Ten Things You Should Know About the State Budget Disaster
ByTen Things You Should Know about the Great North Carolina State Budget Disaster of 2009:
1. Our state has one of the least progressive tax systems in the country. In 2007, the bottom fifth of wage earners paid 10.7% of their income in state taxes and the top one percent paid just 7%.
2. In real terms, our state government spends about as much per citizen as it did eight years ago. If the House gets its way and balances the state budget without raising additional revenue, we’ll be back to spending as much per citizen as we did in 1992.
3. Our state government is one of only a handful that uses federal taxable income as a basis for the state income tax. In addition to reducing revenues, this benefits the wealthy, who are more likely to itemize and take many other deductions.
More after the jump.
4. Our state government has not joined the growing number of state governments that tax corporations based on all their earnings, not just those they report in-state. This reduces revenues and penalizes local businesses that don’t have the luxury of reporting their income in states with lower (or no) state corporate taxes.
5. Our state government has refused to include services among the items included in the sales tax. This reduces revenues and means that we pay taxes when we buy necessities like clothing, but not when we buy luxuries like pedicures and bikini waxes.
6. North Carolina’s public schools spend less per student than 43 other state systems, a ranking that will likely decrease if the House gets its way on the budget.
7. As of 2006, North Carolina’s state mental health system spent less per citizen than 44 other state mental health systems, a ranking that will surely decrease if the House gets its way on the budget.
8. By closing the door on new enrollments for our state children’s health insurance program, the budget cuts will cost the state $15 million in federal money.
9. The General Assembly is set to increase the gas tax, suggesting that highways mean more to them than education or mental health.
27 Comments
June 8th, 2009 at 8:16 pm
11. (the one they don’t want you to know) the Democratic Party has held control of the government in NC for a very long time!
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June 8th, 2009 at 8:23 pm
and, in resonse to all the feedback ahead of time I have two words – Mary Easley!
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June 8th, 2009 at 10:39 pm
Thanks, Doug. I learned a lot from this post.
Mind if I cross post to BlueNC?
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June 8th, 2009 at 10:46 pm
Sure, we can blame the Dems. But, of course, in NC the Democratic party is a wide-ranging hybrid that has shifted over the years that it held power. Jesse Helms was a Democrat before he joined the racist ship-jump to the Southern Strategy Repubs. Easley and Black straddled the ideological (and ethical) lines. Jan Davis is a Democrat but he donated $$ to Carl Mumpower. So blaming either party for the state failures that Doug lists is pretty meaningless.
The people of this state have assented to those budget choices. We can change the choices if we want to. I do. Do you?
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June 9th, 2009 at 12:23 am
I blame the Dems for things as they are, but I fear how the Republicans could make them worse.
Gordon, go ahead and cross post if you feel like it.
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June 9th, 2009 at 7:35 am
So blaming either party for the state failures that Doug lists is pretty meaningless.
Actually it is meaningful to blame both ruling parties for the dire state we are in, it’s time everyone stops lying to themselves and act on what you know, we need new representation on every level!
(Gordon, go ahead with your standard defense of the status quo by invoking “baby steps”)
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June 9th, 2009 at 8:31 am
Dave!
Welcome to the blog. If you have any questions, just ask. I don’t cover everything here, so if you’re curious about something in particular, go ahead and say so!
It seems today you’re curious about whether I will “avoid” talking about the former governor’s wife’s job in the university system. Sounds like mad shenanigans went down, but I haven’t followed the story very closely. You’re a lot more likely to hear epithets flow from me regarding Easley if we start talking about the wreckage of the mental health system. What do you think about “this Easley subject”?
And, Dave, check your assumptions about me at the door will you? I’m a therapist, husband, blogger, and first-time candidate. You can read about me and my positions here: http://www.gordonforasheville.com
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June 9th, 2009 at 8:38 am
Kai!
Parties are merely vehicles. NC would be much better off with open ballot access for all political parties.
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June 9th, 2009 at 8:58 am
Not all services are luxury services such as pedicures and waxing. Both my full time job and second job are “services”. If services are taxed, either my customers will purchase fewer hours, or our rates (and income) will have to drop. This will negatively impact my family’s already strained budget.
For every dollar you tax on a service, that dollar has to come from somewhere. For every worker that loses their job, the tax burden on those still employed goes up without cuts in government. There is no way our already battered state can sustain billions in tax increases.
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June 9th, 2009 at 9:04 am
Education, Mental Health, and Social Services are vital government services. I’d be pleased as punch if the legislators wanted to find cuts somewhere else.
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June 9th, 2009 at 9:49 am
Well, we could cut subsidies to businesses that decide to relocate here. (And we could start on the list the libertarians provided in the previous thread.) But we’re talking about a $4 billion hole, and there are only so many cuts that will work.
Services don’t have to be taxed at the same rate as purchases. We can limit the services that are taxed. We can increase the level of income under which people can receive the EITC. And we could add a marginal tax rate or two above the current top rate.
But there are reputable economists who argue that tax increases – provided they’re the right kind – are far better than steep budget cuts during a recession. Because, of course, Education, Mental Health, and Social Services aren’t just vital services – they’re jobs. Slashing the budget to “save jobs” just doesn’t make any sense at all.
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June 9th, 2009 at 3:36 pm
I am confused about #9
9. The state Senate is working to remove the cap on the gas tax, suggesting that contractors’ jobs mean more to them than teachers’ or health care workers’ jobs.
How is raising the gas tax suggesting that contractors’ jobs are more important. Wouldn’t raisingthe gas tax cost most contractor much more than teachers or health care workers. The logic of this point evades me.
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June 9th, 2009 at 4:41 pm
Ralph, the question is what taxes get raised to protect what kinds of spending.
You’re absolutely right that the gas tax will hurt contractors – especially those running small businesses that have nothing to do with transportation – but it will also hurt people whose incomes have taken a hit as a result of the downturn, and those who were poor to begin with. These folks, after all, will not be able to deduct what they spend on gas as a business expense.
And the bulk of the money raised will go to spending on highways, much of which will benefit large contractors who work on highway projects. And I guess I’m just wondering, since we’ll raise taxes on ordinary people to fund them, what public good highways provide that is so much greater than the public good provided by teachers and health care workers.
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June 9th, 2009 at 5:11 pm
Since you mentioned us Libertarians, I thought I’d pat my own back: As a Libertarian elected to the Lenoir City Council, I was the only elected official to vote against the Google incentives. I have never voted for one of these corporate welfare “economic development incentives” in my almost six years on council.
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June 9th, 2009 at 5:29 pm
Some facts need to be checked. First, the Senate voted to stop the gas tax from going down when it resets at the end of June. This hurts all consumers, helps road builders. Second, per capita spending in constant dollars has increase in each of the past 5 budget years. The Democratic controlled NC House Fiscal Research Division published a document on May 11, 2009 showing that per capita spending increased from $1964 in 03-04 to $2023 in 07-08. Third, California voters turned down all attempts to raise taxes in their May referendum. Their hole is much bigger than ours.
Also, guess what services are being excluded from taxation. Lawyers fees, um, any connection possible to the trial lawyers association??
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June 10th, 2009 at 2:08 am
First, I’ve edited the item about the gas tax to make it more accurate.
Second, according to the North Carolina Budget and Tax Center,
Which is what I said – that our state government spends about as much per capita as it did eight years ago. In fiscal year 2004-2005 we were spending $250 less per citizen than in 99-00, so it’s no wonder we’ve seen five years of increases, but it doesn’t mean much. It’s about as germane as saying that there’s no global warming because we haven’t yet broken 2005′s record as the hottest year ever.
Third, California did attempt to raise revenues. Some of the ways the state government planned to do this were subject to the proposition process. The propositions failed as much because progressives regarded the revenue sources as unfair as because conservatives opposed all taxes. In fact, polling suggests that the vast majority of Californians opposed a cuts-only budget, which would mean that a minority in the state legislature is thwarting the will of California’s citizens.
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June 10th, 2009 at 7:27 am
Parties are merely vehicles. NC would be much better off with open ballot access for all political parties.
Like – Dislike
Gordon, spoken like a real politician. The discussion is about that the two ruling parties got us into this mess and you defend it by “I am for more ballot access”.
It is not about BA, what’s about is the fact that the ruling parties do not represent the people and reform will not change the parties. New parties with new internal rules are needed. Anyone who wants real change needs to turn their backs on the corrupted ruling class parties and support alternatives like the Libertarians and Greens.
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June 10th, 2009 at 9:01 am
Kai,
The discussion, as I see it, is about how the tax structure is a real mess. For you, I understand, the discussion is always about the “two ruling parties”. Saying that I’m speaking like a real politician is a lousy thing to say. You know me better than that.
If you want a revolution and new parties and shiny unicorns, then make it happen, dude. The rest of us are trying to work with what we’ve got.
I do support expanded ballot access. If a nice libertarian party person or green party person told me that there was an actual plan afoot to make it happen, I’d be excited. Instead I think the plan is to insult the people making use of the viable vehicles.
Good luck with that.
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June 10th, 2009 at 9:21 am
Kai,
Just out of curiosity – really, honest curiosity – how many self-described Greens are planning to run for municipal offices in North Carolina this year?
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June 11th, 2009 at 9:44 am
Gordon,
to say you are for expanded ballot access (BA) is a politicians answer because it cost you nothing, it’s like saying you are for clean water. What have you been doing to expand ballot access in NC over the last lets say 4 years? Do you even know the house bills number/title dealing with BA in the NC legislature without first googling it? And shiny unicorns? Really Gordon unicorns? Do they have to be shiny?
And yes part of the discussion is about what a mess the tax system is but if we do not discuss the underling problems and who is to blame for it nothing ever gets changed. But then again for you that is ok because the status quo is working for you I guess.
Doug,
because of the draconian ballot access laws in NC it is almost impossible to run as Green or even independent. In 2008 we run 3 candidates and we are discussing with several people their possible campaigns, however considering the limited resources we have in NC and the fact that the NC Greens are hosting the National Green Party Annual Meeting (ANM) I do not see much happening on that front in 09. Part of the discussion at the ANM will be ballot access and how stronger Green Party chapters (like CA, IL, AZ, TX, NY) can help assist newer parties like the NC Greens.
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June 11th, 2009 at 9:46 am
edit: underlining problems
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June 11th, 2009 at 9:48 am
darn it i can’t think, spell this morning to save my life, i guess the word i was looking for is: underlying problems
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June 11th, 2009 at 10:21 am
Kai,
Thanks for the info. Now, I’ll admit this next question is a little pointed.
What, exactly, are the ballot access issues preventing self-declared Greens from entering municipal races, the vast majority of which are non-partisan in North Carolina?
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June 12th, 2009 at 7:27 am
entering municipal races
Doug,
you are talking about dog catcher and water board etc. positions, right?
Those are great first political positions that many use as a spring board into more interesting political positions. But if your party has no BA then it is a spring board to nowhere.
Every state where the Green Party has gain BA has seen an increase in membership and in people interested in running for county commissioner, city council, major etc.; those are positions where real change can be archived and those are not open to Greens in NC.
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June 12th, 2009 at 10:09 am
Ron Paul has certainly leveraged the Republican Party well for the Libertarians.
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June 13th, 2009 at 10:42 am
As healthcare isn’t that important, I bet the state legislator’s could save much more money by cutting their own health insurance. Most of them are older and are probably prescribed a plethora of pharmies, which as well all know (especially those without health coverage or with basic major medical coverage) cost a lot. Additionally, being a state legislator isn’t even a full time job, and how many of their constituents have health coverage working either a full or part time job? Even if one does have health coverage, it certainly isn’t free, and I would wager one month’s premiums that it isn’t as good as what the legislators provide for themselves.
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June 13th, 2009 at 12:52 pm
eemilla,
wow what a concept our political leaders actually taken the lead, not that i am hopeful ….
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