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Time to stop putting band-aids on budget

Former Gov. Jim Hunt is the founder and driving force behind the Emerging Issues Institute, a Raleigh-based think tank, which is undertaking both a study and a major effort to overhaul the way North Carolina pays for its government. Hunt reflected on the effort in an interview with staff writer Rob Christensen.

THE N&O: Why do you think we need to modernize the state's finances?

JIM HUNT: We've come to the point now where the legislature is regularly facing budget shortfalls and crises that we have been attempting to solve with stopgap measures, year after year. Frankly, in the future, things are going to be even more difficult.

THE N&O: What are the causes?

HUNT: The sales tax base is shrinking. Our income tax has been very unpredictable, and our tax system is riddled with exemptions, and that makes it very complicated and hard to administer.

The sales tax on products was established at a time [the 1930s] when we were primarily a product economy. People bought things instead of services. Now a very large part of what we buy is services.

THE N&O: Do you have any ideas on what changes you would like to see?

HUNT: I really don't have any bias in this matter. I just want a system that is efficient and that is fair. That's why we have established these three very important working groups who are working very hard on these issues before the forum [Feb. 6-7]. We will have a wide variety of speakers who come at this from different view points -- conservative to liberal. And we will look at what systems are being adopted in other countries.

THE N&O: How difficult will it be to reform the system?

HUNT: It will be very difficult. This is a subject that everybody says we have big problems. When the legislature comes to town every year, they are wringing their hands about it. But very few people actually want to do something about it.

We are keenly aware that even discussing it will not be popular among folks. But a lot of tough things we have done in our state over the years have been unpopular in the beginning and hard to do. We hope to provide information and educate our citizens and policy-makers on what some of the alternatives to the present tax system are and examine whether or not some changes can be and ought to made.

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