Good stewards needed

Published 4:36 am Thursday, May 31, 2007

By Staff
The North Carolina Senate’s proposed state budget contains at least one thing that would be good for North Carolina taxpayers — letting two “temporary” taxes finally come to an end.
One reason the Senate’s proposed spending plan is about $263 million less than the state House’s tentative budget is that the Senate wants to do away with a one-fourth of a cent on the sales tax and a higher income-tax bracket for the state’s highest paid workers.
It’s time the two “temporary” taxes came to an end. The taxes were approved in 2001. They’ve been extended twice. The House proposes letting the taxes stay around for another two years, with revenues from those taxes paying for health-care needs and education.
Leaving the taxes in place would generate about $300 million next year.
Part of the “temporary” taxes expired last year.
The House proposes to let the sales tax most people pay remain at 6.75 percent, but the Senate wants to reduce the tax to 6.5 percent. The Senate also wants the income-tax rate for the state’s top wage-earners to be set at 7.75 percent. The House is calling for that rate to be 8 percent.
Hopefully, the Senate’s version of these proposals will become law. It’s time the taxpayers, at least in two areas, are given a break.
To make up for the revenue that would be lost as the result of its sales-tax and income-tax proposals, the Senate put aside about $165 million less than the House in the state’s reserve fund for “rainy days.” The Senate also proposes to spend about $116 million less in upfront funds on some of the state’s capital projects, mostly building needs.
That sounds like good news. But there’s a catch.
The Senate wants the state to take on more than $1.2 billion in debt to pay for approximately 30 prison, university system and other state-government construction projects. That debt would be issued without the consent of voters by way of a statewide referendum.
That plan will draw fire from fiscal conservatives, who are already upset with the House’s proposed budget that calls for $450 million in such debt.
State Sen. Kay Hagan, a Democrat from Guilford County, told The Associated Press the additional debt is needed to keep pace with the state’s building demands. The state’s population is expected to increase by three million people from now to 2030, going from nine million people to 12 million people.
To deal with that population growth, the Legislature is expected to consider a proposed spending plan that may include a bond referendum on whether to borrow money to pay for roads, schools and infrastructure such as water lines, sewer lines and the like.
A disheartening element of the Senate’s budget proposal is the absence of $100 million in one-time funds the House spending plan includes to help the state’s 100 counties pay for their share of Medicaid costs. The Senate set aside nothing, but it is looking for a long-term solution to a situation that requires the counties to pay more than $500 million in Medicaid-related costs.
North Carolina and New York are the only states that require counties to share the burden of Medicaid costs. New York is phasing out its requirement that its counties pay a share of such costs.
That burden needs to be removed or, at least, eased.
The General Assembly should let the “temporary” taxes expire, giving taxpayers some relief. It should also provide counties some or all of the money needed to help them pay their Medicaid related costs, providing the counties with some relief.
Before borrowing money to help meet other needs in the state, the General Assembly must review the state’s finances to determine if there are other revenue sources that could provide the money needed to meet those needs. Cutting or eliminating funds for so called “pork barrel” projects and doing away with wasteful spending could help provide the money needed to help the state prepare for growth and its demands.
State legislators must remember the dollars they are appropriating are the people’s dollars, not theirs. Legislators must be good stewards with taxpayers’ money.
If they are not, they better be prepared to answer to voters at the polls.