More than $650 million can be cut from North Carolina’s continuation budget.
• $300 million in cuts identified by Governor Easley
• $30 million in cuts recommended by budget and legislative staff
• Millions more in non-essential services, including:
o $10.6 million for “Tourism, film, sport and development
o $13.6 million for government-run television and radio
o $3.5 million for a “grassroots initiative” within the Department of Environment and Natural Resources
SUMMARY: As the General Assembly reconvenes for its 2008 “short session,” one thing has become clear: the slowing economy will make revenue tight, forcing legislators to make some tough decisions on how to fund North Carolina’s priorities. Implementing the sound spending reductions included in the attached spreadsheet will help legislators ease the tax burden on North Carolinians, while still allowing expanded spending on priorities such as mental health and teacher salaries:
• Some specific tax relief proposals and their revenue impact include:
o Avoiding the Governor’s recommended regressive tax increase on cigarettes and alcohol. Tax relief of $165 million.
o Eliminate the remaining ¼ cent regressive “temporary” sales tax. Tax relief of $258 million.
o Eliminate the unpopular “death tax.” Tax relief of $171.8 million.
o Cutting the corporate tax rate to a regionally competitive 5 percent. Tax relief of $330 million.
Providing hardworking North Carolina taxpayers with relief, rather than an added burden, would prove to be a popular move in an election year:
• Two-thirds of voters polled believe that taxes in North Carolina are already too high (Civitas Institute’s April 2008 DecisionMaker poll). Only two percent said they are too low.
• Seventy-three percent of voters, in the same poll, said it is more important to cut taxes to stimulate the economy, compared to only 14 percent who felt increasing state spending is more important.
The attached spreadsheet provides nearly two-thirds of a billion dollars in spending reductions from the state’s continuation budget – a document that traditionally receives little scrutiny during the budget-making process. These recommendations are designed to provide lawmakers with sensible options to better prioritize the spending of taxpayer dollars in what will be a fiscally challenging year.