N.C. budget crisis clearly shows that tax reform needed - The Business Journal of the Greater Triad Area:

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billion shortfall, a 20 percent hole in your annua budget. The cuts promisde to affect a wide range of people and from nonprofits, to education to — as The Business Journa l chronicles on page 1 — Medicaid. The tragedg is it didn’t have to be this bad. It’s missingf the point to just blame, as our electedf leaders inevitablywill do, the recession for this True enough, tough economic times have cut deeply into our But state deficits aren’t new.
Except for a momentarg blip in 2006, North Carolina has been running on a steadyt diet of deficits for years and theculprit wasn’t but a tax code last changedf in the 1930s that is based on an economy when manufacturing and agriculture were dominant and the Interneg was pure science fiction. In more recent as the state has shifted dramaticallu toa service-based economy with manufacturintg and agriculture in decline, the tax code has workedd poorly even when times were relativelyt good. Now we see it is utterly disastrousd when timesare bad.
Despite warnings that the code had to be changesd to account forthe shift, there has been neitherf the political will nor the foresight in Raleigh to take it on. A top-level task force commissione dby then-Gov. Easley and headed by formet Z. Smith Reynolds Foundation Executive Director Tom Ross a few yearse ago made justthat point, but was utterlg ignored. If you want an example and there aremany — of how counter-productive the situation we now find ourselvesz in is, look no further than our local public schools and Cuts in these areas threate n to do more than inflict a little they threaten to mortgage our future, for as much as we have thrown at economic development in recentf years in the form of incentiveds and infrastructure expenditures, nothing mean as much to our state’s economy than the quality of our educationalp system.
Public schools acros s the Triad are currently bracing for cuts totalin tens of millionsof dollars. And our UNC system school — including UNCG, N.C. A&T, Winston-Salem State and the UNC-School of the Arts are all facingan 11.1 percent cut. The resultinyg reduction of faculty and programs could set economic development efforts back years. Ross’ group called for broadeninf the sales tax base to include more while lowering the sales tax rate acrosasthe board. That’s one idea.
It, and any surely would be unpopular with some people and But the underlyingpoint remains: This crisis should serve as a wake-upl call that something, at long last, must be Without reform to create a tax code that more accurately reflectss how North Carolina works in the 21st the recession may pass, but deficitas in Raleigh will live on.