There was a time when North Carolina’s Democratic governor and Republican legislators agreed on the need for formal restraint of state government spending growth.
No, this isn’t the script for one of those clever Biltmore ads. I’m not going to paint a word picture of an idyllic past, only to add a punchline explaining that I’m actually talking about today.
Current Republican legislative leaders have displayed admirable self-restraint. For more than a decade, they have kept a lid on government spending when drafting budgets. Yet they have not approved measures to formalize their restraint.
Meanwhile, Democratic Gov. Roy Cooper has displayed no evidence that he has any interest in limiting spending growth. His budget proposals have featured consistent pleas for lawmakers to spend more taxpayer money than they’re willing to accept.
Perhaps Cooper’s disinterest in spending limits stems from the fruits of Republican lawmakers’ frugality. Not once in his more than six years in office has Cooper had to worry about a budget shortfall. He has squabbled with lawmakers instead about the best way to treat recurring budget surpluses.
A previous Democratic governor faced a far different picture 20 years ago.
In 2003 Mike Easley was entering his third year in the Executive Mansion. He had seen the impact of unsustainable state government spending increases. He and his fellow Democrats running the legislature had relied on tax hikes, spending cuts, and occasionally dubious budgetary maneuvers to keep the state’s books balanced.
In the 2002 election, voters had flipped control of the N.C. House to the Republican Party. Post-election political shenanigans erased that GOP advantage. Eventually, a splinter group of Republicans ended up working with Democrats to create a new functional House majority in 2003.
Nonetheless, Easley faced an excellent opportunity. He could offer a new, bipartisan idea about state government’s finances.
He proposed an annual cap on state spending growth. It would be tied to the rolling 10-year average increase in the state’s personal income, as measured by the U.S. Bureau of Economic Analysis.
Then, as now, the John Locke Foundation stood as the state’s foremost right-of-center advocate for limited government and spending restraint. A Locke report issued in March 2003 urged lawmakers to “Follow Easley’s Lead.”
While Locke credited the governor for identifying an important issue, the group ultimately recommended a different approach. It touted a “stronger proposal,” filed by Republicans in the General Assembly. Supporters dubbed it the Taxpayer Protection Act.
“The Taxpayer Protection Act focuses on spending rather than revenue,” noted Locke President John Hood. “It assumes that the current overall level of state government spending is adequate to fund present and future needs — that any growth in expenditures beyond that needed to keep up with population growth and general inflation should be ‘paid for’ by reducing lower-priority spending elsewhere in the budget.”
Hood contrasted Republicans’ proposal with Easley’s plan. “Because personal income typically grows faster than the combined rate of inflation and population growth, the TPA would allow North Carolina’s tax burden to shrink over time, while the governor’s proposal would essentially freeze the tax burden at its current level.”
Despite the two plans’ differences, Locke credited Easley with starting a “welcome and healthy discussion about how best to tame the spending appetites of politicians and to forestall future budget deficits and tax increases.” Whatever type of spending limit lawmakers pursued, Hood suggested asking voters to add that limit to the N.C. Constitution.
Those efforts fell by the wayside in 2003. Twenty years later, North Carolina still has no formal mechanism to “tame the spending appetites” of officials charged with spending taxpayers’ dollars prudently.
But the idea hasn’t gone away. House Bill 146, filed by Rep. Dennis Riddell, R-Alamance, revives the Taxpayer Protection Act idea. Riddell and fellow supporters hope their colleagues will place a spending limit proposal on the ballot for N.C. voters in the 2024 general election.
The bill would add a “fiscal year spending limit” to state law. “The maximum annual percentage change in State fiscal year spending equals inflation plus the percentage change in State population in the prior calendar year,” according to the bill’s text.
Lawmakers could avoid the spending cap only by securing a two-thirds supermajority vote in both chambers of the General Assembly.
Advocates will need a slightly smaller supermajority — three-fifths margins in the House and Senate — to put the idea on the ballot for voters. That means Republicans would need to enlist at least one Democrat in the House to go along with them.
Perhaps members of the House Democratic Caucus will recall the time — two decades ago — when a Democratic governor touted the benefits of government spending restraint.
Mitch Kokai is senior political analyst for the John Locke Foundation.