Fitzsimon File

The House debate on the budget and revenue plan went pretty much as expected Thursday afternoon and featured nods to Thomas Paine, Winston Churchill, King Charles II, and Aristotle.

Democratic leaders defended the plan they put together, spending most of their time talking about the important programs in education and human services that were restored by the $784 million tax package, and there are plenty, especially in education and human services.

Most Democrats didn't talk much about the deep cuts that remain however, $3 billion worth of reductions in education in the next two years, $3.3 billion in health and human services.

Republicans stayed true to their rigid talking points, disputing the size of the shortfall, claiming that the tax increases would hurt economic development, insisting that raising taxes in a recession is bad economic policy, and predicting that small businesses and wealthy individuals would flee North Carolina because of the increases in income tax rates for the richest taxpayers.

None of it is true.

The General Assembly last session passed a budget for the current year that came to $21.35 billion. Add inflation, the increasing cost of health care, the new students enrolling in school and it would take just over $22 billion to maintain state services at the same level.

The revenue forecast for the fiscal year that begins July 1 is $17.6 billion, a long way from $22 billion. That's a shortfall, no natter how you look at it.

As for the claims that rich people will leave the state, Elaine Mejia with the N.C. Budget and Tax Center calls them hogwash and has the data to prove it. In the five years after the General Assembly raised the income tax on the wealthiest taxpayers in 2001, the average income of the families that moved to North Carolina was more than $1,500 higher than the incomes of households who moved away.

The state gained $11 billion in taxable income and a net of 204,000 households as a result of moves between states. North Carolina didn't lose wealthy residents after increasing the income tax on the wealthy, it gained them.    
   
The arguments against the tax package by Republicans are all based on their assertion that the state has a spending problem, not a need for more revenue. Evidence from the Budget and Tax Center doesn't support that either.

The revenue forecast for next year would reduce state spending per capita to a level not seen since 1993-1994. Measured as a share of percentage of total personal income, state spending is significantly lower than it was in 1989. There is no spending problem.

Then there are the services that the new revenue saves, including health care for children, home services for seniors and people with disabilities, and smaller class sizes for students in grades K-3.  That's the point of raising taxes.

The need to help seniors and people with disabilities isn't hard to understand and a report released by the N.C. Budget and Tax Center Thursday shows rejecting an increase in class sizes in early grades is also vitally important.

The evidence is clear that students do better in smaller classes for a lot of reasons, not the least of which is the extra individual attention teachers can give them.

Nothing is a certainty at the General Assembly, but it appears the majority of the House understands what's at stake in this year's budget decisions and would rather lessen the damage to schools and human services than serve an ideological agenda.

The House approved the revenue package by a 64-52 vote, a result that is likely to be repeated as the budget faces more votes on its way to the Senate and then a conference committee, where the real fun begins.

Rep. Jim Crawford started off Thursday's debate by quoting Thomas Paine's famous statement that "these are the times that try men's souls." 

Given the state of the economy, the size of the shortfall, and the lives that hang in the balance, it's hard to argue with him.

And despite the contentious debate and the damaging budget cuts that remain, Thursday brought some encouraging signs that lawmakers may be up to responding to the task.

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This entry was posted on Thursday, June 11th, 2009 at 6:56 pm and is filed under Fitzsimon File. You can follow any responses to this entry through the RSS 2.0 feed.