Economist Stephen Moore of the Heritage Foundation has a piece in today’s Wall Street Journal that reminds us of why fiscal reforms in our state have worked and are still working.
But he also warns us of how easily all the gains can be lost.
He notes that North Carolina cut taxes in the right way, and also tightened up on unemployment insurance. Soon “the unemployment rate started to decline rapidly and job growth climbed. Not just a little. Nearly 200,000 jobs have been added since 2013 and the unemployment rate has fallen to 5.5% from 7.9%. … On the Tax Foundation index of business conditions, North Carolina has been catapulted to 16th from a dismal 44th since 2013.”
Now that NC has paid back the $2.8 billion in unemployment funding owed to Washington, North Carolina “now has a trust-fund surplus. This means it will be able to provide employers with at least $500 million in cuts from the state and federal unemployment tax on payroll over 18 months”
Meanwhile, Moore notes, “Even with lower rates, tax revenues are up about 6% this year according to the state budget office. On May 6, Gov. [Pat] McCrory announced that the state has a budget surplus of $400 million.” That in turn has triggered further business tax cuts, which means employers will be able to grow and hire more people.
Just as important, Moore noted, is the contrast with Kansas, which also cut taxes, but without the corresponding fiscal discipline. Right now Kansas lawmakers are struggling with a revenue shortfall and face the possibility of tax increases.
That’s one reason Tar Heel conservatives are concerned about the current state House budget, which spends more and is packed with pork barrel spending.
Excessive spending can wipe out the gains North Carolina has made with all the recent reforms the General Assembly has instituted. It’s good to remember how far the Old North State has come and how much we all have benefited, but in the euphoria, let’s not forget how important fiscal discipline is, and how easily all our gains could be lost.