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John Hood: State budget builds on conservative success


John Hood

RALEIGH — North Carolina House and Senate leaders have just fashioned a compromise budget for the 2017-18 and 2018-19 fiscal years. The deal includes sizable pay raises for school teachers and principals, boosts for other state employees and retirees, tax cuts for most households and businesses, a prudent deposit into the state’s savings account, and budget savings in other areas to keep overall spending growth modest and sustainable.

Naturally, all this was greeted by the state’s liberals as a great disappointment. It is a disappointment — but for them, not for North Carolina.

Since 2010, when Republicans won their first majorities in both legislative chambers in modern times, they’ve consistently pursued a conservative approach to fiscal policy and state government. They’ve cut taxes by billions of dollars, while also reforming the tax code to reduce its previous bias against capital investment and job creation. They’ve expanded parental choice and competition in education, trimmed entitlement spending, enacted Medicaid reform, and refocused transportation funds on high-value projects to reduce congestion and boost growth.

While most states are experiencing either revenue shortfalls or budget overruns or both, North Carolina has maintained annual revenue surpluses and a triple-A bond rating.

To their credit, the state’s conservative lawmakers didn’t respond to this revenue growth by resuming the profligate ways of their predecessors. Instead, their budgets have grown no faster than the combined annual rates of inflation and population growth. By doing so, the General Assembly has reduced the size of state government as a share of the state’s economy by more than 10 percent, while simultaneously building up a sizable rainy-day fund to cushion the blow during North Carolina’s next recession or natural disaster. When the new budget deal becomes law, that fund will exceed $1.8 billion — the largest such savings reserve in state history.

Instead of simply raising pay across the board, North Carolina’s new budget will continue the recent practice of reforming the compensation system in public education. Teachers will earn more when they teach challenging subjects and children with special needs; when they teach at high-poverty, low-performing schools; and when they excel at delivering educational value to their students. Principals, too, will be eligible for performance-based bonuses.

Long-term thinking is the key to understanding North Carolina’s conservative approach to public policy. House Speaker Tim Moore, Senate President Pro Tem Phil Berger and their colleagues don’t see their fiscal and regulatory policies as quick fixes, shots of adrenaline or “run on” bills designed merely for public consumption during the next election.

Their goal is a North Carolina with a smaller, more effective government that does well what it is supposed to do but otherwise leaves private households, businesses and voluntary institutions alone to set their own goals, make their own decisions and fashion innovative solutions to their own problems.

Conservatives disagree on particular issues — and, indeed, on some of the details of North Carolina’s new budget. But our common ground is large enough that we all have plenty of room to stand.

Modern-day liberals yearn for an end to conservative policy victories. In North Carolina, at least, their disappointments will continue.

John Hood is chairman of the John Locke Foundation.



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