A measure that would present a three-part constitutional question to North Carolina voters in 2016 regarding state taxation, spending and savings passed the State Senate this afternoon. SB 607-Taxpayer Protection Act received the necessary three-fifths supermajority vote required for constitutional amendments, passing the Senate by a party line vote of 31-14.
Under SB 607, voters in November 2016 would be asked to vote FOR or AGAINST the following ballot measure: “Constitutional amendments adding the Taxpayer Protection Act to the North Carolina Constitution that would limit the growth of State spending to inflation plus population growth, establish and require yearly deposits in an Emergency Savings Reserve Fund in the State Treasury, and reduce the maximum allowable income tax rate in North Carolina from ten percent (10%) to five percent (5%).”
During Tuesday’s floor debate on the bill, Senator Brent Jackson (R-Sampson) said, “Placing these protections in our state constitution will help ensure current and future state leaders spend sensibly, save wisely and tax sparingly-while still retaining the flexibility to react to crises and economic downturns.”
SB 607 is sponsored by Sens. Bob Rucho (R-Mecklenburg), Wesley Meredith (R-Cumberland), and Andrew Brock (R-Davie). If approved by the House this session, and ultimately by a majority of General Election voters in 2016, the “Taxpayer Protection Act” would limit the annual percentage increase in state spending to “the average growth for the prior three calendar years plus the average growth in State population for the prior three fiscal years.” Any spending above that constitutional limit would require a two-thirds vote of both the State House and Senate.
The amendment would also create an “Emergency Savings Reserve Fund” for financial emergencies or natural disasters, with any withdrawals or decisions not to reserve funds in a particular year requiring a two-thirds vote of the State House and Senate. Under the amendment, North Carolina’s rainy day fund would grow to at least 12.5 percent of total state spending. Finally, the amendment would limit the state’s income tax rate at five percent beginning in 2020, which is half of the current 10 percent cap.
According to the News & Observer, Rep. Jason Saine (R-Lincoln), who co-chairs the House Finance Committee, has indicated that the House’s priority is to finish the budget first, and then it may consider a “Taxpayers’ Bill of Rights.” “Their idea is worth discussing, but that’s not as time-sensitive as the rest of the things we need to be working on,” Saine said.