Yesterday Gov. Cooper signed House Bill 7 into law, albeit with some apparent reservations.
Legislative budget-writers will have to set aside money every year for the state’s rainy day fund, under a bill signed into law on Thursday by Gov. Roy Cooper.
The governor signed the bill while warning against putting too much into savings at the expense of tax breaks for the middle-class, schools and attracting jobs….During his campaign for office last year, Cooper said the $1.5 billion in the fund was excessive. That remark prompted criticism from Republicans, who claimed Cooper would leave the state without enough savings for emergencies such as the flooding and wildfires that hit the state in 2016.
This new law will require 15 percent of annual projected state revenue increases be set aside into the state’s rainy day fund. This, along with other measures restricting the ease with which funds from the account can be appropriated, will better grow and preserve the savings reserved for difficult fiscal times.
As long as our economy continues to be dragged thru a cycle of booms and busts courtesy of the Federal Reserve, it is wise policy to aggressively set aside savings in anticipation of the next recession. Past legislatures irresponsibly refused to set aside money into the rainy day fund, and as such the state was caught empty-handed when recessions hit, for example in 2000 and 2008. The result was panic, and the enactment of “temporary” taxes that made the recession in NC worse and recovery slower – not to mention some of those “temporary” taxes stuck around a long time.