In an allusion to the signal that’s seen in the Vatican when the leaders of the Catholic Church elect a new Pope, at least one news media report this morning is talking about “white smoke” being visible on Jones Street. The story accompanying the headline, of course, is that leaders of the North Carolina General Assembly signaled over the weekend that they have agreement on the framework of a state budget deal. Assuming it really comes to fruition, the agreement comes a full month into the 2015 fiscal year.
A closer look at those puffs of smoke, however, reveals them to bear a notably blue tinge — that is, the kind one typically see with an engine that’s leaking oil and about to blow. As Alexandra Sirota details in the post immediately below and Chris Fitzsimon highlights in this morning’s “Monday Numbers,” one important impetus for the agreement would appear to be the latest calculations of the General Assembly’s Fiscal Research Division staff that the income tax cuts enacted last year are harming state budget revenues even more than had been officially forecast – i.e. more along the lines of what the Budget and Tax Center has been predicting all along.
So, keep in mind a couple of things this week as lawmakers and the Governor are falling all over themselves to issue statements of self-congratulations:
1) Notwithstanding their rosy claims, the engine driving state government — the tax system — remains cracked and badly in need of an overhaul.
2) The current proposed solution — rolling up the window and ignoring the smoke — will provide only a temporary solution at best.