J. Peder Zane

Zane: How Republicans have righted North Carolina’s fiscal ship

J. Peder Zane
J. Peder Zane JULI LEONARD

Never give an inch, never admit error and never ever miss a chance to push your party line no matter how false it may be – hey, it serves the larger truth!

These pages work overtime trumpeting faults on the right, so I’ll focus on a prime example of this phenomenon from the left: its relentless assault on the state budgets passed since the GOP took control in 2011.

A year ago, many liberals were beating the apocalyptic drums when it appeared that the state might come up a few hundred million dollars short in a $21 billion budget. This rounding error, they thundered, exposed the recklessness of GOP tax cuts.

As someone who has worked at businesses forced to make cuts because of tough times – coincidence? I hope so! – I find the logic behind that critique telling. It suggests that every government program and position is absolutely vital, that the bureaucracy is all bone and muscle.

Hmm, it can’t be that.

The line makes more sense, however – and here we identify a main difference between the liberal and conservative mindset – if one believes that government’s main obligation is not to the citizenry but to itself. In the latter case, government is not an entity meant to efficiently facilitate relations among people, but a giant mechanism of employment and income redistribution that must raise all the revenue it needs to keep itself, rather than the state, running.

These differing views are a legitimate point of contention.

Fortunately, they were moot because the GOP tax cuts did not drain the coffers. Instead, they helped replenish them – just as the falsely derided Reagan tax cuts actually increased revenues and sparked a two-decade long rise in median incomes. These are the stubborn facts that belie the incessant propaganda of those who insistently pretend that supply-side economics is a fantasy.

Now a stable enterprise

In North Carolina, tax receipts rose during the last fiscal year, and they are up again this year. We ended with a fairly healthy surplus that bolstered our rainy day fund while paying off the billions owed to Uncle Sam. Since 2011, the fiscal state of North Carolina has been transformed from a failing to a stable enterprise.

Restoring the state’s fiscal health should please liberals. After all, years of state spending that increased faster than population growth were a major reason North Carolina was so unprepared to meet the challenges of the Great Recession.

That’s why Democrats who were running the show and knew they couldn’t ram through a massive tax hike during a recession were forced to slash spending, especially in education. Indeed, most of the cuts liberals deride were made by their leaders whose blue-sky budgets made no provision for stormy weather.

Ironically, the GOP seems the better friend of big government. Its policies should protect us against massive disruptions in services when the next crisis strikes. This includes its minor but much criticized effort to reduce income tax rates while raising some user fees and sales taxes – following even steeper cuts in those rates.

Again, it is fair to argue about the “fairness” of such an approach. Sales taxes are regressive. But they, along with property taxes, are also far more stable and predictable revenue generators than income taxes, which rise and fall with the economy.

Ignoring the approach that has helped us achieve this hard-won fiscal stability, many now are demanding another spending spree. So you’d think they would be thrilled that Gov. Pat McCrory is proposing a $2 billion Connect NC bond issue to improve “education, parks, safety, recreation, and water and sewer infrastructure.” Instead, some liberals are grumbling because it is being funded through a bond issue – which offers the government more flexibility in how it finances the work than the strait-jacket of new taxes.

Putting aside the fact that North Carolinians have shown little appetite for any new taxes, this liberal approach is misguided because it would steer us from our safe harbor. We have indeed experienced a Carolina Comeback under GOP leadership – not in the private sector, which ebbs and flows with larger forces, but in the government. We have righted the fiscal ship of state. In these uncertain times we can’t assume smooth seas ahead. At least we will be in better shape the next time we hit the rocks.

Contributing columnist J. Peder Zane can be reached at jpederzane@jpederzane.com.

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