July 31, 2007

Raleigh – North Carolina’s House Democrats voted together, Monday, to put their final stamp on a third straight “super” increase in state spending, far beyond the rate of inflation and population increase. For the first time state spending will exceed $20 Billion – a 9.5 percent increase over last year’s budget.

Republicans in both the House and Senate voted not to go along with a conference report that was worked out behind closed doors by a small group of Democrats.

“It’s the third year of super-spending increases,” said House Republican leader Paul Stam (R-Wake).

“Democrats increased taxes and hiked state spending 9.7 percent two years ago, 8.2 percent last year and now they’ve put into law billions of dollars of new spending directly on the backs of North Carolina’s hard working taxpayers.

The budget conferees were charged to work only on differences between House and Senate budgets passed months ago. Instead the committee delivered up a strange “compromise” adding new items and far exceeding lower spending levels approved in each chamber.

“The budget conferees added spending items that were not included in either the Senate or House proposals,” Stam said. He immediately objected to their inclusion citing House Rule 44(b), which reads, “only such matters as are in difference between the two houses shall be considered” by conferees, and “the conference report shall deal only with such matters.”

Speaker Joe Hackney (D-Orange), without explanation, overruled Stam’s “Point of Order”. Stam noted that the inclusion of a local real estate land transfer tax or increased local sales taxes could not have passed either the House or Senate, “which is why these new tax increases were attached by budget conferees to the massive budget.”

With North Carolina General Fund topping out at $20.7 Billion, spending has been increased by $1.8 Billion over the prior year. The Democrat leadership’s budget also “makes a final repudiation of a six year old promise,” Stam said, making permanent the “temporary” sales tax increase enacted in 2001 during a temporary crisis.

A local option will allow counties to triple the land transfer tax or vote to increase local sales taxes.

The “Medicaid Swap” presented by budget conferees does provide more funds for some counties but North Carolina’s fastest growing counties barely break even. Even funding designed to “hold counties harmless” in the swap will leave most counties little or no better off in the long run.

For many counties, the “swap” is simply a hidden tax increase, passed along to county commissioners.

It is estimated that the new budget will increase the average earner’s annual tax burden by $176.09 ($352.18 on families).

Population plus inflation total this year only 4 percent. If state spending were tied to actual growth in population and inflation, over the course of this two year budget we would save the taxpayers $1.06 Billion.

“The land transfer tax option handed off to the counties treats similar people very, very differently,” Stam said. “A family with ten children living in the same home for many years would be taxed exactly as another home that changes hands frequently but with far impact on infrastructure. It’s irrational and supported only by a few Members. A majority in the legislature do not support it.”

“Counties are forced to vote on this locally while only a minority of members support it, but constitutional protection of private property, supported by 90 percent of North Carolinians and protection for marriage, supported by 85 percent of our citizens, are issues Democratic leaders refused to allow on the ballot.

“Democrats in control of state government want government to grow endlessly and take more of people’s hard-earned money so they can decide how it’s spent.”

Addendum:

Link to list of items included in the Budget not a part of either the House or Senate versions of the budget: http://www.joelraupe.com/additions.aspx

Link to list of Taxes and Fees included in the Budget
:http://www.joelraupe.com/taxesandfees.aspx