Republicans have had a good week. First, they announced that the state had paid back its debt to the federal government for unemployment insurance. Then yesterday, the Fiscal Research Division of the legislature announced the state would see a $400 million surplus instead of the budget shortfall many people, including me, were predicting. I got that wrong.
From a political stand point, these are relatively minor victories. Most people don’t pay enough attention to care about paying off the debt or whether we had a surplus or shortfall. They care about the impact of policies on their day-to-day lives. Small business people and seniors are complaining the tax increase that resulted in the surplus. Parents of school kids are wondering if the GOP is going invest more in our classrooms or continue to starve our public schools.
However, the good headlines are part of a Republican narrative we’ll hear going into 2016. They are building a case. They’ll claim the GOP has restored fiscal discipline to state government. They reduced our debt and cut taxes at the same time. Their fiscal moves resulted in the unemployment rate dropping dramatically, leading North Carolina on a Carolina Comeback.
It’s a pretty good story even if it’s paid for on the backs of small business people and the middle class. Pat McCrory would prefer a big win in the form of an auto maker moving to North Carolina, but if that doesn’t pan out, the steady stream of good headlines might suffice. If people are feeling good about the economy, then Republicans have a much better chance of getting re-elected.
Democrats, for their part, should be careful about criticizing the surplus. Sure it came from shifting the tax burden from the wealthy and corporations onto the middle class but that’s more than most people can grasp. They don’t care what other people pay or don’t pay. They just care about their own pocketbooks and their own experiences.
Instead of talking about the budget, Democrats should remind people that the GOP raised taxes on small businesses and seniors and increased the sales tax on things like hair cuts, movies and entertainment. They should stay focused on schools, reminding people that teacher pay and per pupil spending in North Carolina are among the lowest in the country.
Which narrative works depends on where the economy is in the summer and fall of 2016. If wages and incomes are rising, the GOP will have a strong case for re-election. If only the wealthy are feeling the benefits of Republican policies, Democrats will have a good argument for change. Republicans won the week, but there’s a long time before the election.
Thomas Mills is the founder and publisher of PoliticsNC.com. Before beginning PoliticsNC, Thomas spent twenty years as a political and public affairs consultant. Learn more >
What people ought to be talking about is how to end the poverty rate of 25 percent that exists in the State of North Carolina. Genneen I think it was wrote that it wasn’t really how much money you had but how much you had access to use. For the poor, rent and food leave little to use for much of anything. As a simple cure for much of the poverty a 15 dollar an hour minimum wage would help. Legalization of pot as a replacement crop for tobacco would provide agricultural income from small lands, hopefully providing some protections to whatever grand aggregations the corporations have up their sleeves. The State could initiate ocean tide turbine building that would provide incredible renewable? -Constant energy, instead of letting go of views and advancing the threats of drilling off the coasts. All 100 counties ought have their own airports, and no place ought be more than 4 hours apart from anywhere for anyone in the state. That surplus would increase if people who worked got paid fairly. I don’t know that the Democrats need to do anything but attack the reasons for the grinding poverty that afflicts way way too many, but then often it seems Democrats have gotten stuck in reactionary politics that make them seem anti all, and quiet if it is something that might offend the religious leadership that gets off pleading ignorance as a reason to stop reform legislation that would diminish the prison industrial complex.
Let’s get one thing straight. The NCGA didn’t cut _taxes_, they cut tax _rates_. And only then did the wealthy and the corporate really see a cut of any significance. But compare you last two tax returns. Did you pay less this year than last year? I didn’t. Our seniors didn’t. Our poorest citizens surely didn’t. Did you buy anything last year? Then you paid more for the privilege of doing it — in sales taxes. And is this surplus actual money in the bank, or is it simply a “projection”? Because as far as I know, the only way you can lower the public debt while simultaneously cutting revenue (otherwise known as taxes) is with some kind of fairy dust accounting method. That or doing something like slashing $90 million from the education budget.
Oh. Wait.
“Money in the bank” is determined on June 30th (end of the state fiscal year). So the $400M is a projection at this point.
But the new budget will use up any surplus immediately. GOP is committed to giving corporations another tax rate break, which will eat up at least $109M of that $400M. And they still have to fund school district enrollment increases (those funds were recently removed from the budget baseline calculation by the GOP). That will be a large amount of dollars too. Plus, they want to establish a bigger rainy day fund. So, while there’s a $400M surplus projected now, any surplus amount will disappear very quickly in the new budget.
Debt paid off by squeezing the already strapped unemployed. “Surplus” created by smoke and mirrors sleight of hand giving to the wealthy by taking from the rest. Keep on plugging the truth and maybe, just maybe, enough people will listen, and act to turn the tide.
Parents, like myself, would have preferred that surplus to be used on classroom supplies, like BOOKS.
I wrote the following as a comment to John Wynne’s “Carolina Comeback in Full Swing?” blog, but I think it fits just as well as a comment to this blog, Thomas:
“A case of shooting their wad too early?
A great week for the NCGOP (at least in their money-colored minds). A state revenue “surplus” is announced. They celebrated the paying off of money owed to the feds on unemployment assistance. And now the projected revenue “surpluses” in 2015 and 2016 will trigger further corporate tax cuts—always a cause for GOP giddiness.
But it’s 18 months to the next NCGA elections. And during that time there will be another year of income tax filing by NC citizens. There will also be additional taxes on new car sales, DMV fees, and maybe on car insurance premiums. Those new taxes on our electric bills will continue to hit our monthly household budgets. And there will likely be more announcements that corporations will pay even less taxes.
So, IMO, unless a real and major “Carolina Comeback” actually happens before Nov 2016—one that exceeds “comebacks” in other states, and that takes voters minds off their tax bills and off the state’s big needs on public education, roads and environmental quality/safety, me thinx the GOP will be on the defensive at the ballot box.