The latest version of a proposed TABOR was HB 188 – introduced last spring. Per usual, the bill never so much as received discussion in committee. However, running some numbers shows how much North Carolina could have benefitted if it had passed such a spending limit in 2000.
Using the specific formula included in HB 188 (a three-year average of the combined inflation and population growth) as the annual spending limit shows that state government could have had more than $10 billion in extra revenue to set aside for a rainy day.
As shown in the chart below, TABOR spending limits would have smoothed out the dramatic growth in spending in the mid part of the 2000s.[viii]
Instead of rapid growth of the state budget, a TABOR would have limited the amount of expenditures, and set aside any surplus revenue into a rainy day fund (and possibly returned any further excess revenue to taxpayers). Had TABOR been in place over the past decade, North Carolina would have reaped roughly $10 billion in reserves for budget writers to help balance the budget during the latest fiscal crisis – and avoided the billion-dollar tax hikes imposed on North Carolina’s economy.
Conclusion
By several measures included in this article, North Carolina's fiscal and economic situation took a major step backwards in the last decade. Irresponsible state budgeting and a poor business climate has resulted in more North Carolinians out of work, multiple budget crises, exploding state debt and an economy losing ground to the region and nation.
North Carolina's struggling economy simply cannot afford to continue the failed policies of the past decade.
[i] Current Employment Statistics, Employment Security Commission of North Carolina. Available at: http://esesc23.esc.state.nc.us/d4/CesSelection.aspx
[ii] Working age personnel data from Office of State Budget Management, State Demographer. Available at http://www.osbm.state.nc.us/demog/prsage.html
[iii] Private sector jobs taken from North Carolina Employment Security Commission, Current Employment Statistics data. Available at: http://esesc23.esc.state.nc.us/d4/CesSelection.aspx (unadjusted job numbers taken from Dec. of each year for comparison to state gov't employee data) State gov't employee count taken from Fiscal Research Division's Full-Time Equivalent Budgeted Position Counts, a survey conducted annually in Dec. Available at: http://www.ncga.state.nc.us/fiscalresearch/statistics_and_data/statistics_and_data.shtml Data readily available only back to 2001.
[iv] General Fund appropriations for FY 1979 through 2007 from the 2006 Post-Legislative summary produced by Fiscal Research, subsequent appropriation numbers taken from each year's budget bill, population estimates for July that begins each fiscal year from the Office of Sate budget and Management, and GDP deflator levels taken from the Federal Reserve Bank of St. Louis
[v] Ibid, plus author's calculations
[vi] Source: North Carolina Comprehensive Financial Report for 2010
[vii] Bureau of Economic Analysis, Regional Data. Available online at: http://www.bea.gov/iTable/iTable.cfm?ReqID=70&step=1&isuri=1&acrdn=4
Southeast region includes: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia
[viii] Population numbers taken from Office of State Budget and Management: http://www.osbm.state.nc.us/ncosbm/facts_and_figures/socioeconomic_data/population_estimates/demog/ncpopgr9.html
cpi annual percentage change taken from Federal Bureau of Labor Statistics: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
Annual budget figures from each respective year's budget bill. FY 2009 and 2010 budget figures include only state spending, and excludes federal stimulus dollars used to backfill state appropriations. In some years, actual spending was below what the TABOR limit would have allowed. In those cases the author used actual expenditures to complete the data set.
