A budget surplus with a values deficit

by | May 11, 2015 | Budget, Editor's Blog, Education, Tax Reform | 25 comments

Republicans are crowing about the $400 million surplus while progressives are griping. The GOP should be given credit. They used conservative estimates in their budget projections because of the uncertainty of tax reform. To their benefit, the numbers came in better than expected. That’s smart politics and smart budgeting. It’s always better to have more money than expected than have less.

However, Republicans can’t claim that cutting taxes led to increased revenue. Even Art Pope admits that. In fact, raising taxes on small businesses was a major factor in the increased revenue. Those small businesses did better than expected and taxing their first $50,000 of income, which had been exempted, brought in a lot of money.

Republicans are loathe to admit that they raised taxes on businesses but they did. They like to claim that they instituted the $50,000 exemption as a temporary measure so, somehow, by eliminating it, they didn’t raise taxes. That’s not how politics works.

A few years ago, Democrats let a temporary sales tax exemption expire. Republicans pounced and ran campaigns on the Democrats’ tax increase. The same politics applies here.

Republicans also raised taxes on seniors when they eliminated the medical tax deduction. Given the power seniors hold at the ballot box, the GOP knows they screwed up and are working on fixing it before April 2016. They’ll have to get the money from somewhere else and you can bet your bottom dollar that it won’t be from rich people.

They also raised taxes on the working poor by ending the Earned Income Tax Credit. North Carolina is the only state in 30 years to eliminate the tax credit that Reagan called “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” Hitting the poor as they are struggling to climb out of the Great Recession was one of the more shameful acts by Pat McCrory and the legislature.

The budget surplus had nothing to do with tax cuts and everything to do with tax increases on small businesses, seniors, and the working poor. But there wouldn’t even be a surplus if Republicans hadn’t slashed funding for public education. North Carolina cut per pupil spending by 4.7 percent this fiscal year and the drop has been 14.5% since 2008. Smart Start, the state’s model early childhood education program, has been cut by almost $60 million since 2008, serving fewer and fewer families while our population is increasing. The University system was cut $400 million in 2011 alone and sees more cuts coming this year.

The GOP tax reform is really about priorities. They slashed taxes for the wealthy and corporations while raising taxes on small businesses, seniors, and the working poor. They helped the people who can already afford nannies, private schools, and private colleges while they hurt the institutions that serve those of us who can’t. That’s not really a budget surplus. That’s a values deficit. 


  1. frank

    How about raising teachers pay. NC is in the bottom 10 states. Teachers are leaving this state for higher pay.

  2. jas0712

    Here is the problem…..less than 40% actually Vote and even less on a non presidential election. Matters not if votes get switched, if we were at 75-80% voting it would be meaning less. Further is only the impoverished voted in NC, whoever they voted for would win.

  3. Apply Liberally

    And I have to laugh when I read that the same party that sponsors possum drop bills also proposes legislation to carry guns into courtrooms/schools/bars/churches, and to give bigots shelter from discrimination charges under the guise of “religious freedom.”

    • TY Thompson

      OK. I’ll bite. Why should bigotry be illegal in the land of the free? Not that I accept your premise that morality is synonymous with bigotry but free expression should be paramount in an enlightened nation.

  4. TY Thompson

    I have to smile when the perpetrators of the North Carolina Eugenics program talk about other people’s values.

  5. Nancy Rorie

    Well said, AL

  6. Apply Liberally

    Right, rofl: The GOP are the fix-it “problems solvers,” alright.

    Like how they managed to send out personal bio info on 40,000 Medicaid’ers–to the wrong people.

    How they “fixed” food stamp processing so that it took a threat of a shutdown from the feds to get them to address it.

    How they were gonna “fix” the coal ash waste problem by slapping Duke-E lightly on the hand with a paltry $99K fine—before the Dan River coal ash spill revealed that sweetheart deal and forced them to get a little tougher (and I do mean only a “little” tougher).

    How they “fixed” the teacher salary issue by leaving out pay increases for the most experienced teachers, and managed to get NC’s comparative pay rate all the way up from 46th to 42nd in the nation (with no follow-up raise program being talked about this session, BTW).

    How they “fixed” pollution in Jordan Lake by installing devices (manufactured by a GOP-donor) that just about every credible natural scientist around says cannot fix the lake’s enrichment issue.

    How they created a budget surplus by taxing small business more and “lightening” seniors of their medical expense deduction.

    How they “fixed” the same-sex marriage matter by pushing through a constitutional amendment (its unconstitutionality notwithstanding).

    How they “fixed” all the health insurance and healthcare issues in NC by not expanding Medicaid (refusing federal dollars that would have come to NC, would have helped the state’s 400,000 near-poor get healthcare and keep small local hospitals above water) and by not establishing an ACA market exchange.

    How they now have “fixed” (in the most pejorative sense of the word) elections via extreme gerrymandering statewide and even now in local areas (where it was shown that they wouldn’t have a chance of winning in the future unless “something” was done about it).

    How they “fixed” our middle-class wagons by raising taxes on electricity, by soon forcing local property taxes to go up (due to their eliminating of local business privilege taxes and meddling with the state sales tax distributions), and by soon passing a bill that raises highway vehicle use taxes, DMV fees, and perhaps even placing a tax on car insurance premiums.

    Yup, the GOP is just doing a great job fixing things here in NC. A certain sign (in your biased mind) that there will be a huge GOP wave come 2016.

  7. cosmicjanitor

    You can’t kick these stinky republicans out of office if your vote does not count, or your vote is intentionally switched to the wrong candidate. There is no independent, transparent vote tabulation verification presently in the state of NC. (or most of the other states in the US. for that matter) – this is why we have a super majority of corporate republikans in the NC. State legislature. As far as Rofl’s accusations go, yeah Easly is a slime ball and Black was in office too long, but Phipps was framed by the powers behind the scene and Purdue was threatened by those very same operatives because she would not rescind the moratorium on fracking – and for good damn reasons, otherwise she would presently still be the sitting governor of NC.

  8. Maurice Murray III

    Businesses can terminate their employees, who depend on their employment at the business to meet their basic needs, for little or no reason. Yes, businesses should be responsible for paying unemployment benefits. Let’s get the facts straight.

    Opinion: “the cuts post 2008 were far worse than they needed to be”

    Fact: “when times were good and the GOP controlled the House, the business community successfully lobbied to significantly reduce the amount of money they paid into the unemployment fund.”

    • rofl

      Fact: Democrats controlled the Senate and Governor’s mansion for the entirety of the 1990s, and controlled the House from 1900-1994 and 1998-2010. Your mess. The GOP cleaned it up.

      • Maurice

        Why didn’t you respond to the statement about how the business community successfully lobbied House Republicans to significantly reduce the amount of money they paid into the unemployment fund? Perhaps, you don’t want to acknowledge these facts:

        In 1995, House Republicans legislated a reduction in the percent of annual average wages used to calculate taxable wage base –from 60% to 50%.

        In 1996, House Republicans passed legislation that allowed businesses with a positive balance to pay no tax and lowered the new business unemployment insurance tax rate from 1.8% to 1.2%.

        SOURCE: NC Employment Security Commission

        And yes, some Democrats must also take responsibility for that.

  9. Rofl

    So according to our knee jerk liberal commentators, Repiblicans create literal budget surpluses and pay off actual federal debts of billions, but have a “values deficit.” As opposed to literal billion-dollar deficits and multi billion dollar debts Democrats left us with. Even if you argue that the Democrats didn’t cause the economic shortfall, their wild overspending, unsustainable UI programs, and failure to build adequate reserved meant the cuts post 2008 were far worse than they needed to be. As for values…lets just say Jim Black, Meg Phipps, Mike Easley, and Bev Perdue come to mind.

    • Nancy Rorie

      Ha, ha, ha, Rofl. Very funny. I can match you one for one on Repulican/Democratic “values”, or lack thereof. I won’t bother to post my list. Waste of time arguing with some people.

    • Thomas Mills

      Get your facts straight about the UI program. That was, in fact, business debt, not state debt. Businesses, not taxpayers, are supposed to pay into the unemployment fund to pay for unemployment benefits. In the 1990s, when times were good and the GOP controlled the House, the business community successfully lobbied to significantly reduce the amount of money they paid into the unemployment fund. When times got bad, there was a shortfall, just like a lot of people predicted. The state had to borrow money from the feds to keep up with the claims. Instead of asking businesses to pay back the amount they should have been paying all along, the state kicked a bunch of victims of the recession off the unemployment rolls and paid off the debt early. It was really bail out the business community at the expense of unemployed people. So, yeah, there’s a values problem.

      • Someone from Main Street

        And because of that kindness bestowed by NCGOP on NC businesses, companies like Volvo, Mercedes, etc. are all flocking here to establish roots. Oh wait… that’s not happening.

        NCGOP loves to privatize profit and socialize the losses. Shame on them.

      • Someone from Main Street

        You know what Thomas? I am not seeing Democrats point out this fact – that GOP diminished what businesses paid into UI, leaving the state vulnerable when the economy crashed. This is the first post I’ve seen to address this fact.

    • Progressive Wing

      Rofl: You apparently are clueless about how NC unemployment insurance works, and how the GOP played favorites on the behalf of private businesses. The UI “deficit” was clearly caused by the GOP giving businesses a pass on making per-employee contributions, and then, when such low contributions caused a shortfall, the GOP cut UI benefits, i.e., made the unemployed suffer.

      • rofl

        Yep, Progressive and Thomas, it was the big bad GOP wut dun caused that $2 billion+ debt because they barely controlled 1/2 of 1/3 of the N.C. government 14 years before the crisis. Let’s be real: North Carolina’s benefits were substantially more generous than our neighbors, and any cuts to employment taxes were also approved by Democrats in the state Senate and the Governor’s mansion. You then had complete control of the NC government, with Democrats leading the House, Senate, and executive branch for every single year after 1998. The crisis was then worsened by Bev Perdue illegally giving away millions of dollars in extra benefits when her perpetually mismanaged ESC inflated benefit checks.

        Now Republicans have cleaned up Bev’s mess, repaid the debt, put good management in place at DES, prevented an additional $200 million tax increase on job creators and have set the program up for new financial stability. Y’all broke it, but the GOP fixed it. You can complain about the methods all you want, but you never cleaned up the mess yourselves. Your “values” led to debt, tax increases, mismanagement, cronyism, and so the voters through you out in 2010, with Republicans winning a majority of the legislative vote ever since. Even after all your complaining, marching, and op-ed writing, Republicans won clear majorities of the legislative vote last cycle, well after these supposedly horrible UI cuts took place.

        • rusty

          Who exactly are you calling the “job creators”? Cutting personal taxes has nothing to do with creating jobs my friend. I own two small businesses and have actually created jobs while paying more in taxes to protect all the bankers that have not scratched the first pay check especially out of their personal accounts. Quit listening to conservative news and sit down with some small business owners and learn something. And for the record im not a democrat or republican.

        • Someone from Main Street

          I can’t stand it when Republicans fail to link “Bev’s mess” to the catastrophe brought on by Bush policies. Apparently Obama has been the only president with any power to do anything.

    • Someone from Main Street

      Poverty is on the increase. Jobs are growing in low-wage (poverty-level) jobs. Big employers are looking elsewhere to land lucrative manufacturing facilities.

      NCGOP is handing money to the wealthy – and building a surplus by increasing taxes on everyone else. This is not just a problem problem of values – but a political problem for the Republicans. Despite big bragging to the contrary, this surplus is NOT a victory for the NCGOP.

  10. Maurice Murray III

    Your best piece yet. This is the message that will allow us to win in the next election.

    What about the tax on tickets to events, like ballgames and movies?

    • Apply Liberally

      Yes, Maurice, there are those additional taxes, plus the tax that the NCGOP added to all our electric bills in 2014…..a very regressive tax indeed.

    • Someone from Main Street

      Don’t forget sales tax was added to college meals.

Related Posts


Get the latest posts from PoliticsNC delivered right to your inbox!

You have Successfully Subscribed!