk that lawmakers will create other mischief with wrongheaded legislation.
If you study the governor’s statement closely, you can see the outlines of what she, for one, would like to see done in the final budget deal. She favors increased taxes on consumption – retail sales, cigarettes, and alcohol – but not higher income taxes on households or businesses. While Perdue is open to broadening the sales tax to services, as the Senate tax plan envisions, she’d rather focus on jacking up rates in the short run and delay any base-broadening reform until after the 2010 legislative elections.
Apparently, Perdue wants the least-salable elements of the House and Senate tax plans to go away – the House’s income taxes and the Senate’s taxes on consumer services. But because she’s on record favoring a higher annual tax bill than either chamber previously passed, the only way to reconcile all these points would be to embrace a bigger jump in consumer tax rates. No doubt, the higher tax rates would be sold as “temporary.”
For North Carolina taxpayers already suffering from economic recession and excessive taxation, there are no good choices on the table. Neither chamber’s leadership stands with them against the spending lobbies and special-interest groups demanding a tax increase. At least as long as the bickering continues, taxpayers get to keep more of their own money and state government must operate under a tight continuing resolution.
If taxpayers are lucky, then, perhaps the budget negotiations in Raleigh will linger until Labor Day, or longer.
I can’t believe I just wrote that.
Hood is president of the John Locke Foundation