A new brief from the North Carolina Budget and Tax Center makes a strong case for increasing taxes to solve the state's budget crisis. The report rightly argues that economic times are so bad, resulting in such low revenue projections across the country, that policymakers aren't left with any other option but increasing taxes. In fact, the report finds that, "No state with a projected gap as large as North Carolina is attempting to balance its budget with spending cuts alone."
Apparently, Governor Beverly Perdue is coming around to this thinking too, saying that tax increases may be necessary to close the state's projected $4.5 billion shortfall which is equivalent to 20% of the state's budget. The outcome of the state's budget debate remains to be seen. But with Senate leaders and now apparently the Governor interested in raising taxes, perhaps it's not too much of a leap to predict that North Carolina will join with other states that have raised taxes to address dire shortfalls.