The N&O is at it again, trying desperately to drive the narrative that somehow the tax cuts enacted in 2013 are wreaking havoc on the state budget – which in the eyes of the N&O is far more important than the economic health of the state’s citizens.
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.
Where to start?
First off, a state budget “surplus” or “shortfall” is not a ‘problem’ caused by tax hikes or cuts. These merely represent the inaccuracy of revenue projections made at the time the budget is written. When actual revenue exceeds or falls short of what was predicted, the result is a “surplus” or “shortfall.” And this year’s inaccurate budget prediction is projected to be off by $271 million – which would amount to less than 1.5% of the state’s General Fund budget. For some perspective to the N&O, a 1.5% miss in revenue projections would be far smaller than what we’ve seen over the last 20 years. The average difference between projected revenues vs. actual revenues for those 20 years is 4.3 percent – roughly three times as large as this year’s projected miss. Furthermore, six of the last 20 budgets ended with shortfalls that averaged 6.5 percent. So the N&O has its work cut out for them trying to manufacture a crisis around one of the smallest revenue projection discrepancies in two decades.
Moreover, painting the “shortfall” as the result of tax changes only examines one side of the equation. What about spending? Even after adjusting for inflation, per capita spending from the state budget has increased 62 percent in the last 30 years. In other words, the state budget now spends nearly two-thirds more per person in real terms that it did three decades ago. Yet the N&O would never dare identify such dramatic spending binges as “excessive.”
Finally, once again the N&O dredges up the false and discredited narrative that the tax reform that reduced tax rates on everybody somehow only benefits “the wealthy and corporations”, and concludes that tax cuts equate to “giving money to the already well-off.” Giving money? When someone’s tax bill is reduced, that means that person keeps more of their own money. The government did not give them anything. This reveals the N&O’s mindset that all money and property belongs to the government and that whatever our rulers deem we are allowed to keep is somehow a gift from their benevolence.