Spotlight Report

One Way Street for Spending Adjustments: Reverse Logrolling Offers an Alternative

posted on in Spending & Taxes
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•  The General Fund portion of North Carolina’s $51.7 billion state budget for 2013 is now $20.18 billion, as passed by both the House and the Senate. This exceeds planned spending, as passed in 2011, by $242.2 million, but it does not necessitate a tax increase.

•  All of this year’s General Fund proposals from the House, Senate, and governor have been for more spending than planned. The governor was the most extreme in this regard, proposing a sales tax increase from 4.75 to 5.5 percent and spending increase of $969.6 million.

•  Tax revenues for fiscal year 2012 proved greater than projected by $232.5 million. The Fiscal Research Division also predicts slightly higher than expected revenues for the coming year, $21.0 million, for a two-year total of $253.5 million over previous projections.

•  North Carolina’s Rainy Day Fund is just 1.6 percent of the General Fund, but legislators have approved spending 95.6 percent of the revenue surplus.

•  By taking the lower cost of each General Fund component from the House and Senate proposals — “reverse logrolling” — with a couple of exceptions, one could achieve a General Fund total of $19.85 billion. That would save $330 million from the enacted General Fund and $87 million from last year’s plan.

Fergus Hodgson (@FergHodgson) is Director of Fiscal Policy Studies at the John Locke Foundation, a Policy Advisor with The Future of Freedom Foundation, and a member of the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force. He… ...

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