by Brian Balfour
Senior Vice President of Research, John Locke Foundation
“Set some money aside for a rainy day.” That’s financial advice anyone discussing finances worth their salt would include.
So why does the Raleigh News & Observer ignore the fact that the General Assembly has amassed a perhaps historical amount of savings for a rainy day in their article warning of a coming “revenue cliff”?
Instead, they direct anger at a decade of tax cuts implemented by conservative leadership that has dramatically improved the state’s business tax climate, and enabled North Carolina workers to keep more of what they earned.
Also during the time of tax cutting, spending restraint was implemented. The combination of healthy economic growth bolstered by tax cuts with spending restraint enabled state budget writers to build up a massive amount of savings – exactly what one would want if they anticipate a “revenue cliff.”
Indeed, the November monthly General Fund report from the state controller’s office shows that North Carolina has more than $14 billion set aside in reserves, not counting federal Covid relief funds.
How the N&O could leave this vital information out of an article discussing a potential revenue cliff in the future is beyond explanation.
Instead, the article laments that Democrats weren’t in control for the past decade, and wishes for an alternative reality that included spending all the revenue surpluses, which would essentially leave our state’s coffers bare when the revenue cliff does hit. For years, progressive groups and the N&O were angered by the conservative legislature’s aggressive setting aside of surplus revenue into savings.
So what would the N&O’s prescription be when the revenue cliff hits? To raise taxes still further, of course, helping to not only stifle economic recovery but to punish workers at a time when they are struggling.
North Carolina is sitting on a perhaps historic amount of savings, and a decade of reform has us with one of the most attractive business tax climates in the nation. That is what will enable us to weather the next fiscal storm better than most states. Sadly, the N&O would have North Carolina in the opposite position, with little to no savings and one of the least attractive states for investment: a combination that would spell disaster when the next “fiscal cliff” hits.