RALEIGH – The state Senate Finance Committee approved a bill to add three sections to the North Carolina constitution that sponsors say will protect taxpayers. The amendments, which would have to be approved by voters in separate referenda, would lower the maximum individual income tax rate to 5 percent from 10 percent, would establish an emergency savings reserve fund to cover revenue shortfalls, and would limit the growth of state spending to inflation growth plus population growth each year.
“During my time in Raleigh, I’ve learned politicians usually have a hard time doing those things with taxpayer money,” said Senate Appropriations Committee Co-Chairman Brent Jackson (R-Sampson). That’s why we’re proposing giving voters the chance to place protections on our ‘Rainy Day’ emergency fund and responsible limits on the growth of government spending into our constitution.”
Opponents worried about being able to fund teacher’s salaries, textbooks and mental health programs with restrictions on tax revenue and expenditures.
“I understand what you’re trying to do with the growth of spending,” said Sen. Floyd McKissick (D-Durham). “But what I worry about is unfunded mandates…. It can put you in a set of handcuffs.”
Jackson said he was not worried about emergency situations, since the General Assembly could always vote to expend more money by a two-thirds majority of both houses to do it.
Sen. Bob Rucho (R-Mecklenburg) said lowering the maximum income tax rate was a way to keep politicians focused on moving the state away from reliance on the income tax as its major source of revenue.
“Lowering the maximum income rate to 5 percent will provide taxpayers with constitutional certainty that politicians will not be able to return to the tax-and-spend ways that left us with the Southeast’s highest taxes and multi-billion dollar deficits,” Rucho said in a statement.”