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Top Story
NCCBI’s
opposition to higher taxes
pushes legislature toward other options
With
NCCBI coming out squarely against higher taxes, leaders in the
General Assembly now seem firmly committed to cutting spending
or taking other steps to balance next year’s budget.
A tax increase wasn’t on the table when members of the
General Assembly’s six budget-writing subcommittees
assembled in Raleigh to eyeball spending for the fiscal year
that begins July 1. Getting down to business a month ahead of
the May 28 start of the General Assembly’s short session,
the budget panels worked on spending-reduction targets
totaling more than a billion dollars.
A few days before the lawmakers
came to Raleigh, NCCBI announced its no-new-taxes position
following a vote on the issue by the Executive Committee.
Following the vote, NCCBI issued a news release that said the
association believes the budget shortfall should be addressed
by reducing spending and that a tax increase would have an
impact on a recovering economy. See complete story below.
"Our belief is that the very best way to fix the budget
shortfall is to reduce spending," NCCBI Chair Jim Hyler
said in the news release published by the Raleigh News &
Observer and other papers. Hyler added that increasing taxes
would impede an economic recovery. "There are signs that
North Carolina is beginning to climb out of the recession. Any
tax increase now will make an economic recovery harder to
achieve," he said.
Latest estimates are that, because of overly-optimistic
revenue growth estimates and rising Medicaid costs, the
roughly $15 billion state budget for the coming year – which
was written last fall -- is at least $1.2 billion and possibly
as much as $2 billion out of balance. That was the target
identified by the six budget-writing subcommittees when they
met in late April to go over the numbers.
Senate Appropriations Education Subcommittee Chairman Walter
Dalton (D-Rutherford) said his panel had been directed by the
leadership to identify $695 million in 2002-03 fiscal year
budget cuts to the k-12, community colleges and UNC System
budgets, which translates into 8 percent of the $8.4 billion
education budget. Spending on education accounts for 60
percent of the state budget.
Analysts said if real cuts aren’t made to education
appropriations, spending on the rest of state government would
have to be slashed 20 percent to close the budget gap.
Educators said an 8 percent cut would be felt at the classroom
level – an outcome that Gov. Easley has said isn’t
acceptable.
House Appropriations Subcommittee on Health and Human Services
Co-chair Edd Nye (D-Bladen) said he had been directed to
identify $330 million in cuts to human services programs.
Testifying to Rep. Nye’s subcommittee, HHS Secretary Carmen
Hooker Odom said "I believe cuts of this magnitude will
have a catastrophic impact on our department's ability to
serve the most vulnerable citizens of the state."
Lawmakers continue searching every corner of state government
for additional revenue. New ideas floated recently include
borrowing money from the Highway Trust Fund, obtaining some
sort of upfront payment from Blue Cross and Blue Shield of
N.C. as part of its conversion to for-profit status, and
adoption of a state lottery.
Here is the text of the
NCCBI press release:
NCCBI
leaders vote to oppose any tax increase this year
RALEIGH -- North Carolina Citizens for Business and
Industry (NCCBI), the state's chamber of commerce and largest
business group, announces that it will oppose any tax increase
legislation during the General Assembly's short session, which
starts next month.
NCCBI officials believe the budget shortfall should be
addressed by reducing spending and that a tax increase would
have an impact on a recovering economy.
The decision was reached after NCCBI's Executive Committee
voted to adopt a resolution directing the association to lobby
against any bill proposing higher tax rates for businesses or
individuals or any tax increases that single out specific
businesses or industries.
"Our belief is that the
very best way to fix the budget shortfall is to reduce
spending," said NCCBI Chairman Jim Hyler, who added that
increasing taxes would impede an economic recovery.
"There are signs that North Carolina is beginning to
climb out of the recession. Any tax increase now will make an
economic recovery harder to achieve," he said.
NCCBI is also calling for the
General Assembly to give two blue ribbon tax commissions time
to do their work. The panels, appointed by Gov. Mike Easley to
address the state budget crisis, are the Commission to Promote
Government Efficiency and Savings on State Spending and the
Commission to Modernize State Finances. Several NCCBI members
are represented on both panels including Hyler, who chairs the
efficiency commission.
Both commissions will make
reports to the governor prior to the short session that starts
May 28 and a final report by year-end.
A copy of the resolution
follows:
"Whereas, the state¹s
worst economic conditions in more than a decade have hit
business, industry and individuals extremely hard; and
"Whereas, the governor has
named a high-level Commission to Promote Government Efficiency
and Savings on State Spending, headed by Jim Hyler, chair of
NCCBI, and a Commission to Modernize State Finances; and
"Whereas, it will take
these two groups some time to identify short-range and
long-range solutions, most of which will require legislative
approval;
"Therefore, North Carolina
Citizens for Business and Industry will oppose any tax
increases in the 2002 session of the General Assembly
involving tax rates for business or individuals or any tax
increases which single out specific businesses or
industries."
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