John Hood’s column wisely counseling not going overboard with the projected budget surplus included this very recent object lesson:
Last year, disingenuous liberals and panicky worrywarts looked at the early numbers and concluded that North Carolina’s recent tax reforms had reduced revenue far more than projected. What really happened was that the pattern of income-tax collections changed, with most North Carolinians keeping more of what they earned from each paycheck (because of lower withholding) but then some North Carolinians paying more at the end of the year than they were used to (because of fewer special deductions).
That reminded me of last year’s hysterics. Although fiscal year 2015 ended up with a budget surplus of $860 million, early projections were in the negative, and the editors of The News & Observer were verklempt.
They were also convinced it was all because of tax cuts, one of their bêtes noires right up there with transportation experts and planners who agree with dozens upon dozens of other transportation experts and planners that Wake County isn’t dense enough to support massively expensive fixed light-rail.
So when, in December 2014, the early projected budget shortfall was $190 million, they blared out the headline “NC tax cuts are taking a toll” and called it “worrisome because state spending already is at a spartan level” and “creating unnecessary headaches for state agencies and preventing investments in education, infrastructure and services for the needy.”
By January N&O editor Ned Barnett estimated the shortfall spanned a range of at least $200 million to possibly over $1 billion. Barnett blamed it on “cutting off unemployment benefits [and] lowering taxes on the wealthy and profitable corporations.” Make no mistake: “The main effect of Republican tax cuts has been to starve a state budget already lean from years of recession-induced austerity.” North Carolina was “sliding backward, losing ground” while “Republican leaders showed not a whit of concern about the revenue shortfall or a doubt about their scorched-earth approach to state funding or any sign of listening to those who say the state should do more.”
Merciful heavens. What then have they warned about the effects to the state budget of tax credits for big business in fiscal 2016 that will cost the state at least $183.5 million to uncomfortably close to $1 billion?