by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
Gov. Roy Cooper’s proposed budget would raise taxes from current law and guarantee additional tax increases in future years.
Based on current law, including $500 million in lower taxes, state government would have $25 billion available in the General Fund to spend, though $1.1 billion of that is nonrecurring money that cannot be counted on to fund ongoing operations. The $23.9 billion in expected tax collections is supplemented by a $491 million in lower spending, $357 million in higher revenue, and $275 million in reversions.
No matter, Gov. Cooper would repeal a portion of the tax cut, spend nearly everything available, and take on an additional $2 billion in new General-Fund-backed debt. After setting aside $500 million in reserves, most of which would be spent during the year, the budget plan adds $1.5 billion in recurring spending, or $500 million more than the recurring revenue the budget would make available.
Would the governor pay for that $500 million structural deficit with higher income taxes or higher sales taxes?