NAACP in voter ID, tax cap litigation appeal: Illegal actions have consequences

Illegal actions have consequences — that’s the message the NAACP is sending to lawmakers in its response to an appeal of a court’s decision to throw out the voter ID and tax cap constitutional amendments.

A Wake County Superior Court judge ruled in February that the unconstitutionally constituted legislature did not have the authority to alter the state constitution when it proposed those two amendments. Lawmakers appealed the decision, and the NAACP, which raised the legal challenges, has asked for the state Supreme Court to step in, but in the mean time, litigation goes through the state Court of Appeals.

The plaintiff’s argument in its appellate response is that the legislative defendants forfeited their claim to popular sovereignty when they drew illegal maps that racially segregated voters and diminished the political voice of African Americans. They are represented by the Southern Environmental Law Center.

It states that Republicans, who had a supermajority in the legislature at the time the amendments were created, knew they obtained power illegally and was warned about it by a federal court, but still proceeded.

“Nevertheless, Defendants, without regard for the law or the people they serve, attempted to rewrite our state’s most foundational document,” the court document states.

The legislative defendants wrote in its appeal that the lower court that ruled in favor of the NAACP focused more on the ills it perceived from redistricting than it did the merits of the case.

“The trial court became the first known court in the country to void amendments passed by a majority of voters on the theory that state legislators were usurpers and lacked the ability to propose amendments to the people for a popular vote,” the initial appeal states.

The defendants contend that the trial court encroached on the legislative branch and violated the separation of powers, so the Court of Appeals should overturn its decision.

The NAACP response states that the defendants “rely on inapposite case law, alarmism, and misinterpretation of state law.”

Gov. Roy Cooper filed an amicus brief in the case agreeing with the NAACP’s position that lawmakers should not have been able to propose an alteration to the state constitution. Read more

Statement on the Passage of the Income Tax Cap Proposal

The passage of Senate Bill 75, proposing a Constitutional amendment capping the income tax rate to lock in recent legislative decisions to reduce rates, is fiscally irresponsible and unnecessary.

In order to keep funding vital public services such as schools and public safety, lawmakers will likely have to raise the sales tax or fees, which will eat into middle class families’ paychecks and financially hurt those who are already struggling to get by.

Lawmakers are not trying to bring greater democracy to the budget process; they are trying to take choices away from future generations of North Carolinians.  Voters in November should reject this effort to limit the tools available to future policymakers and the will of future voters.

Constitutions should be flexible and enduring frameworks for governing, not the place to impose the arbitrary whims of the moment on future generations.

The vote shows just how arbitrary the rate is that legislators choose to enshrine in the state Constitution. The bottom line is that this is about further locking in low tax rates that primarily benefit the wealthy, cutting public investments that serve the common good, and shifting the costs for our state’s needs to local governments and the middle class.

In the end, the results of this unnecessary amendment will be costly for us all.

Income tax cap seeks to lock in a failed economic experiment

The current push to reduce North Carolina’s Constitutional income tax cap (SB75) is not rooted in sober analysis of hard economic data.

From the moment that legislative leaders proposed slashing income taxes in 2013, we were promised that it would radically transform North Carolina’s economy. Now, several years into this experiment, evidence abounds that tax cuts failed to change our economic trajectory. Employment growth in North Carolina has moved in virtual lockstep with our immediate neighbors through the recession and recovery, both before and after the recent wave of tax cuts started taking effect. In fact, several of our neighbor states have added jobs faster than North Carolina since the start of 2014, and none of our neighbors embarked on a similar set of income tax reductions.

The economic benefits of recent tax cuts may be undetectable, but the harm is plain to see. Tax cuts have reduced state revenue by $2.6 billion each year, seriously undermining our collective commitment to strong schools, healthy communities, and a competitive economy. For example, we have an estimated $8 billion backlog in school construction and repairs statewide, we’re not aggressively building 21st-Century broadband infrastructure, and we have dramatically reduced our efforts to protect the public from harmful toxins and contaminants.

Locking in recent tax cuts would become even more damaging in the next few years. The non-partisan Fiscal Research Division of the General Assembly projects that the current tax system won’t raise the revenue needed to continue current services, falling billions of dollars short in the next few years. If the income tax cap passes, it would then force legislators to cut vital public services even more, or to increase sales taxes, fees, and other levies to fill the hole.

The unfortunate fact is that we have fundamental economic challenges that tax cuts simply cannot address.  Poverty remains far too prevalent, wage growth remain tepid, and many communities still face barriers to opportunity. To make matters even worse, roughly  one-third of North Carolina’s counties actually lost jobs over the past year, deepening longstanding racial and regional economic divides. This week, researchers revealed that North Carolina’s rural economy would expand by $5.3 billion if we ensured that everyone who wants a job can find one.  We can’t realize that potential through tax cuts—we need investments in rural regions, systems that deliver the training and business supports to grow a competitive rural workforce, and 21st-Century infrastructure that connects communities from the mountains to the coast.

An income tax cap won’t make North Carolina any more prosperous, or any better prepared for an uncertain future. It will simply make it harder for us to respond to the real challenges facing our state.

Patrick McHugh is an Economic Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

Artificial income tax cap would permanently hamstring our public schools

By all accounts, the biggest issue facing North Carolina’s public schools is the lack of adequate funding. Adjusted for inflation, 18 of the 24 biggest school funding allotments remain below their pre-Recession levels, or have been eliminated altogether. As a result, North Carolina’s per-student state funding remains 3 percent below pre-Recession levels after adjusting for inflation. According to the most recent data from the National Education Association, North Carolina’s per-pupil spending ranks 39th in the country, trailing the national average by over $2,400, or 25 percent.

More sophisticated measures of school spending paint an even bleaker picture. For example, EdWeek’s Quality Counts report gives North Carolina an F (47th in the nation) for level of school spending. Research from the Education Law Project and Rutgers University reaches a similar conclusion, ranking North Carolina 48th in terms of total school spending.

Compared to other states, North Carolina devotes a shockingly small share of its wealth towards funding our public schools. North Carolina’s spending on public schools accounts for less than 2.8 percent of the state’s gross domestic product. By contrast, Vermont makes twice the effort, devoting 5.6 percent of its state wealth to its public school system. Overall, North Carolina ranks 46th in terms of school funding effort; a ranking that has fallen even as the national recovery officially began.  Rather than invest when it has been possible to do so, the current leadership of the General Assembly has continued to reduce their commitment to our classrooms and children.

If North Carolina’s lawmakers were interested in addressing the inadequacy of North Carolina’s school funding, they should want to have every revenue-generating tool at their disposal. Particularly, lawmakers should prioritize revenue options that minimize the tax burden on lower-income North Carolinians who have mostly been left behind in North Carolina’s economic recovery. Read more

Tax cap amendment unwise, politically motivated say N.C. business owners

A group of North Carolina business owners spoke out Tuesday against a constitutional amendment to cap the state income tax rate at 5.5 percent.

In a press teleconference arranged by the North Carolina Business Council, a number of owners said the amendment, which would be put on the ballot in November, would hem in state leaders in times of crisis.

“One thing I’ve learned about business is we never know what the future is going to be,” said Eric Henry, chairman of the council and owner of TS Designs in Burlington. “So we need to keep our options open. When things happen we need to have the ability to change and adapt.”

“By putting a cap on our state income tax, basically handicaps our legislators in the future to addressing what might pop up,” Henry said. “It could be a hurricane. It could be education. We don’t know what the future is. So why do we want to go down the path of putting this essentially handcuff on our legislators to keep them from doing what’s best for the state?”

The current individual income tax rate is capped at 10 percent, according to the state constitution. The rate is set to be 5.25 percent in 2019. Revenue from income taxes accounts for over $12 billion, more than half of the state budget.

Without the option to raise the income tax in times of crisis and emergency, Democratic lawmakers have argued, things like property taxes, sales tax and user fees would have to go up when the state and counties need additional resources. Those are the taxes that have the greatest impact on poor North Carolinians.

Business owners stressed that point Tuesday.

Barbara Hemphill, whose Productive Environment Institute helps to train business owners to succeed, said the amendment would hurt the ability of small businesses in the state to adapt to  changing economic circumstances and business environments.

“It makes absolutely no sense to say ahead of time we’re going to put a cap on this because don’t know what’s going to happen,” Hemphill said. “We used to make ten year business plans or five year business plans. We can’t even do that anymore because demands change so quickly.”

Bruce Nelson, former CEO of Officer Depot and owner of Reverence Farms in Graham, agreed. Read more