BY REP. TODD CARVER

I have been getting quite a few questions this week surrounding the state budget and the process used in North Carolina for funding our state government.

First an acknowledgement: It is embarrassing to me that we haven’t passed the budget already. I believe adopting a statewide spending plan is one of our primary responsibilities. Our goal is to have the budget adopted for implementation on July 1 of each biennium. The goal is so seldom met that the General Assembly adopted a policy some years ago to deal with this likelihood. If a budget is not adopted on July 1, programs continue to be funded at the previous budget levels. This prevents us from going through the continuing resolution dramas seen on a regular basis at the federal level.

This year the process has played out as it has in many previous years. The governor, the House and the Senate all have made budget proposals for adoption. The rub has been one of the major differences in the House and Senate budget. Previous assemblies had agreed on what are called tax triggers. I will do my best to explain this concept. I will use theoretical dollar amounts and percentages to simplify the explanation. If the state collected $30 billion in taxes the rate would be set at 4%, but if the collection rate rose to $35 billion the tax rate would drop to 3.75%. As the amount of tax collected increases the tax rate decreases. Again, I am not using actual numbers — these are just round figures for illustration purposes.

In theory, I could really get behind this model for a tax policy. The more the State of North Carolina is collecting from the people, the lower the rate would need to be — except for the one variable left out of this equation: inflation. Everyone understands that $30 does not purchase as much today as it did in 2020. What you and I experience with a twenty and two fives, the state experiences on a larger scale. Inflation eats away at the state’’ ability to provide services and maintain wages for employees under this trigger taxation policy. That’s where the rub is this budget cycle. The House version of the budget has an allowance for inflation adjusting the triggers and the Senate does not have an allowance for inflation.
Failure to adjust the taxation rate triggers in this biennium will eat away at North Carolina’s ability to provide services. The two budgets differ on the amounts of raises for teachers and other state employees because in the Senate’s budget there isn’t the money available to provide better raises.

Failure to change this tax policy will create a need to reduce the state budget in coming years. One thing I am certain of is that people will not be willing to provide the same level of service for less money.
I believe the House leadership is right to hold out for a better deal accounting for inflation with the taxation triggers. I hope we can get it done sooner than later, but it’s the right course of action for our citizens and our employees.

If I can ever do anything to help you or your family, please do not hesitate to reach out.

Rep. Todd Carver represents the 95th District in the N.C. House. Email him at todd.carver@ncleg.gov.