The truth about the Senate tax cut plan from their own staff

| April 21, 2017

by Chris Fitzsimon, NC Policy Watch and NC SPIN panelist, April 19, 2017.

he wisdom of the plan by Senate leaders to cut taxes by $839 million was called into question this week by an important source, the nonpartisan legislative staff that works for them and inadvertently by a powerful Senator himself.

Two weeks ago, the Senate passed the proposal that would be yet another boon for corporations and wealthy North Carolinians with assurances that the state could afford it and that it wouldn’t hurt efforts to fund schools, health care programs, environmental protections and other vital state programs.

But the Fiscal Research Division of the General Assembly says that’s not true, that the tax package would result in state budget shortfalls of more than $600 million in just three years.

It’s not clear why the analysis wasn’t done before the Senate voted to slash future revenues, but better late than never.

Senator Jerry Tillman brushed aside the analysis and claimed it did not take into account the growth in the state revenue that the tax cuts would create, pointing to the expanding state economy in recent years.

But the analysis from Fiscal Research does include projections for state budget growth of more than four percent a year and does not account for any significant downturn in the national economy. In other words, the legislative economists are basing their warnings about the budget shortfall on a relatively rosy forecast.

Imagine what would happen if the national economy sputters or even heads towards a recession that we know is inevitable.

Then consider that despite all the rhetoric otherwise, North Carolina trails much of the country and most of its neighbors in investments in key areas.

The state ranks 44th in per pupil spending, average teacher pay is lower than in every bordering state and principal pay is dead last in the country.

The university system has been forced to absorb several hundred million dollars worth of budget cuts in recent years with faculty leaving because of low pay.

Thousands of at-risk children languish on waiting lists for PreK programs that could change their lives. The waiting list for childcare subsidies routinely stays at more than 20,000 kids.

Massive tax cuts mean the state has less to invest. That’s just basic math.

And it is worth remembering that if the current Senate proposal is adopted, millionaires in North Carolina will have received a $20,000 a year break from the tax changes made since 2013 while the poorest people in the state have barely received anything at all.

The analysis of the Senate tax plan also does not include the almost certain reduction coming in federal funding for important programs in North Carolina. That will force state lawmakers to make up the difference or leave state agencies even less able to meet the needs of the people they serve.

President Trump’s budget would slash funding for the EPA by almost a third and federal funds make up half of the budget of the state Department of Environmental Quality. Federal Medicaid funding is even more precarious and even a slight reduction in the percentage of funding could cost the state hundreds of millions of dollars.

The obvious conclusion from the analysis from the legislative staff is that North Carolina cannot afford the Senate tax cut proposal. And Tillman himself reinforced that notion, telling the News & Observer that if there is a shortfall, the General Assembly could just make more budget cuts to address it.

Apparently, 44th in the country in per pupil spending isn’t low enough for Senate leaders. Tax cuts for millionaires are more important.

The truth about the Senate leaders’ tax plan from their own staff

Category: NC SPIN Perspectives - Opinions from NC Leaders & Organizations

Comments (4)

Trackback URL | Comments RSS Feed

  1. bruce stanley says:

    How many budget surpluses in a row is it going to take before Chris acknowledges that tax cuts have resulted in more money in the coffers, not less?

  2. Norm Kelly says:

    I’ve commented before that facts are routinely ignored by liberals. Facts are those things that prove the fallacy of the liberal agenda. Whenever a fact is examined, it proves that libs just don’t know what they are talking/writing about. So, instead of trying to use logic and facts to prove their point, libs simply ignore facts, pretend they don’t exist, and hope that none of their audience bothers to check on the story.
    Chris is a good case in point. Usually is, as he ignores facts like every good lib must in order to keep their agenda going. So I try to quote libs whenever possible so anyone who reads my blatherings knows I’m not taking them out of context. Which is usually what libs say when they are caught telling lies, providing misinformation, or making up the story to fit their agenda. So directly from Chris’s pen: ‘Massive tax cuts mean the state has less to invest. That’s just basic math.’ Bu it’s only basic math in lib la-la-land. In reality, as in NC recently, the facts prove that this statement from Chris is ENTIRELY WRONG! Revenue to the state is up. It’s just that libs don’t like tax cuts. Ever. For any reason. So to support their agenda and purposely mislead anyone crazy enough to read their drivel, and to do everything they can to prevent another tax cut, libs simply mislead. Misinform. Create fake news. They can’t help themselves. Cuz they know if they are honest with people, they will NEVER regain power. Let’s face it, Roy only got elected cuz of the lies and misinformation. Remember ‘this election is about more than one bad bill’? Except Roy made sure it was ONLY about HB2!
    ‘millionaires in North Carolina will have received a $20,000 a year break from the tax changes … while the poorest people in the state have barely received anything at all.’ So, when you pay the majority of taxes, and taxes are cut, shouldn’t you get a relatively large tax cut? And when you pay almost NO taxes, how do you get a sizable reduction in taxes? If you don’t pay them, how do you get a reduction? Again, trying to distract readers from logic, truth, facts, common sense! Libs always complain that those who pay the least in taxes are the ones who get the smallest effect of a tax cut. Cuz they pay the smallest amount, they get the smallest impact of a reduction! That’s basic math! Which is probably why it’s missed by most libs!
    ‘Thousands of at-risk children languish on waiting lists for PreK programs that could change their lives’ And exactly HOW was this different when libs ruled Raleigh? Seems that no matter how much libs taxed us, they were always whining about not having enough money to spend on ‘the children’. So, raising taxes didn’t help these kids. Which lib is willing to try any other way to have an impact?
    ‘The university system has been forced to absorb several hundred million dollars worth of budget cuts in recent years’. The university system is top-heavy. Instead of cutting classes, or teachers, how about the system start eliminating some of the very expensive upper management people? How many chiefs does this tribe need? Cuz they have waaaaaay too many now! Cutting senior management significantly would NOT be noticed and would save the system MILLIONS of much-needed dollars! How about having ‘professors’ who actually teach classes? Isn’t that what they get paid for? And if it’s not it should be!
    ‘principal pay is dead last in the country.’ That’s hard to imagine! I know how much some principals get paid. And it’s outrageous! And there are too many chiefs in the K-12 grades as well. How do private schools manage to run their programs with fewer chiefs? And they also don’t seem to have trouble hiring teachers! Why is that? Is there anything government monopoly schools can learn from private schools? Of course not. That would be like the monopoly admitting that they don’t do EVERYTHING just right! And NO government agency is allowed to admit that they aren’t perfect. Witness Obamacancer and DMV to start. Go to Amtrak if you need another example. And government monopoly schools are a good example for most things that don’t work as good as they should or could!

  3. Richard L Bunce says:

    Chris is the little boy that cries wolf every time a State income tax rate reduction proposal darkens his door… his tale of gloom and doom has been wrong the last two years… one year State revenue will go down… I hope sooner rather than later… but it will be for reasons other than rate reductions such as economic cycles or hopefully the State government just does not need all that money.