Late last month, Alabama Gov. Robert Bentley proposed a budget that included $541 million of tax increases in his state. The revenue is needed to shore up a general fund that’s been depleted by shortfalls stemming from years of tax cuts.
The governor’s proposal was met with resistance, as he expected, from a Republican legislature that had passed those tax cuts in the hopes they would spur economic growth. They hadn’t. Alabama was suffering.
“We cannot cut our way out of this,” Bentley said.
If you were hoping for a similar epiphany from North Carolina’s governor, you surely were disappointed by the 2015-17 budget Pat McCrory proposed Thursday.
It was a careful budget, sprinkled with modest new proposals, but it would do little to change the troubling direction North Carolina is headed fiscally.
It has no tax increases, save for a gas tax hike that Republicans will continue to try to label otherwise.
It continues to chip away at higher education, with a trim of about 1.2 percent, despite other states increasing what they spend on colleges and universities. Other major agencies would see similar cuts, and the judicial system remains dangerously underfunded.
The budget has some highlights. It funds the expected increase in students enrolling in public schools with money to fill more than 1,400 teacher positions. It also includes money to save about 2,000 teaching assistants.
But, as McCrory said this week: “The budget is still very tight.”
There’s a reason for that. Tax revenues aren’t where Republicans thought they would be. A Feb. 10 memo from the legislature’s Fiscal Research division and the Office of State Budget and Management put the shortfall at $271 million thus far this fiscal year. That number could grow this spring.
There’s a reason for that, too. N.C. Republicans have slashed personal and corporate income taxes, with the notion that businesses and the wealthy would use that money to create more jobs and revenue for the state.
It hasn’t worked. Historically, it doesn’t work. It’s why Kansas Gov. Sam Brownback has proposed dialing back on tax cuts after a budget shortfall almost cost him an election. It’s why Republican Gov. Bobby Jindal is uncharacteristically considering increasing the tax burden on businesses to make up for a $1.6 billion shortfall.
It’s why a Republican governor in Alabama is desperately proposing tax increases.
North Carolina’s shortfall hasn’t reached such a dire point – yet. But we’re on a path that’s unsustainable. Will we learn what others are already realizing?