Editorial

Penny foolish

Senate GOP leaders follow the House in dropping a helpful sales tax at the worst possible time.

May 26, 2011 

Republican leaders in the state Senate believe they have fashioned a responsible budget that recognizes hard times, cuts taxes and protects vital services. No matter how thick the lenses on their rose-colored glasses, their solutions to a $2.5 billion budget shortfall that certainly demands some budget reductions are too drastic when it comes to public education at all levels, cuts in Medicaid for the poor, the cutoff of money for passenger rail projects and a reduction in important services for the sick.

And those leaders stubbornly refuse to make a simple and positive decision that would alleviate some budget pressure and perhaps save thousands of state workers' jobs: keeping a one-penny addition to the sales tax that was added in 2009 to help the state through a budget crisis that continues to linger, and will for a while. Leaving that penny in place (Gov. Beverly Perdue wants to keep most, but not all, of it) would mean over $1 billion to the state's economy. Yes, it's a tax, a word that is anathema to Republicans even when it's reasonable and responsible.

But this is a tax virtually no one notices, regressive though it may be. Were it put toward saving state workers' jobs (the estimated number of lost jobs wildly varies depending upon who is doing the figuring, but it will be in the thousands) that would mean some services would not be lost, and that the state's high unemployment figures would not grow even more. Cutting jobs in the name of keeping a "promise" on a temporary tax (it is set to expire in weeks) may bring the books closer to balancing, but it is not smart governing.

Phil Berger, president pro tem of the Senate, and two of his Republican budgeting leaders, Sens. Richard Stevens and Neal Hunt of Wake County, shared their thoughts on the budget earlier this week with editors and reporters of The News & Observer. Berger, of Eden, defends the end to the tax as appropriate in view of both the promise made to taxpayers and of the status of the budget deficit. When the deficit was first considered, he said, it was thought that it might reach as high as $3.7 billion. In view of the lower figure lawmakers now believe is realistic, $2.5 billion, letting the tax expire seems the right thing, he said.

The problem with that logic is that $2.5 billion is a huge gap, and Republican leaders are leaving on the table a sum from one source that could cut it nearly in half.

What happens without it? Pretty much what happens in the House budget. Education funding at the university, community college and elementary and secondary public school levels will be inadequate, necessitating job losses and, for example, elimination of teachers' assistants in all grades but kindergarten.

Moving around this cherry tree to pick a few more examples of budget-cutting: Medicaid services would be reduced, including the elimination of optional services such as physical, speech and respiratory therapy; funding for UNC-TV would be trimmed and then phased out; the same would happen to the Health and Wellness Trust Fund, which leads anti-smoking efforts and other health-awareness projects.

Berger, Stevens and Hunt aren't tea partyers, and they've been around long enough to understand that for many North Carolinians the cuts in services will be a real hardship. They also should understand that the hardship could be eased by the simple act of leaving that additional sales tax in place.

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