Attend to needs before cutting more taxes

Published June 14, 2015

Editorial by Fayetteville Observer, June 14, 2015.

A bill in the General Assembly sets up a study to determine why teachers leave North Carolina.

Why bother? There's no mystery here. Despite some efforts to improve the pay of young teachers, North Carolina still ranks at or near the bottom for teacher pay and per-capita education spending.

And now the state Senate proposes that we lop another $2 billion off our corporate and personal taxes over the next five years - $2 billion less to pay for education, among other things, in a state that has long since set its sights south of mediocrity.

We're not sure if this tax proposal is an irrationally exuberant reaction to this year's surprise $400 million revenue surplus, or a cynical bet that racing some of our low-tax neighbors to the bottom will draw business and industry here. Whatever the rationale, what the Senate wants to do will hurt us.

As we move toward the 2016 elections, there's no doubt that further cuts in the state income tax, as proposed by Senate budget writers, will be popular. Cuts in the corporate tax rate will be welcomed, too.

But the state has big needs. Our highways are crumbling. They need repair and expansion. As the state's population grows, we need new roads, along with other expensive transportation improvements. Where will be get that money - especially in light of lawmakers' dislike for the governor's infrastructure bond plan?

But wait. It gets worse. The Senate tax plan also would impose a sales tax on most purchases by large nonprofits. Today, a big hospital is exempt from sales tax on the first $666 million in purchases. The Senate plan would drop that exemption to the first $15 million. For a health system the size of Cape Fear Valley, for one example, that would all but do away with the benefit and place a tremendous burden on an already struggling system. For some hospitals already teetering on the edge from expenses that Medicaid expansion would have paid, it could be the final blow.

And one more thing: The Senate also wants to redistribute our wealth, taking sales-tax revenue from big counties and giving it to smaller ones. Counties like Mecklenburg and Durham, which have invested millions in the infrastructure that makes them a commercial hub, would lose big chunks of the tax revenue that covers those expenses.

We're grateful for tax reductions, and happy to see a revenue surplus. But let's look at our state's needs carefully - and attend to them - before we start cutting more. What the Senate proposes doing looks irresponsible in a state where roads and the education system are so badly battered.

http://www.fayobserver.com/opinion/editorials/our-view-attend-to-needs-before-cutting-more-taxes/article_e84e37d2-ab7d-5d3e-b503-283bd4278f96.html