06/27/06 — Auditor -- Spend surplus wisely

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Auditor -- Spend surplus wisely

By Andrew Bell
Published in News on June 27, 2006 1:45 PM

As North Carolina legislators consider how to spend the state's $2.4 billion surplus, state Auditor Les Merritt told a group at the Wayne County Republican Headquarters Monday night that legislators should remember that every penny belongs to taxpayers -- and that the money should be allocated with that in mind.

Merritt attended the Hawaiian-themed Republican Party meeting to discuss his job and his fiscal recommendations to the General Assembly.

In a recent letter to representatives, Merritt said the state's leaders have great power in establishing the spending policies for state government, but that the power comes with an equally great responsibility.

In previous years, legislators have levied temporary taxes, borrowed from designated funds to balance the budget and have used temporary funds for recurring projects.

"But for how long can the public's trust be retained when sunset provisions on taxes are extended, obligations to repay borrowed funds are ignored and permanent spending increases are funded by a temporary surplus?" Merritt asked in his letter.

On Monday night, Merritt reiterated his points, saying lawmakers could get rid of temporary taxes, such as taxes on food, the sale of goods and the highest marginal tax rate, by spending $580 million, which represents roughly 20 percent of the surplus.

"Once you get a temporary tax, it never really goes away," Merritt said, citing the state sales tax on food and taxes levied since then with sunset clauses included.

Merritt said he would like to see legislators repay money borrowed from designated funds in previous years. Since the Highway Trust Fund was created, Merritt said an annual appropriation of $170 million is transferred to the General Fund to meet budget shortfalls. The result is the deteriorating condition of roads throughout the state, Merritt said.

"We used to be the 'Good Roads State,' but they're not in the same condition as they were 20 years ago. We've been putting off projects, but why move money from the highway fund to anything else?" Merritt asked.

Legislators also should beware of starting new programs with surplus money. The state could go several years before seeing another surplus, he noted, and if a new program is started and a recurring source of funding is not found, legislators would have to eliminate another program or find more revenue through taxes or another source.

"Don't start something if you can't fund it or you're not willing to," Merritt said.