Don’t be fooled by this NC tax ‘refund’

North Carolina Senate leader Phil Berger has led a drive to shortchange the state’s needs to pay for tax cuts that largely benefit the wealthy and large corporations. Now he wants to give a few bucks back to the little people by spending a $896 million budget surplus on refunds to taxpayers.

“I actually think that the right thing to do with that is to send that money back to the people that sent it to us,” Berger told a Spectrum News program. “What we ought to be doing is thinking about how we can provide a refund to the taxpayers of the state of North Carolina. If they sent us more money than was needed last year for the budget, then I think they deserve to have some of it back.”

Everyone loves tax refunds — especially politicians approaching an election year — but don’t be fooled by the sudden generosity of the skinflint senator whose governing credo is: “North Carolina does not have a revenue problem; we have a spending problem.”

North Carolina does have a spending problem. It’s not spending enough and the unmet needs are piling up. Teachers need substantial raises across the board, as do school bus drivers, custodians and teacher assistants. The shortage of textbooks and school supplies remains acute. Many local water systems need major improvements to provide safe water. The state’s judicial system from courtrooms to prisons is underfunded to the point where justice too often cannot be served. The University of North Carolina needs more state support to be affordable to most North Carolina residents. The state is leaving hundreds of thousands of people uninsured because Republican lawmakers won’t accept the cost of expanding Medicaid.

Alexandra Sirota, director of the nonprofit N.C. Budget & Tax Center, said Republican state lawmakers have abandoned the idea of growing state spending to keep up with a growing state population. “Their diminished level of service is lower so it looks like they have more (revenue) than they thought they’d have, but that doesn’t mean they have more than they need,” she told the Editorial Board on Monday.

State government spending as a share of the state economy has fallen sharply since before the Great Recession despite a years-long recovery. According to an analysis by the nonprofit N.C. Budget & Tax Center, North Carolina would be spending $5.8 billion more if it was spending at its 45-year average share of the economy. Part of that reduction reflects tax cuts that are costing the state $3.6 billion annually.

Berger and other Republicans hope that North Carolinians ignore the pain of the missing money and instead accept the completely discredited notion that tax cuts generate more revenue by stimulating the economy. They hold up the budget surplus as proof that the Laffer Curve is not laughable, but this surplus isn’t proof. For one, the rise in unexpected revenue this year reflects a one-time effect of major federal tax changes that resulted in a surge in capital gains and corporate profits. More significantly, the surplus points to the Republicans’ choke hold on state spending.

Taxpayers didn’t send the state “more money than we needed,” as Berger put it. Instead those taxpayers are trying to send a message that needs are being neglected. That’s why teachers have marched on Raleigh, local governments are raising taxes and Democratic Gov. Roy Cooper is demanding Medicaid expansion.

Sending taxpayers what Berger’s office estimates to be “a few hundred dollars for a couple filing jointly” will cover a few trips to the grocery store, but it won’t put textbooks in schools, ensure clean water from the faucet or insure the uninsured. Taxpayers don’t need individual refunds this year as much as they need a common investment in making the state better in the years to come.