JLF Research Archive
Showing items 451 to 475 of 481
North Carolina's Unemployment Insurance trust funds continue to be bloated due to overcharging workers and employers. A series of tax cuts during the 1990s has failed to bring the system under control. A new bill would cut the UI tax by 20 percent but impose a new tax of the same amount to fund unneeded administrative costs and community college items that, in some cases, constitute corporate welfare. A better answer would be to cut UI taxes and draw down the state's separate $200 million reserve for any needed college improvements.
The N.C. Senate is debating its budget proposal for FY 2001-03. For all the furor about "severe cuts" in the plan, it would increase total General Fund spending next year at nearly the same rate (4.7%) as Gov. Mike Easley's budget (5.2%), including a 15% increase in health and human services spending vs. Easley's 16.2% hike. Both offer a stark contrast to the Changing Course budget prepared by Locke analysts, which would essentially hold spending constant while cutting taxes.
The American Lung Association's recent report on ozone fueled a media frenzy in North Carolina, with repeated suggestions that the air in the Triangle and Charlotte was "more polluted than New York City's." The truth is far different. Due to a misleading grading system and a faulty and selective reading of data, the ALA report provides little useful information to North Carolinians about the quality of the air they breathe, and falsely suggests that pollution is increasing.
For all the talk of a fiscal crisis this year and the need to tighten the belt of state government, Gov. Jim Hunt's proposed adjustments to the FY 2000-01 budget would hike General Fund operating spending by nearly 7 percent, vastly increase state debt, and deplete state savings accounts for many years to come. The budget also contains many new items of questionable merit. North Carolinians should not be surprised to see sizable tax increases in the future as a result.
As state lawmakers grapple with a projected budget gap of at least half a billion dollars, some observers have blamed recent tax cuts for the problem. But modest tax reductions in the mid-1990s followed big tax increases earlier in the decade. The net change in taxes in the 1990s was a tax increase of nearly half a billion dollars. Other proposed causes for the gap, including poor legal representation and excessive spending growth during the decade, are more persuasive.
Responding to calls for billions of dollars for capital needs in the UNC and community college systems, legislative leaders are considering asking voters to approve a $3.1 billion bond referendum this November. Because the bonds would more than double the state's debt burden and generate a debt service budget approaching $600 million in four years, taxpayers have little reason to believe that a bond issue of that size won't result in tax increases in the future.
North Carolina faces significant fiscal and economic challenges over the next two years. But it need not resort to higher taxes, a state-run lottery, higher debt, or gimmickry to balance its budget. Nor does North Carolina need to skimp on crucial needs such as education and highways. By setting firm priorities within state government, eliminating unnecessary or duplicative programs, and charging users of some services a reasonable price, state leaders can generate sufficient savings to invest in the future needs of the state.
Author Charles J. Sykes identifies a growing crisis in North Carolina higher education and suggests reforms to reward teaching, improve curriculum, and to spend scarce resources better. (40 pages-not available online.)
North Carolina has reached a crossroads in the delivery of mental health services. After decades of escalating budgets and haphazard growth, years of costly and controversial study, and promises to act that have yet failed to materialize, the state’s mental health system continues to suffer from a host of systemic problems. Only fundamental change in the structure and funding of the system will improve outcomes for patients and taxpayers.
The need for fundamental tax reform in North Carolina has never been more obvious. Unfortunately, Gov. Mike Easley's "tax loophole" commission is incapable of fashioning a sound reform plan. It lacks guiding principles, is using a faulty definition of "loophole," and is more interested in raising tax revenue than reducing tax biases. Policymakers should pursue simplicity, neutrality, and equity through a consumed-income tax and other ways to flatten and reduce tax rates.
Co-authors John Hood and Don Carrington follow up their much-celebrated 1995 report on North Carolina state spending, proposing 179 recommendations for budget savings and tax cuts totalling $725 million. (28 pages-not available online.)
Co-authors Michael Lowrey and Jonathan C. Jordan examine North Carolina transportation policy and recommend ways of improving it without resorting to more taxation, regulation, and government control. (38 pages-not available online.)
By the Numbers 2001: What Government Costs in North Carolina Cities and Counties is a publication of the Center for Local Innovation, a division of the John Locke Foundation. Its purpose is to inform North Carolinians about their local governments and promote debate and discussion about the future of city and county fiscal policy in North Carolina. It is not intended to advance or impede legislation before local, state, or federal lawmaking bodies.
By the Numbers: Comparing the Cost of Local Governments in North Carolina represents an attempt by the John Locke Foundation to help North Carolina citizens get a handle on the total cost of their local governments.
North Carolina's new Child Health Insurance Program known as Health Choice has grown rapidly in its first two years, attracting national praise and prompting calls for additional funding to enroll more children. But the program, while helping to reduce the uninsured rate, has also contributed to a 30 percent drop in private coverage and self-sufficiency among families of modest means. Significant changes are needed to ensure a better use of taxpayer dollars.
Among the major causes of this year's $800 million state budget deficit is a $108 million increase in projected Medicaid spending. After a brief period of slow growth in the late-1990s, North Carolina's Medicaid program is now a significant threat to the state's long-term fiscal health. It is also the most expensive Medicaid program in the South. The state should enact reforms in eligibility and benefits which could save taxpayers at least $251 million a year.
State policymakers are considering a $43 million request for additional funding for poor school districts and awaiting the resolution of the Leandro school finance case. They should keep in mind that funding disparities among North Carolina school districts are minor due to their primary reliance on state rather than local taxes. Indeed, in inflation-adjusted spending per pupil, the state's 25 poorest districts are better funded today than the 25 richest districts were 11 years ago.
Like taxes, state and local regulations have an enormous impact on the average citizen as well as on businesses, especially small business — the key to job creation in a vibrant economy. In many ways, regulations are a more onerous and hidden way than taxes for the state to take resources out of the private sector to accomplish what is at least a purportedly public objective.
The 1995 session of the General Assembly was unique in the history of North Carolina. After years of rapidly increasing state spending, both Gov. Hunt and the legislature expressed an interest in controlling spending growth and cutting taxes. As a result, operating spending grew by only 1.4 percent in FY 1995-96, by far the slowest rate of spending growth in a non-recession year this century.
When it comes to state transportation policy, there can be little doubt that North Carolina offers a model not to be emulated. Unfortunately, numerous scandals, problems, and challenges have continued to intermingle transportation policy with politics.
By Jonathan C. Jordan and Michael Lowrey
This comprehensive briefing on 21 issues facing the state, as well as statistics on government expenditures and outcomes, provides ideas and recommendations on taxes, state spending, education, health care, welfare, and more.
Please consult Agenda 2002 for the latest information.
Policymakers should think carefully about the administrative costs of raising revenue through a state lottery. In effect, the state would be legalizing gambling, establishing a state monopoly on it, and then taxing gross sales at a 33 percent rate. The cost per dollar collected of this lottery tax would be 20 to 50 times greater than the cost of raising rates for other state taxes that already exist. The best course for the state is not to raise taxes at all but to reduce the size of government.
In his State of the State address, Gov. Mike Easley stated his case for a state lottery for North Carolina by suggesting that it would raise up to $500 million annually and that North Carolina's neighbors were collecting "hundreds of millions of dollars" from N.C. lottery players. Neither assertion is correct. The net proceeds from a lottery will likely be no more than $285 million. And a lottery's administrative costs would far exceed the current "loss" of revenue to other state lotteries.
Gov. Jim Hunt's long-awaited budget recommendations for FY 1999-2001 do not actually present a full balanced budget to state lawmakers. Instead, the plan offers sizable increases in operating spending, particularly for education and corrections, while listing only "options" for dealing with the more problematic capital and nonrecurring sides of the General Fund budget. Of the $400 million in proposed "savings," the vast majority come from correcting the administration's earlier errors in projecting debt service and Medicaid costs.
One of the most common arguments in favor of a state lottery for North Carolina is that the Virginia Lottery attracts as much as $100 million in lottery ticket purchases from North Carolinians. But this revenue loss is exaggerated and dwarfed by the loss of revenue to out-of-state corporations that North Carolina would experience with a lottery. In reality, Virginia receives at most $34 million in state revenues from N.C. residents, while management fees paid out-of-state for operating a N.C. lottery would be at least $36 million.
