The misleading conventional wisdom

The misleading conventional wisdom

- in Fitzsimon File

House Democratic leaders are reportedly putting the final touches on a revenue package to present to the House Democratic Caucus as early as Monday evening.

It's likely the plan will raise roughly a billion dollars next year by increasing the state sales tax half a penny, raising income taxes on people who make more than $250,000 a year, and increasing taxes on alcohol and cigarettes.

It's not clear yet the package can pass the House or what it means for the budget process. House leaders want a budget on the way to the Senate by the end of the week.

Monday's news comes after a weekend barrage of conventional wisdom mixed with Republican talking points about taxes and the state budget that make a progressive solution to the shortfall more difficult.

Most pundits on talk shows and reporters playing analysts dismissed last week's House budget debate as political theater designed to scare people into supporting a tax increase. Many even disputed that the draconian cuts in the House plan would hurt as much as lawmakers claimed. 

One reporter said the House budget was bad, but not catastrophic, which may come as a surprise to the thousands of children with disabilities that would lose services or the seniors on Medicaid that will no longer able to see a dentist.

Health and Human Services Secretary Lanier Cansler says that he could lay off every employee in the department and still have cut only half of what the House budget demands.

The evidence for the reporters' claim was that the House public education budget was more than a billion dollars higher than it was in 2002-2003. That's a version of the talking points circulated by House Minority Leader Paul Stam, who claims all lawmakers need to do to address the $4.6 billion shortfall is to cut overall state spending to 2006 levels.

There are 150,000 more kids enrolled in public schools than attended in 2002. That alone almost accounts for the increase in the education budget.

Teacher salaries have increased an average $6,000 since then as part of a push to increase teacher pay to the national average.  That came at a cost of more than $200 million a year in several years since 2002.

Teacher bonuses have averaged $100 million a year. The cost of educating children with disabilities has risen as much as 14 percent in one year. 

Not to mention inflation, increased funding for disadvantaged schools as part of the Leandro lawsuit, increased demands from lawmakers for student evaluations and reporting, etc.

Of course this year's education budget is bigger that it was seven years ago. Nobody wants to back up seven years, give up the teacher raises, kick all the new kids out of school, close the new schools that have been built since then, etc.

But the misleading comparison is an effective soundbite if it's not challenged. Republicans use it to make a partisan point. Reporters ought to know better, but it's become part of the conventional wisdom in Raleigh, as has the general sentiment that part of the current budget crisis is due to budget decisions made by lawmakers in recent years. In other words, the state has a spending problem.

Wrong. The N.C. Budget and Tax Center will report in an upcoming brief that the current House budget would reduce spending per capita to level it was in 1994-1995.  The state spent roughly the same per capita in 2007-2008 as it did in 1999-2000.  The state has not been on a spending spree, it has been on a growing spree.

The top editor of the News & Observer in Raleigh criticized lawmakers this weekend for not being able to provide a list of the new programs created in the last ten years, saying that it's part of the budget problem.

Programs should be reviewed, but the growth of the state budget is not a mystery. State Medicaid costs have increased an average of 10 percent a year since 2000. Add that to the hike in education spending and you can see most of the budget's growth.

Lawmakers in both parties still say that it is bad economic policy to raise taxes during a recession. But many economists, including Nobel Prize winner Joseph Stiglitz, say raising taxes is better for the state's economy than slashing state spending and cutting essential services.

Lots of insiders like to call for zero-based budgeting, a plan to make every single state program justify its budget to lawmakers every year, which would take months and months of meetings and briefings.   The same pundits also want to impose limits on the length of legislative sessions, making it harder to for lawmakers to spend time going over the $20 billion budget line by line.

The state is not in the current fix because of dramatic overspending or starting new programs. The House budget approved last week would devastate public schools and programs that serve the most vulnerable people in the state. It would indeed be catastrophic.

The answer is raising revenue. That would protect some of the vital services the state provides and be better for the overall economy, no matter what the conventional wisdom says.
These are not conventional times.

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina.