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North Carolina is charging ahead of California and the reason why is surprising

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North Carolina is charging ahead of California and the reason why is surprising

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Earlier in May, two starkly different fiscal news items highlighted the divergent paths taken by North Carolina and California. While North Carolina celebrated news of projected revenue surpluses in 2024 and 2025, California is grappling with a $44.9 billion budget deficit. How did these two states end up in wildly different places?  

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The contrast is emblematic of the philosophies governing these states. North Carolina’s conservative fiscal policies, emphasizing low taxes and restrained spending, widely differ from California’s high tax rates and expansive spending programs. The recent outcomes suggest that North Carolina’s approach offers a model of responsible governance from which other states, including California, could learn. 

North Carolina’s success results from deliberate and sustained conservative fiscal policies. The state embarked on a series of tax reforms, which started in 2013 and were the largest in its history. These reforms included reducing the personal income tax rate from a progressive structure topping out at 7.75% to a flat rate of 4.75%, scheduled to drop further to 3.99% by 2026. Corporate tax rates were also slashed from 6.9% to 2.5% — the lowest in the nation for states that levy such a tax — with plans to phase it out entirely by 2030. 

CALIFORNIA HAS YET TO PROVIDE 1,200 TINY HOMES FOR STATE’S HOMELESS THAT WERE PROMISED IN MARCH 2023

These tax cuts were not merely superficial adjustments but were coupled with prudent spending measures. North Carolina’s general fund spending has been managed to ensure essential services are funded without resorting to excessive borrowing.  

The massively slow and expensive construction of the California bullet train project is photographed in Corcoran, California, left, and Hanford, California, right. (Robert Gauthier/Los Angeles Times via Getty Images | George Rose/Getty Images)

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Fiscally conservative policies retired 40% of state debt within a decade, reducing general fund-supported debt from $6.5 billion in 2012 to $3.9 billion by 2021. Moreover, the state has avoided budgetary gimmicks and one-time fixes, focusing instead on long-term fiscal sustainability. 

Spending restraint has been a hallmark of North Carolina’s approach. State legislators have maintained strict controls on spending growth, ensuring expenditures do not outpace revenue. This disciplined approach has allowed North Carolina to build substantial reserves, including a savings reserve (or “Rainy Day Fund”) that currently stands at $4.75 billion, equivalent to just over 15% of the 2023-24 state general fund budget.  

This fiscal prudence has positioned North Carolina to weather economic downturns without resorting to drastic cuts or tax hikes, avoiding volatility in the lives of state workers. 

The result? North Carolina has seen robust economic growth. According to the John Locke Foundation’s 2024 North Carolina Budget, Tax, and Economic Highlights, from 2016 to 2022, North Carolina’s per capita income grew at an average annual rate of 5.3%, higher than the national average and highest among its neighbors. North Carolina’s real GDP increased by a total of 11.4% from 2017 to 2022, which is also higher than the national average. 

In contrast, California has pursued a high-tax, high-spending approach. The state imposes some of the highest tax rates in the country, including a top personal income tax rate of 13.3% and a corporate tax rate of 8.84%. According to the California Policy Center, “In just the last ten years, the General Fund budget has grown by 84 percent after adjusting for inflation and for population growth.”  

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California ranked No. 49 in the Fraser Institute’s 2023 economic freedom report, which evaluates states and provinces based on variables such as government spending, taxes, labor market freedom, and more. North Carolina ranked No. 13.  
 
A significant portion of California’s tax revenue comes from capital gains taxes, making the state highly dependent on the stock market’s performance. In boom times, this can lead to substantial windfalls; however, it also means that revenue is highly volatile and can plummet during market downturns, leading to substantial budget deficits. 

Its expansive spending on social programs, education and healthcare exacerbated California’s fiscal woes. While these programs initially aimed to provide a high level of public service, they have also led to fiscal instability. 

Gavin Newsom speaking at bill signing ceremony.

Democratic California Gov. Gavin Newsom leads a state that has gone from surplus to a huge deficit. (Justin Sullivan/Getty Images)

A key issue is that high tax rates have not translated into stable revenue streams. The Golden State’s reliance on high-income earners and capital gains means that its revenue is highly volatile, fluctuating significantly with economic cycles. The New York Times said, “When the rich do well, the state government reaps a bonanza. But when the stock market slumps or initial public offerings dwindle, revenue plummets.”  

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This volatility makes budgeting challenging and often results in substantial deficits during economic downturns. 

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California’s budget process is further complicated by the state’s commitment to numerous unfunded mandates and pension liabilities. The state’s pension system is underfunded by billions of dollars, putting additional strain on the budget. Despite high tax revenues, the state frequently finds itself in a fiscal crisis, forced to make painful cuts or propose tax increases to balance the budget. 

When a state’s budget is volatile, the effects on state workers such as teachers, state park employees and correctional officers can be profound and destabilizing. Budget unpredictability often leads to cycles of boom and bust, where periods of fiscal surplus may result in temporary increases in salaries, hiring and program funding, only to be followed by sharp cutbacks, layoffs and pay freezes during downturns.  

California ranked No. 49 in the Fraser Institute’s 2023 economic freedom report, which evaluates states and provinces based on variables such as government spending, taxes, labor market freedom, and more. North Carolina ranked No. 13.  

This instability can create a climate of uncertainty and low morale among state employees, who may face the constant threat of job insecurity and reduced benefits.  

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North Carolina’s fiscal discipline offers a blueprint for other states, demonstrating that conservative fiscal policies can lead to economic stability and growth. By maintaining low taxes and controlling spending, North Carolina has created an environment conducive to business and investment, fostering economic resilience even during challenging times.  

California, on the other hand, illustrates the pitfalls of high taxes and expansive spending without adequate fiscal controls. As the nation observes these contrasting outcomes, it becomes clear that responsible budget management, as exemplified by North Carolina, is essential for economic prosperity. States should adopt similar conservative fiscal policies to achieve stable and sustainable economic growth. 

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San Francisco, CA

At Manny’s cafe, group therapy for newly hopeful Democrats

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At Manny’s cafe, group therapy for newly hopeful Democrats


SAN FRANCISCO — They filed in tentatively, taking seats on plush couches and folding chairs arranged in a semicircle in the cafe’s gently lit backroom. Here would be safe to share their deepest feelings, they were assured, to unspool their still-fresh emotions.

And the Democrats gathered at Manny’s — for what looked and sounded a lot like group therapy — had a lot to unpack.

In one of America’s most liberal cities, this is where San Franciscans come when they need a place to process the latest political bombshell. So they did Monday, gathering after President Biden ended his reelection campaign and ceded the spotlight to one of the Bay Area’s own. In confessional tones, person after person reported how their mood had changed overnight: from depression to delight, anxiety to excitement.

The preceding weeks had been traumatizing, the previous 24 hours life-affirming.

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“I think for the first time in months I feel so optimistic,” said Chandru Murthi, a 77-year-old resident who was the first in the circle to share.

Manny Yekutiel imagined exactly this type of discussion when he founded his hybrid coffee shop, bar, bookstore and event space in the Mission district in 2018. The 34-year-old political science major is a longtime Democratic fundraiser and strategist, and he decided to open shop after Donald Trump’s election.

Since then, Manny’s has become a pillar of the city’s political scene, a physical retreat for like-minded souls to talk at a time when so much discourse is chronically online. The back of the cafe is decorated like a living room, with floor lamps, house plants, even a red vintage rug from Yekutiel’s childhood home in Los Angeles.

California Gov. Gavin Newsom, Michigan Gov. Gretchen Whitmer and first lady Jill Biden are among the prominent Democrats who have all stopped in. Vice President Harris, now the party’s likely ticket-topper in the November election, is also a fan. “You’re amazing,” she told Yekutiel during one of her visits.

For anyone looking to do a wellness check on the psyche of a deeply blue stronghold at this historic moment, Manny’s is where to go.

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Responding to Biden’s news, Yekutiel reworked the week’s schedule, starting with Monday’s session. He kicked things off as discussion leader. “Let’s ground this in how we feel right now,” he told the crowd of about three dozen people. “How are we feeling as Democrats, as San Franciscans, as people who have a lot at stake in this election?”

“I feel excited, I feel hopeful,” said Angelina Polselli, 24. “It feels like everyone finally woke up from a long, long nap.”

As Manny’s resident Gen Z expert, she noted that young people have some concerns with Harris, particularly her record as a prosecutor. But there’s also the “brat” factor, which Polselli had to explain to an audience who appeared largely unfamiliar with the catalogue of Charli XCX.

“It feels exciting to have a young candidate who is energized and youthful and who is also talking to young people and using the language we use,” she added.

Soon, however, that familiar fear crept back in.

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“I’m a little bit worried about a San Francisco liberal carrying the battleground states,” said Dan Rink, 81 and himself a liberal from the Bay Area.

“I’m not sure she’s a liberal, I view her as more moderate,” David Anderson, 55, a film industry veteran, chimed in.

Yekutiel took a poll: “How many of you, if you’re willing to raise your hand, are worried about her ability to win?” About half the circle responded, though several acknowledged they were “more hopeful than 24 hours ago.”

Hope has been in short supply all year for this crowd. Enthusiasm, even shorter.

“The last few weeks were really difficult because people have just felt this dread, that there’s no point,” Yekutiel said. “And now I have all these ideas, my mind has been racing, people are reaching out to me, asking how they can help. That was not happening 24 hours ago.”

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Two nights later, Manny’s hosted a watch party for Biden’s Oval Office address, his first since exiting the campaign. Despite the new themed drinks — “Kamalattes,” sweetened with coconut syrup, of course — the affair was solemn.

As the president’s speech played on a small TV opposite the barista station, some 20 people fell silent and clustered around the screen. Passersby stopped to watch through the cafe’s open front windows. A woman named Lydia walked in to order a mocha and wound up staying for the whole thing.

The elated embrace of Harris expanded to a tearful appreciation of Biden.

“I felt in his voice and his speech and his words so much love for this country,” Michelle Jeong said, choking up. “The hope, unity and the lack of ego.”

For Mike Madison, who had also attended the Monday gathering, the sentiment was overdue. Lost in the memes and the Harris hullabaloo was the fact that Biden had just made a tremendous sacrifice, he said.

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“I wanted people to remember what he’s done, his real accomplishments,” Madison said.

If night one’s theme was relief and celebration and night two’s was gratitude, a third event Thursday was something of a reality check. It was also the largest gathering of the week, squeezing about 175 people into Manny’s backroom for a panel featuring two journalists dissecting the upcoming campaign and Harris’s prospects for victory.

“It’s not going to be easy, let’s be clear. It’s not going to be easy to win in November,” said Scott Shafer, politics editor at KQED, a Bay Area public radio station.

The evening served as a call to action: “This is our hometown candidate, she’s one of us,” Yekutiel said. “So we are going to be needed to propel her to this highest office.”

For those interested in getting involved, he announced a very San Francisco option: A “disco for democracy” party, with proceeds going to get-out-the-vote efforts in neighboring Nevada. Only days earlier, when Biden was still heading the Democratic ticket, such festivities were a harder sell, Yekutiel said. But now there was something to dance about.

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Lalita Abhyankar, a physician, was ready to volunteer. “I want to knock on doors,” she said. “I’ve never felt this way about a candidate, not even Obama. … I can vote for her instead of just voting against Trump. It feels amazing.”

Thursday was her first time at a Manny’s discussion, she said. A friend told her it was the place to be this week, and she wanted company as she reveled in her new enthusiasm. Sometimes even those who didn’t know they cared leave Manny’s fired up — like the woman who happened to walk in just before Biden’s address.

“She came in for a mocha and participated in a major historic moment,” Yekutiel said. “That was my vision for this place — you trap people with beer and coffee so they don’t even realize they’re walking into a political space. And then, they’re in.”





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Denver, CO

Rockies, dominated by Giants’ Kyle Harrison, lose ninth straight in San Francisco

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Rockies, dominated by Giants’ Kyle Harrison, lose ninth straight in San Francisco


The Rockies lost their momentum in San Francisco. Again.

Coming off a 4-2 homestand culminating with a 20-7 bombardment of the Red Sox on Wednesday, the Rockies were manhandled by left-hander Kyle Harrison Friday night at Oracle Park.

Harrison allowed one run on one hit over 6 2/3 innings as the Giants routed Colorado 11-4 Friday night at Oracle Park. Harrison matched a career-high with 11 strikeouts.

Harrison got a big assist from sizzling rookie shortstop Tyler Fitzgerald, who launched a pair of two-run homers as he continued his magical July. All told, the Giants hit four home runs.

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The Rockies, 14-37 on the road, have lost nine consecutive games at Oracle. Since the start of the 2021 season, they are 5-24 in the City by the Bay.

“Overall, it was a tough one tonight,” Rockies manager Bud Black told reporters in San Francisco. “Harrison was the key.”

With left-hander Kyle Freeland on the mound, the Rockies took the field with a puncher’s chance. After all, Freeland came in riding a streak of five consecutive quality starts, during which he posted a 1.95 ERA.

Although Freeland struck out eight and escaped jams in the second and third with clutch punchouts, he was tagged for two home runs. Jorge Soler led off the first with a blast to left, and Fitzgerald ripped a two-run homer to left in the fourth. Heliot Ramos and Casey Schmit also tagged Freeland for triples to right-center field.

Freeland got the hook after four innings, charged with six runs on eight hits.

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“Kyle had to work hard and they had some good at-bats against him,” Black said. “Kyle’s stuff was good, but they worked him hard, they really did. And he just couldn’t seem to find the inside corner enough with the fastball.”

Fitzgerald’s second two-run homer came in the sixth inning off Tyler Kinley, extending the Giants’ lead to 8-1.

Fitzgerald, who homered in five straight games from July 9-23, is riding an eight-game extra-base hit streak, the second-longest by a Giants rookie since 1900. It trails only Hall of Famer Hack Wilson’s nine-game streak in 1924.

Fitzgerald’s overall hitting streak is now at nine games, during which he’s hit .452 (14 for 31).

Plain and simple, Harrison owns the Rockies. He’s 3-0 with a 2.22 ERA and 28 strikeouts. On May 7 at Coors Field, he pitched a career-high seven scoreless innings, allowing just four hits in San Francisco’s 5-0 victory.

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Powered by a two-run double by Brenton Doyle in the eighth, the Rockies’ hibernating offense woke up late. But it was too little, much too late, especially after Heliot Ramos crushed a three-run homer off reliever Ty Blach in the eighth.

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Seattle, WA

Former Seattle mayor Charley Royer dies at 84

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Former Seattle mayor Charley Royer dies at 84


Charley Royer, Seattle’s longest-serving mayor, has died at age 84. He was the city’s 48th chief executive.

Royer was ahead of his time in many ways. He established low-income housing to combat homelessness. Royer decided that the city would recognize domestic partnerships and provided city benefits to those families. He oversaw the development of the Washington State Convention Center.

Royer was born in Medford, OR in 1939. He joined the Army in 1961 and after leaving the Army studied Journalism at the University of Oregon. Royer worked for KING 5-TV.

KIRO Newsradio last spoke with the three-term former mayor in 2023, when he weighed in on the whereabouts of the “Seattle Spirit” in modern times.

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“Our spirit is not pep rally spirit,” Royer said. “It’s almost a ‘golden rule’ kind of spirit, and it’s something that I think still exists. But when you start growing as fast as we have been growing, you get a lot of people who don’t know the handshake,” he continued, using the metaphor of fraternal organizations with arcane traditions. “They don’t know that they’re supposed to not be angry about gay people. They don’t know that Republicans sometimes, like Dan Evans and a bunch of Republicans we had in office, are for the environment, they’re for people paying their fair share of taxes.”

As Royer told it, it was almost like that 19th-century Seattle Spirit morphed and evolved into the 20th-century Seattle Process, which is the sometimes – OK, often – pejorative name for a style of big-tent public engagement in decision-making which can seemingly go on for years or even decades, which can often frustrate citizens watching from outside the big tent.

Royer said the modern version of the Seattle Spirit is also about getting over old rivalries like the one with Tacoma – which dated to the railroad age but which continued until recently.

“I couldn’t believe it when the Port of Tacoma decided that it would partner up with the Port of Seattle,” Royer said. “They were fierce competitors. Tacoma and Seattle have always competed for business, and it’s been unhelpful to everybody.

“Our cities in the region have not collaborated and so those grudges and competitions have blinded us to some opportunities,” Royer added.

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When asked by KIRO Newsradio to give advice to incoming mayor Bruce Harrell, he said good working relationships with the city council and the media are key.

“Don’t criticize the council, even in private with your department, and don’t engage in bad mouthing the council with the citizens or with others who have some case against the council,” Royer said. “They know it when you’re doing that, it’s almost like an animal kind of sense that they sense that you have been talking about them, or they hear about it, and that will negate any entreaties you make with the council, or any approach you make for the council to try to work with them. So don’t engage in that, and certainly don’t engage in beating up the press.”

One big part of that skill and leadership emerging and taking action, said Charles Royer, is about the timing and about a critical mass of the public having the will and the stomach necessary to tackle the big issues.

Royer said honesty is critical to a functional political system. Even though Royer didn’t share the political views of Ronald Reagan, who was president during much of Royer’s tenure at Seattle City Hall, he did admire him.

“I thought he was a pretty good president. And he was an honest man, I think, and he was a caring person,” Royer said. “But he also told the truth. He may occasionally have, in some of his stories, bent the truth a little bit to his advantage – particularly if he was campaigning – but he didn’t outright lie.”

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Royer is survived by his wife Lynn Claudon, two children; Suzanne Royer McCone and Jordan Royer, and 4 grandchildren and one great grandchild. The cause of his death is not known.

Contributing: KIRO 7

You can hear Feliks every Wednesday and Friday morning on Seattle’s Morning News, read more from him here, and subscribe to The Resident Historian Podcast here. If you have a story idea, please email Feliks here.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here. 

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