Since Colorado passed a so-called Taxpayer Bill of Rights in 1992 and then regretted it, at least 30 states have considered doing the same. Not one has pulled the trigger.
But North Carolina lawmakers, we’ve seen, aren’t afraid to pass nationally unique self-defeating legislation. They’re considering doing it again with Senate Bill 607. It’s called the Taxpayer Protection Act, but it wouldn’t protect taxpayers who want well-paid teachers, strong schools and public infrastructure that keeps up with the state’s growth.
The Senate passed the bill on a party-line vote last summer. It’s been sitting in the House Finance Committee ever since, but the N.C. Insider news service reported Tuesday that House members might take up the bill in coming days or weeks. They shouldn’t.
SB 607 would have voters decide in November whether to pass constitutional amendments to do three things:
▪ Limit the growth in state spending in any given year to inflation plus population growth.
▪ Cap the top tax rate on personal and corporate income at 5 percent, half of the current constitutional cap of 10 percent.
▪ Designate 2 percent of the General Fund budget for a rainy-day fund and restrict how that money could be spent.
The bill sounds reasonable on the surface. In practice, though, it prevents the state from investing adequately in fundamental public services even in good times. As North Carolina’s population and demand for services grow, state spending would fail to keep up.
Colorado’s experience was so bad that it suspended the law in 2005 after schools, roads and other areas suffered. The state experienced “ratcheting down”: Spending drops during a recession, then each year’s spending is pegged to that new lower level. The state is unable to get back to responsible levels even after the economy rebounds and generates more tax revenue.
Jan Brewer, the conservative Republican governor of Arizona, vetoed similar legislation in 2011, citing Colorado’s failed experiment.
The income tax provision would cut revenues by almost $2 billion a year. Expect the legislature to make up some of that through higher sales taxes and for local governments to be pressured to raise property taxes.
In Colorado, the state’s leading CEOs and other business leaders eventually came out against the Taxpayer Bill of Rights. N.C. business leaders will regret it if they do not do so before this becomes law.
Natalie English, senior vice president for public policy at the Charlotte Chamber, told the editorial board Tuesday that the Chamber has not taken a position. But “we have talked with colleagues in other states that have passed (or considered) similar legislation. Many of those colleagues express frustration and regret which gives us reason for hesitation.”
The House should hesitate, too, indefinitely.