Riddell files Taxpayer Protection Act to restrain NC government spending growth

North Carolina would face a new state constitutional limit on government spending growth, if lawmakers and voters approve a proposal filed Monday in the state House.

House Bill 146 is titled the Taxpayer Protection Act. Rep. Dennis Riddell, R-Alamance, filed the bill. Fellow Republican Reps. Destin Hall of Caldwell County, Erin Paré of Wake County, and Jason Saine of Lincoln County co-sponsor the legislation.

The bill would add a “fiscal year spending limit” to state law. “The maximum annual percentage change in State fiscal year spending equals inflation plus the percentage change in State population in the prior calendar year,” according to the bill’s text.

In other words, spending growth would not exceed the combined rate of inflation plus population growth. Lawmakers could exceed the cap with a two-thirds supermajority vote in both the state House and Senate.

Voters would see the following language on the ballot for the 2024 general election in November. “Constitutional amendment limiting the annual growth of the State budget to a percentage equal to the sum of annual inflation and the State’s annual population growth rate unless increased in a year in which two-thirds of both chambers of the General Assembly votes in favor of the increase.”

The John Locke Foundation, which oversees Carolina Journal, has advocated this type of spending reform for years. Locke’s “North Carolina Policy Solutions” guidebook lists a similar proposal as the top priority for reform in the area of “spending and taxes.”

Locke urges lawmakers to “Amend the state constitution to limit spending and spending growth.”

“A proper amendment would (1) allow tax hikes or higher spending growth only if approved by public referendum or a legislative supermajority, (2) deposit excess revenue in the Savings Reserve or refund taxpayers, (3) prevent ratchet effects from recessionary spending
cuts, and (4) apply to General Fund and total spending. Commonly referred to as a Taxpayer Bill of Rights (TABOR), such restraints would cap annual spending growth to a formula tied to population plus inflation growth.”

The idea is not new. In 2003 Locke touted a Taxpayer Protection Act as a more effective reform than one proposed by then-Gov. Mike Easley. Easley, a Democrat, called for a cap on state spending growth tied to growth in N.C. personal income.

“The governor’s proposal would limit General Fund spending increases each year to a rolling 10-year average increase in the state’s personal income as measured by the U.S. Bureau of Economic Analysis. A stronger proposal, which legislative sponsors in North Carolina have called a ‘Taxpayer Protection Act’ and which emulates the Taxpayer Bill of Rights (TABOR) cap currently in operation in the state of Colorado, would limit annual spending increases to a combination of the projected inflation rate and the projected growth in the state’s population,” wrote then-Locke President John Hood.

“The Taxpayer Protection Act focuses on spending rather than revenue. It assumes that the current overall level of state government spending is adequate to fund present and future needs — that any growth in expenditures beyond that needed to keep up with population growth and general inflation should be “paid for” by reducing lower- priority spending elsewhere in the budget,” Hood wrote 20 years ago.

The post Riddell files Taxpayer Protection Act to restrain NC government spending growth first appeared on Carolina Journal.

 

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