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NOTE: According the Rules of the Senate of North Carolina (2005), any Member, with the permission of the Presiding Officer, at the end of the days' calendared business, may address the Body for up to three minutes on a "moment of personal privilege." The only topics restricted are remarks about specific persons or about any specific piece of legislation. On Wednesday, Feb. 2, 2005, Senator Robert Pittenger asked and was given permission to address the body. The text of his remarks appear below. (During his remarks, Senator Pittenger was interrupted by other Senators attempting to editorialize on his statement, within the rules. These motions failed until the Lt. Governor, sitting as presiding officer, gaveled Senator Pittenger to his seat, claiming his time had expired.) February 2, 2005
Senator Pittenger’s Remarks to The Senate As we begin the 2005 session of the legislature, much attention and comments have already been made on which new tax revenues would be required to address the $1.5 billion shortfall. The question presently being discussed is how much should we increase cigarette taxes and other sin taxes, while considering service taxes and the lottery tax and not sun-setting the sales and individual income tax rate increases. All of the discussion by the leadership has been where to find more revenue to address the massive shortfall since there remains very little in the Medicaid, transportation, rainy day and clean water trust funds to raid to help balance the budget.
I would like to see us change the focus of the debate from imposing a greater tax burden on the people of North Carolina, who presently support the highest corporate and personal tax rates of any state in the southeast, and among the highest in the nation, to a full commitment to identify cost savings and efficiencies, waste, duplication and fraud in government that would enable us to lower the cost of delivering the services to the people of our state. Let’s look at the alternatives to raising taxes. We should begin with Governor Easley’s Commission of Efficiency and Savings in Government which was released in December of 2002 and had very little attention and even less implementation. Many believe that implementing this report along with his restructure commission of last year, which includes zero based budgeting for all departments and agencies, could save between $1 Billion to $2 Billion annually. The Governor’s report addresses the 7,000 non-profits funded with over $700 million, which has minimal accountability as evidenced by the abuse by one Congressman who was a State Senator when his non-profit was established. We were not successful in this body last year in passing legislation, which enabled the State Auditor to conduct a performance audit of just 20 of the 7,000 non-profits. We were told that they were all good people and we were on a witch-hunt. In addition, the report addresses the work training centers, which are funded at $500 million annually that could be consolidated. NBC Channel 6 in Charlotte did an investigative piece last year revealing funding for training center classrooms which had no students and a Director which was paid full time and was not on campus because he had another job. There are also the 13,000 properties owned by the state which includes abandoned buildings and undeveloped land that we have never had an inventory analysis to determine which ones we need and which could be sold off, generating revenue and creating a tax base. There are also the 5,000 staff positions that are funded in various departments, which are vacant, and yet the money is spent for other purposes. There are opportunities in Medicaid fraud detection where other states of similar size have found as much as $150-$200 million of fraud in the system. With $8 Billion of total monies spent in Medicaid annually, which includes about $2.5 Billion of state money, it behooves us to do all we can to insure that the system is not being abused by those who know how to exploit it. The Charlotte Observer had a three-day series report last week on group homes, noting a young girl who had died, with no management over-site where we spend $165 million annually.
The list goes on and on and the Governors Report is available to any who would like to review it. I have submitted a copy to each member of the Senate today and hope that each will have time to review it. Perhaps the Senate President Pro-Tem would consider appointing a committee to insure implementation of the report findings. I would gladly join others who seek fiscal accountability to serve on such a committee. In addition, I believe we should significantly increase the budget for the State Auditor to assist with this oversight. Regretfully, last year the State Auditor’s budget was decreased at a time when we needed greater accountability.
We should not be content with the status quo while our state is losing by default as companies like Louisiana Pacific, Asurian, Asset Acceptance, Verizon, Depository Trust Corporation, Quanta Computers, Household Beneficial, Cinram, Grid South, Prairie Plastics, Wells Fargo, Lear Corporation, Plastic Pac, Dei-Tec, Pella Corp., UPS, Employee Benefit Services and hundreds of other companies have located to Georgia, Tennessee, Florida and bypassed North Carolina in the last year or so in great measure because of our excessive and burdensome tax rates. Some would seek to camouflage our corporate and individual rates by saying that overall our tax rates are somewhere in the middle among other states. That analysis includes property tax rates, which are lower, and does reduce the overall rate. However, the problem is that business in this state is not land intensive. We are not an oil and gas state, nor a cattle state, which requires a lot of land. Business leaders who are considering moving to our state see that our corporate rate is the highest in the southeast, for example 6.9% in NC and 5% in S.C. and that our individual rate which affects all subchapter S companies and small businesses in this state is the highest in the southeast.
We have given enormous amounts of tax breaks to just a few companies, including $250 million recently to Dell, while small business generates 70-80% of the new jobs in this state and we have done nothing to assist them with tax relief.
My fellow colleagues, I hope that we will work hard this session, not to identify new tax revenues for the good people of this state to shoulder, which impedes job creation and economic development, but we will take seriously the recommendations of our Governor and other opportunities that we identify which would bring greater fiscal accountability in state government and position us with tax policy that would attract tens of thousands of new and better jobs for regions of our state that are in desperate need.
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