August 9, 2005

RALEIGH – The state budget plan now facing floor votes in the North Carolina House and Senate levies another big tax increase to pay for excessive spending – and clearly busts Gov. Mike Easley’s spending cap, which he should enforce with a veto, said the author of a John Locke Foundation analysis.

Joe Coletti, fiscal policy analyst at the Raleigh-based think tank, observed in a new Spotlight briefing paper that the budget plan would spend $17.2 billion on General Fund programs in 2005-06, representing an 8 percent increase over the previous year. Gov. Easley’s spending cap, which limits annual growth in the General Fund to a 10-year average of personal-income growth, would allow only a 5.6 percent increase in 2005-06.

“The governor’s spending cap, offered as a fiscal solution and touted as a campaign pledge, now faces its greatest test,” Coletti said. “Because it has not been enacted as a constitutional provision, which would be better, his spending cap relies completely on the governor’s willingness to enforce it.”

Reacting to attempts by the Easley administration to claim that the proposed budget can fit within the spending cap, Coletti argued, “Only through impossible fiscal acrobatics and gross deception can an 8 percent increase in the General Fund be reconciled with the governor’s stated policy.”

In his analysis, Coletti said that while the final budget package spends hundreds of millions of dollars more next year than either the House or Senate initially proposed, it still offers only paltry raises to state employees and fails adequately to fund high-priority needs such as the state’s overburdened court system.

Instead, he noted, it sprinkles pork-barrel projects across the state and allows excessive spending in fast-growing state programs such as Medicaid and corporate subsidies. Funding for the Commerce Department and related agencies jumps by a staggering 78 percent, while community colleges see a 14 percent increase and the University of North Carolina 11 percent.

“The taxpayers of North Carolina cannot afford a return to the huge annual spending increases of the 1990s that set us up for chronic deficits and massive tax increases,” Coletti said. “Someone, somewhere, needs to stand up and tell the big-spenders ‘No.’”

One modest piece of good news to be found in the budget is that the pork-barrel projects are for the most part spelled out in the legislation rather than having legislative leaders dip into discretionary slush funds later on, Coletti concluded.

“If the public’s money is going to be squandered, at least it should be done in public for all to see,” he said.

Joe Coletti’s Spotlight, “Waiting for Veto,” is available on the John Locke Foundation website. For more information, contact Coletti ([email protected]) or Summer Hood ([email protected]) at (919) 828-3876.

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