Deciding "essential" services
Published May 27, 2014
by Paul O'Connor, Capitol Press Association, published in Greenville Daily Reflector, May 26, 2014.
No one expects Republicans and Democrats to agree on things, but the gulf in their assessments of the state’s finances must be baffling North Carolina taxpayers.
Republicans say there’s a budget surplus; Democrats say we’re headed into a structural deficit.
Budget talk is tailor-made for politicians. They can talk from either side of their mouths and remain technically correct, saying, for example, that the budget increases education spending or cuts it. And both could be right because they may be discussing different budgets as the baseline from which the change is calculated.
This year’s kerfuffle centers on the $455 million revenue shortfall and whether it portends a structural deficit for years to come.
A structural deficit, in layman’s terms, exists when an entity’s revenue stream — in this case state government — can’t reliably support essential expenses.
North Carolina has struggled with a structural deficit for years. Our industrial-era state tax structure devised in the 1930s does not support “essential services” in the information age. The tax structure does not align with economic activity.
Republicans promised tax reform in 2013 but didn’t have the political will to pull it off. So they cut taxes for the affluent, raised taxes on many others, and set the stage for this shortfall.
When Democratic leaders Sen. Dan Blue, D-Wake, and Rep. Larry Hall, D-Durham, held their session-opening press conference, they spoke of the state’s structural deficit and a revenue system that can’t support “essential services.”
And the next day, Art Pope, state budget chief, recited a slew of numbers that said just the opposite: The state has a surplus this year.
Here’s how both sides can be technically right: It depends on one’s definition of “essential services.”
For the 10 years prior to the GOP’s legislative takeover in 2011, Democrats didn’t reform the revenue structure, but kept the budget in balance with temporary tax increases. That allowed them to provide raises for teachers and state employees most years, to fully fund UNC, pre-school and public education, and to maintain the community colleges and other programs.
To Democrats, all were essential services and the tax system had to support them.
To Republicans, much less is considered essential. Since 2011, they’ve cut public school, UNC and social service budgets all so they could keep state spending in line with a revenue stream that they’ve depleted with their tax cuts.
You can’t say that there’s a structural deficit because Republicans have shown they are willing to keep cutting what Democrats would call “essential” services.
Here’s the difference in simplified form: Democrats decide which services are essential and then set tax rates to pay for them. Republicans set tax rates and then see what that will buy them in services.
In 2010, after Democrats had repeatedly raised taxes to maintain most services, voters threw them out of office. Some day, when voters decide that Republicans have cut “essential services” too much to maintain low tax rates, they will throw them out, too.
http://www.reflector.com/opinion/other-voices/oconnor-deciding-essential-services-2489017
May 27, 2014 at 11:17 am
Norm Kelly says:
'No one expects Republicans and Democrats to agree on things'. A very true statement. Simple reasons on both sides. First because Democrats don't cut taxes; they raise taxes. Second because Democrats don't cut spending; they increase spending. Third Democrats do NOT eliminate useless government programs; they create a new program with the same goal as the original that failed in it's mission. But they don't eliminate the original failing program. That would mean a budget cut and elimination of bureaucrats. Everyone knows bureaucrats are just Democrat voters, so why irritate your supporters by eliminating their job.
'North Carolina has struggled with a structural deficit for years'. Strange that a fact appears in a 'news' paper. Remember this when it comes to election time again. Who ran Raleigh for YEARS? The Democrats. Who was in charge of taxes and spending for years? The Democrats. How long have we been struggling with a structural deficit? For years? So what's changed now? Republicans run the show so it's time for libs of every stripe to come out and complain about how the short term take-over by Republicans isn't solving the SAME PROBLEM the DemocRATS failed to solve. But now that libs aren't in control, now that libs can point the finger at those unsavory Republican scum, it's suddenly a problem. And the libs want to make sure the Republicans take all the heat and blame for the 'problem'.
But ask yourself the MOST important question on this matter. What did the Demons do when they were in control? What are the future plans of the demons if they gain control again? Do the demons have a plan? NO?! Seriously? Yes, seriously. The demons DO NOT have a plan on what to do different. Of course, the first thing the demons would do if they took over Raleigh again would be to RAISE TAXES. And then they would also have to RAISE SPENDING. You know, the only 2 things the Demon party knows how to do; the only 2 steps in their playbook. Oh, wait. There are 3 steps in the playbook. Raise taxes. Raise spending. Blame Republicans. End of text. The entire Demoncrat playbook fits on a single page, with plenty of white space left over.
How did the Demoncrat party 'keep the budget in balance'? Demons 'kept the budget in balance with temporary tax increases'. What the author fails to point out is that most of these temporary tax increases were converted to permanent tax increases. And, see I told you, demons have a very, very, very short playbook. Did they cut spending? No. They still spent money on a TEA CUP museum! No. They still bought a lake-rated ferry to use on the OCEAN to ferry kids to/from school. Was the budget balanced when the Demons controlled Raleigh? Depends on how you define 'balanced'. Kinda like what 'is' is. If you consider that Gov Mike stole sales tax money from the county coffers, then yes. If you consider that Gov Mike stole money from the E911 fund, then yes. But if you consider that the budget was balanced by good financial math, then NO, the budget was NOT balanced. Then there's the debacle of extended unemployment benefits. Where the Demons took a $2.8BILLION loan from the feds with NO PLAN to repay the loan. How's that for balanced? Did the math work? No, but the demons controlled Raleigh, so the media types, the allies of the demon party, simply ignored the problem. A structural deficit only exists when Republicans control the budget. Otherwise its just a temporary setback that can be fixed in the next budget cycle.
Somewhere between the Demoncrat limited playbook of raise taxes and spending, and the Republican playbook of limited government, there is a happy medium. Look around the country for perfect examples of both sides of the aisle. In areas controlled by Demons, how's the economy? How high are taxes, how many people with money are leaving those areas? How many areas are like Detroit & Pittsburgh? How many areas have been running budget deficits for years, but being covered up by creative accounting? How about areas controlled by Republicans? How's the budget cutting, program elimination, tax cutting going? Is the economy in generally Republican areas growing or shrinking? How's the tax rates in Republican strong-holds? Are people with money, who actually PAY taxes moving to these areas? Are moneyed people moving to Republican areas as fast as moneyed people are leaving Demon strong-holds? Where are people who are unemployed, under-achievers, under-employed better off? Where the money is moving to or where the money is moving from?
Did Illinois raise taxes to take care of the bloated spending or did they cut spending to stay in line with tax revenue? When they raised taxes on business & 'the wealthy', did this improve the economy for the general population? Or did the Illinois response to taxes and spending actually hurt more people than it helped? When libs figure this out, more people will be voting for Republicans and Libertarians. But, then again, I give too much credit to the average low-information demon voter. I expect people who are on the government dole will wake up. I expect those people who feel guilty for expecting others to work for themselves, be more interested in taking care of their families, won't let go of the guilt and will continue to vote for Demon politicians who promise to steal more from 'the wealthy' and give to 'the poor'. If for no other reason than to assuage someone's guilt. And if it makes people 'feel good' the Demon party has achieved it's goal. Nothing was probably done to fix the problem, but at least they feel good. And those darn 'rich people' are being punished for taking advantage of 'poor people'. Somehow. Don't try to figure it out cuz it don't make sense!
