Can't have any tax increases. Nope, just can't. Republicans don't do tax increases. They're off-message. Republicans hate taxes. And by the way, when North Carolina has tax increases that are set to expire, they should go ahead and expire. Temporary means temporary. Repeat: No tax increases if the GOP has anything to say about it.
Well, the GOP does have something to say about it, seeing as how Republicans will soon control both houses of the General Assembly. But with their election victories last month came a booby prize - it's they who will have the high honor and distinct privilege of enacting a balanced budget while closing a $3.7 billion shortfall.
So, if tax hikes are off the table and temporary taxes are to phase out as scheduled, the shortfall will have to be bridged via spending cuts. Maybe Republican legislators can find $3.7 billion to whack out of a $19 billion budget that's already been pared down, but it won't be pretty in terms of the impact on state services. Do they really want to be quite so doctrinaire on the revenue side?
Checking the signals they're sending to Democratic Gov. Beverly Perdue, perhaps they do. But Perdue should call their bluff - even though she's not enthused about additional taxes either.
It's the governor who will draft a budget for legislators to consider. She is well along in the process of identifying potential spending cutbacks. But after she spoke to a Republican caucus Wednesday, House Speaker-elect Thom Tillis urged her to make the knife go deeper. And those temporary tax increases enacted back in 2009? Forget about extending them, Tillis advised.
Those tax hikes were part of a package, along with reduced spending, that brought the budget into balance as the recession was first grabbing North Carolina and the country by the throat.
The sales tax was raised by a penny on the dollar, bringing the combined state and local tax to 7.75 percent in most locations, with a sunset date at the end of the current budget year next June 30.
And a surcharge of either 2 or 3 percent was put on personal income taxes. It kicked in at the 2 percent level with taxable incomes above $100,000 for couples or $60,000 for people filing singly. All told, the increases are expected to raise $1.3 billion toward the current budget.
Nobody disputes that North Carolina's sales tax is on the high side, and sales taxes are especially burdensome for lower income people. Yet they also bring in a ton of money and they're paid gradually.
As for the income tax surcharge, it typically costs people who have to pay it a couple hundred dollars or so, or maybe a couple of thousand for folks really raking it in. That's money no one wants to forgo, but not an unreasonable imposition on people with decent incomes, considering the state's needs.
The conditions that led to these additional taxes haven't much changed. If anything, they've grown worse. Perdue's budget should retain the taxes - yes, temporarily - and let her Republican friends figure out which further spending items they would cut if they want to let the taxes expire.
The magic number: $1.3 billion. And if the GOP agrees after all that the wise course is to keep the taxes, or part of them, in place, maybe the governor could promise not to rub it in.
