Over the past few years, North Carolina’s state government has increased spending at an alarming pace. The current FY2007-08 budget, for instance, increased spending by 9.5 percent over last year and spent 20 percent more than just two years ago. North Carolina’s policy of spend and tax has hampered economic growth, hurt working families and handicapped job creation. While the state’s economy continues to grow for now, North Carolina recovered more slowly from the last recession than most other states. Consider the following:
- State spending has increased 42 percent since 2001.
- The combined state and local tax burden on North Carolina citizens is at an all-time high and is the highest among Southeastern states.
- Total state debt more than doubled from 2001 to 2006.
- North Carolina’s economy has fallen further behind the national average.
- 2006 per capita income growth was the third-lowest in the nation.
- The state’s unemployment rate has exceeded the national average 7 years in a row.
The BASICS: A Three-point Plan for Prosperity
Creating jobs, growing the economy and increasing prosperity for North Carolina’s citizens will require fresh and innovative ideas inspired by a new vision for our state. This plan is grounded in the following three goals:
1. Create Opportunities for Working Families – Reform the tax code to encourage entrepreneurship, job creation and higher wages
A Competitive Tax Code for Business
- Lower the tax rate on all businesses to 5 percent
– Exempt business inputs from taxation
– Modernize the tax code by eliminating or reducing corporate tax breaks
– Create uniform criteria for corporate incentives
Tax Relief for Working Families
- Exempt groceries from the local option sales tax of 2 percent
– Cut the gas tax
– Repeal the remaining “temporary” sales tax increase
– Lower the top marginal personal income tax rate to 7 percent
Tax Relief for the Elderly and Retirees
- Expand the homestead exemption for retirees
– Increase the deduction for private pension income
– Repeal the state “death tax”
– Repeal the gift tax
2. Make Government More Transparent – Empower citizens to more easily monitor government spending and debt
Transparency for State Expenditures
- Create a publicly searchable state spending transparency Web site
– Follow procedural rules when crafting the budget
– Implement zero-based budgeting
– Stop paying for vacant positions
Transparency for Bonds and Other Forms of Debt
- Apply “truth in lending” practices to state and local bonds
– End or reduce the use of nonvoter approved debt
3. Spend Within Our Means – Hold lawmakers accountable and give voters more control over taxation and spending decisions
Accountability to Taxpayers
- Make tax increases subject to voter approval/ or
– Require a supermajority legislative vote to raise taxes and fees
– Index tax brackets for inflation to avoid the “inflation tax”
Common Sense Budgeting
- Reward state employees for saving taxpayer dollars
– Stop funding recurring spending items with nonrecurring revenues
– Increase funding for the “rainy day” fund
– Implement more rigorous oversight over money allocated to nonprofits
– Exercise oversight over local government entities receiving grants