My colleague Michael Walden, in his April 25 Point of View piece "Medicaid shift shows government working at its best," was right to praise the state's takeover of Medicaid costs from the counties. However, this success will force our leaders to confront an equally urgent problem.

State government took 0.5 percent of local sales tax revenues from the counties to pay Medicaid's bills. But the sales tax in North Carolina taxes only goods, a shrinking part of the economy, in a way that burdens low-income families. In other words, state government intends to provide for a rapidly growing program by relying on a source of revenue that is slow growing and regressive.

The next task is to lower the sales tax rate and spread the tax burden widely and fairly on services as well as goods.

Roland Stephen

Institute for Emerging Issues, N.C. State University

Raleigh