Before 2011, North Carolina was facing an economic crisis. Decades of irresponsible tax and spend policies left the state unprepared for the recession, and when it hit, North Carolinians were forced to pay the price for those bad decisions.
The General Assembly slashed teacher pay, cratered education funding, and froze first responder salaries to cover the budget shortfalls precipitated by their reckless spending. On top of that, hardworking North Carolina families and businesses were saddled with the highest taxes in the Southeast, and the double digit unemployment rate was the fifth highest in the nation. Since 2011, legislative Republicans have focused on responsible budgeting and pro-growth economic policies which have North Carolina’s economy booming.
In 2011, the General Assembly faced a $2.5 billion budget deficit, so they immediately began the lengthy and difficult process of rebuilding the state budget. The General Assembly streamlined state government, consolidating and cutting waste and bureaucracy – all without raising taxes. They spent responsibly, restoring education funding and reinstituting regular salary increases for first responders and teachers. The result has been a resurgence in North Carolina’s fiscal health, including four consecutive budget surpluses of more than $400 million. The budget continues to follow a predictable and sustainable trajectory, and the rainy day fund, previously neglected, is now one the strongest in the country. North Carolina has a “AAA” bond rating from all three ratings agencies, one of only 12 states in the country with that designation in 2017.
Private citizens spend their money better than government spends their money. By balancing the budget and keeping spending at responsible levels, we’ve returned billions of dollars back to the people, all while investing heavily in our education system.
Legislative Republicans’ focus on reducing the tax burden to put more money back into the pockets of hardworking families and businesses kickstarted the economy and allowed North Carolina to thrive. The 2013 Tax Simplification and Reduction Act started the process by simplifying the tax structure while reducing the individual and corporate tax rates. Between this act and subsequent legislation passed in the following years, the individual income tax rate has dropped from a high of 7.75 percent and will be 5.25 percent in 2019, while the corporate tax rate has dropped from a high of 6.9 percent and will be 2.5 percent in 2019. North Carolina Tax Reform has been a model for the rest of the country and residents in this state are paying $2.7 billion annually less in taxes as of FY 2018-19; in fact, 99 percent of North Carolina taxpayers are either paying less or no state personal income taxes at all.
Since 2011, over 600,000 new jobs have been created and the unemployment rate has been cut in half. North Carolina’s broken unemployment insurance program has also been completely reformed. A $2.7 billion debt to the federal government was paid off, and the state’s unemployment reserve has grown to $3.1 billion as of May 2018. Once this massive debt to the federal government was paid off, the state unemployment tax was able to be lowered in 2016 from $126 to $42 per employee which is a 67% reduction in unemployment taxes on job creators and businesses. These changes made North Carolina’s unemployment system solvent and removed one of the biggest impediments to job creation and economic growth.
To help North Carolina’s private sector create lasting jobs, legislative Republicans recognized the need to get government out of the way. That’s why the General Assembly has passed more than a dozen regulatory reform bills since 2011, reducing the amount of red tape that holds back business development in North Carolina and encouraging economic development. While lower personal and corporate income tax rates and less onerous regulations have made North Carolina more attractive to businesses, legislative Republicans have continued their efforts to grow the state’s economy by changing the business incentives program to attract major companies that will bring thousands of new jobs to the state.
Since 2011, we have passed a number of major pro-growth reforms to fix North Carolina’s business climate and make our state a place in which companies want to do business. We know those reforms have made us more competitive than ever before – and we believe the change to our business incentives is the final piece of the puzzle that will put us over the top when it comes to recruiting thousands of new jobs and billions in new investment to our state.
Thanks to these historic reforms, business is booming in North Carolina, and the state is getting recognized for it. According to the Tax Foundation, North Carolina’s business tax climate has jumped from 46th all the way to 12th, and the American Legislative Exchange Council ranked North Carolina’s economic outlook seventh in their most recent report after being ranked as low as 26th.