This week’s “Daily Journal” guest columnist is Joseph Coletti, Fiscal Policy Analyst for the John Locke Foundation.
Progressives are obsessed with the idea of framing. Following linguist George Lakoff, they complain that conservatives do not have better ideas, just better frames to put around their ideas. As a result, progressives make sure they talk about the need for effective, efficient government while they declare themselves to be fiscally conservative.
In the process of reframing issues, progressives debase language and make it harder to understand what really happens in government. Examples from Gov. Mike Easley’s $18.9 billion budget proposal will demonstrate the difficulty of understanding language in budgets and government.
Easley and the General Assembly faced fiscal crises in each of the five previous budgets. They passed temporary tax increases in 2001 and extended those increases in 2003 and 2005. They feared billion-dollar deficits far into the future.
Despite this, Easley included in last year’s budget recommendation a phase-out of the 8.25 percent personal income tax rate over two years. That would have meant tax relief of about $25 million for the fiscal year that starts in July. That cut did not make the final bill.
There is no fiscal emergency this year. The state has nearly $2 billion in extra tax collections available to spend or return to taxpayers. The half-cent sales tax and the 8.25 percent income tax rate are set to expire next year. What better time to provide tax relief to North Carolina’s citizens and demonstrate fiscal responsibility?
Easley is taking a baby step toward tax relief. His proposal would keep a quarter cent of the sales tax until at least July 2007 and leave the highest income tax rate untouched. But taxpayers would get to keep another $197 million of their earnings.
Dipping into arcane fiscal details, we learn something about the governor’s two tax relief proposals. Because both the sales tax and income tax hikes were set to expire in fiscal year 2005-06, even the governor’s phase-out of the 8.25 percent income tax rate counted as a tax increase. In contrast, this year’s sales tax relief counts as a tax cut. Both proposals leave taxpayers paying more for state government than they otherwise would.
Instead of providing tax relief, however, the governor would increase state spending by $1.6 billion, or 9.6 percent. This is much higher than his self-imposed 5.6 percent cap on spending and marks the second time in the last three years that spending exceeds the cap. The governor and his staff have argued about what counts under the cap and what does not. But any cap porous enough to be nearly doubled is meaningless.
Another meaningless promise can be found in education spending. Before the lottery passed, everyone from the governor to Sen. John Garwood, R-Wilkes, vowed that lottery money would not supplant existing spending on education.
Most people would see the “reprogramming” from the General Fund to the lottery of $128 million for class size reduction as “supplanting.” Not the governor or the auditor. Gov. Easley’s Senior Fiscal Policy Adviser Dan Gerlach framed the new definition to the General Assembly this way:
“The auditor told us he that he would judge that this is not supplanting if the General Fund budget on education continues to go up at least at the same rate it has historically. The last four or five years, education spending has gone up 4 percent. General Fund spending this year — when we look pre-K through 12 or any way we look at it — goes up at least 8 percent, well above that benchmark.”
This reasoning suggests that state education spending must now grow at least 4 percent a year into the future – regardless of economic conditions or demonstrated needs.
Easley won re-election as a fiscal conservative. He touted the slow growth in government spending in the first years of his administration. The budget passed in the election year 2004 transitioned from modest spending growth of less than $1 billion over three years to spending growth of more than $1 billion each of the next three years.
After years of trying to redefine success in schools, Easley seems to be having an easier time redefining restraint in spending.