Budget keeps NC on the right track

by Becki Gray, John Locke Foundation and NC SPIN panelist, published in Wilmington Star-News, October 3, 2015.

Finally. With the 2015 General Assembly adjourned, there’s a lot for conservatives to celebrate. This was a session built on the principles that started to turn the state around in 2011. The third budget passed by a conservative General Assembly (and second for Gov. Pat McCrory) adheres to fiscal responsibly, transformational reforms, and respect for individual freedoms. It was worth waiting for.

Restraint opened the final budget negotiations. The governor’s General Fund budget increased spending by 2.1 percent over last year. The House proposed a 6.2 percent increase, while the Senate was more in line with the governor at 2.6 percent. They ended up with a spending increase of 3.1 percent, staying within a fiscally responsible limit within the rate of growth of population and inflation.

Reforms to the tax system built on transformational changes started in 2011. This budget reduces the personal income tax rate to 5.499 percent, lower than our neighbors Virginia, South Carolina, and Georgia. The corporate tax rate will go down to 4 percent this year and is expected to drop to 3 percent in 2017, making N.C.’s rate the lowest of any state that imposes a corporate tax. It expanded the sales tax for services provided by companies that already collected taxes. Lower-income families will benefit from a $500 increase in the zero tax bracket. Our tax code is further simplified and North Carolinians will be paying $2.2 billion less in taxes over the next five years.

Reserves are necessary to ensure funding for crucial services in case of a natural disaster or an economic downturn. This General Assembly is building a savings reserve that will exceed $1 billion.

Revealing government spending lets everyone see how much is spent and where the money goes. A new Internet portal will post budgets and expenditures for all state, city, county, and local education agencies with monthly updates.

Technology and a commitment to open government makes what was nearly impossible 10 years ago reality in North Carolina.

Reform to the behemoth Medicaid system, difficult and long overdue, will begin to lower costs (it’s 17 percent of the budget and the fastest-growing part), ensure budget predictability, and provide the 1.9 million North Carolinians under Medicaid (including more than half the babies born) with quality care for the dollars spent.

The annual transfer of $216 million from the Highway Fund to the General Fund stops and that money stays where it belongs — to pay for roads. In addition, an update to the Division of Motor Vehicle fee schedule will provide a reliable stream of money to pave roads, shore up bridges, and relieve congestion.

Responsibilities to ensure every child receives the best education are taken seriously. More low-income kids whose needs were not being met by traditional public schools can attend a private school their family feels is best for them with a $4,200 voucher.

Resources are best spent ensuring every child gets a great teacher (rather than feeding a bureaucratic system), and this budget reflects that. It’s not how much is spent but how it is spent. Additional funding pays for reading camps, hiring more teachers to decrease first-grade class size, instructional materials, and broadband connectivity. Beginning teachers get a $2,000 pay increase and all teachers get a $750 bonus and a step increase on the state salary schedule.

The budget offers relief from growing energy costs, with a realization that when government picks winners, the rest of us lose. A 35 percent tax credit for renewable energy investments will expire at the end of this year. North Carolina citizens, taxpayers, and businesses can expect lower energy costs.

From restraint to relief to reserves, our state’s leadership has built on themes started in 2011 of reforms, redirection, and rebuilding. It was worth the wait.

Becki Gray is vice president of outreach at the John Locke Foundation.

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