Governor's no-tax-hike budget offers counterpoint to recent N.C. history | Eastern North Carolina Now

JLF analyst praises some elements of McCrory's plan, questions others

    RALEIGH     Gov. Pat McCrory recommends no tax increase in his first budget plan, a stark contrast to the most recent proposals from predecessor Beverly Perdue. That's one of the key points the John Locke Foundation's top budget analyst notes in her initial review of McCrory's budget numbers.

    "After two years of budget fights between a Democratic governor and Republican-led General Assembly over sales taxes, the new governor proposes a $20.6 billion General Fund spending plan that would require no new taxes," said Sarah Curry, JLF Director of Fiscal Policy Studies. "In fact, Gov. McCrory is able to address his priorities while repealing North Carolina's estate tax, often criticized as the death tax."

    McCrory's plan would spend an additional $400 million from the state's General Fund, but the plan sets aside reserves of $600 million and anticipates a surplus at the end of the budget year.

    "Rather than devote significant chunks of new money to new programs, the governor seems to be paying significantly more attention to shoring up existing state government programs," Curry said. "He's adding to reserves and allocating $300 million to renovate and repair dilapidated state buildings."

    Curry takes special note of McCrory's decision to end raids of the state's Highway Trust Fund. "The John Locke Foundation has been calling for years for an end of the annual transfer of funds from the Highway Trust Fund to the General Fund," she said. "Even though the amount of the transfer has been shrinking in recent years, the transfers still divert much-needed funds from highway construction and maintenance."

    McCrory's budget steers $65 million away from the Golden LEAF, a group that has used money from a national tobacco settlement for targeted economic development grants. Meanwhile, the budget proposal continues to devote tax dollars to other existing targeted economic grant programs.

    "The best economic incentive does not involve government picking winners and losers," Curry said. "Instead the best incentive is a business-friendly environment with low taxes and less costly regulations for all businesses. Continuing programs that steer tax dollars toward particular companies or industries causes some concern. But the governor has taken a step in the right direction by directing Golden LEAF money toward more pressing state concerns."

    Curry continues to review details of the 324-page budget plan. She will offer soon a much more detailed response. It will be available on the research page at http://www.johnlocke.org/research/.

    For more information, please contact Sarah Curry at (919) 828-3876 or scurry@johnlocke.org. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or mkokai@johnlocke.org.

    Contact: Sarah Curry     (919)828-3876     scurry@johnlocke.org