NC’s excessive tax cuts cause red ink

For a group that promises to squeeze every penny in state spending, the General Assembly’s Republican leaders are surprisingly cavalier about a projected revenue shortfall of $271 million or more.

They say coming up short by a few hundred million dollars is a small fraction of a $21 billion state budget and that they’re used to plugging even bigger budget gaps. In this case, they say, they can dip into the $800 million in Medicaid and budget reserves. Not to worry, they say, we’ve got this.

Well, North Carolinians should worry because Republicans don’t have the problem under control. They caused the problem with excessive tax cuts that gave tax relief to the wealthy and corporations already awash in cash. The N.C. Budget and Tax Center, a nonprofit group, estimates that the total cost of the tax cuts – the difference between revenue that would have been generated by the old tax structure and revenue under the new one – is approaching $1 billion for the current fiscal year.

Now, as the clouds are finally parting over the economy, North Carolina might have to go into its “rainy day” fund. Meanwhile, state services will face another year of budget austerity.

The truth is, North Carolina is a large and growing state that has plenty of means to meet its needs and invest in making its transportation system better, its schools stronger and its people healthier. But rather than taxing adequately and fairly, lawmakers are giving money to the already well-off and creating an artificial revenue shortage.

Most people don’t pay a lot of attention to the actions of the General Assembly, but by April 15 the tax changes, the higher tax bills for many and constricted state revenues will have drawn the attention of many taxpayers. The claim that the budget shortfall is no big deal should increase the public’s concern about who is at the helm in North Carolina and where they are taking the state.