February 17, 2003

A TABOR Wildfire?

John Hood, president of the John Locke Foundation in North Carolina and publisher of the Carolina Journal, reports that legislators there are introducing some smart proposals to prevent or lessen future budget crises in that state.

Sen. Fern Shubert of Union County, newly installed as the Republican Whip in that chamber, filed legislation this week to change the way the governor and legislature fashion North Carolina’s state budget. Given that we are about to head into a fourth-straight year of “unforeseen” budget deficits, it would be hard to argue that the process doesn’t need fixing. In her bill, Shubert is resurrecting the old and praiseworthy idea of ditching revenue forecasting in favor of spending only as much revenue as has already come in the previous year.

By itself, this bill would eliminate the fiscal guesswork and reduce the ability of big-spenders to use budget-gap years to force tax increases on us, but it would not necessarily rein in those big-spending proclivities. After all, there are fiscal years in which state revenues can grow 7, 8, 9, or as much as 10 percent. In order to keep lawmakers from misinterpreting Shubert’s reform as an excuse to spend whatever is in the kitty, North Carolina also needs a constitutional cap on the annual growth of state spending.

States such as Colorado with similar policies have grown modestly, avoided massive deficits, and cut taxes. Fortunately, this week saw the introduction of such a spending cap by Rep. John Blust, a Greensboro Republican. It would limit annual growth to inflation plus population – in effect holding the real cost of state government per person constant.

Also, here’s a link to a Locke Foundation report on the real cause of North Carolina’s budget crisis: overspending.

Thanks to Ben Cunningham for bringing Hood's article to my attention.