Fitzsimon File

Here are some highlights of the budget released by Governor Mike Easley Wednesday morning. First of all, don’t believe the hype of the backward-thinking tank pundits claiming that Easley is on some sort of spending spree, a slight variation from the tired expression that the state has a spending problem.Easley’s General Fund budget totals $16.9 billion, just under a billion dollars more than the final budget approved last year. Thinking that it might actually be a spending spree?

Well, it’s not. If you add up the cost of new students coming into the education system, increased costs in Medicaid, mandated teacher bonuses, a meager two percent raise for teachers and state employees and increased debt service, it totals roughly $990 million.

Overall, Easley’s budget simply keeps up with the growth in the state and gives teachers and state employees a two percent raise. Some spree.

Easley makes spending cuts of $200 million and raises the cigarette tax by 35 cents next year to help pay for expansion of his More-at-Four and Learn and Earn programs and fund a substantial investment in low-wealth schools and poor students.

But Easley also recommends cutting in the operating budget of public schools by $27 million, a cut not mentioned in any of the press releases.

He also wants to end the 2001 income tax increase on the state’s richest taxpayers, but continue the half-cent sales tax increase enacted that same year. Easley said that the current 8.25 percent income tax bracket is hurting business recruitment.

Odd that people smart enough to run a successful business don’t look at the overall low tax liability in the state, but that’s Easley’s story and he is regressively sticking to it.

Easley wants to end the sales tax on farm equipment and manufacturing machinery and raise to seven percent the tax on newspapers, candy, satellite and cable television, and entertainment like movie tickets, movie rentals, etc.

Those things are currently taxed at various rates. North Carolina is part of an agreement with more than 40 other states to streamline the sales tax to eventually begin taxing internet sales.

There is money to keep Health Choice open to the children eligible for it and to move health care for kids under five to Medicaid, a welcome change that means their health care is now an entitlement, not in question every year.

In the category of nice try, but not enough is Easley’s proposal to spend $2.3 million on day care subsidies, which combined with federal block grant money is expected to keep new kids from joining the waiting list.

That’s not much consolation to thousands of kids and their parents who are waiting now for help lifting themselves out of poverty.
And only $5 million for the mental trust fund that needs far more to help community mental health programs as part of mental health reform.

Most disappointing is Easley’s refusal to spend any new money to help poor people living with HIV/AIDS afford lifesaving medicine or to make it possible for developers to build affordable housing.

For roughly the same amount of money it cost to repeal the tax increase on the richest taxpayers, Easley could create 3,000 jobs, build 6,000 units of affordable housing and leverage $200 million of private investment by expanding the Housing Trust Fund.

So maybe the pundits are right that Easley’s budget proves that the state has a spending problem. It spends too little, invests too little in programs that create jobs and help people improve their lives.

It is now up to the General Assembly to fix that by funding a public investment agenda.

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This entry was posted on Wednesday, February 23rd, 2005 at 10:56 pm and is filed under Fitzsimon File. You can follow any responses to this entry through the RSS 2.0 feed.