West
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?
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)
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.”
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.
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.
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.
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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Alaska
Environmental groups ask judge to pause Alaska’s bear cull program scheduled for this month
Two environmental groups are asking an Anchorage Superior Court judge to pause a program killing bears in the southwest part of the state before it gets underway later this month.
The plaintiffs in the case, the Alaska Wildlife Alliance and Center for Biological Diversity, are seeking a preliminary injunction. Their attorney as well as a lawyer for the state of Alaska argued before Superior Court Judge Adolf Zeman on Friday afternoon in Anchorage.
The state’s intensive management efforts are slated to resume this month for a fourth season. Since 2023, personnel with the Alaska Department of Fish and Game have used small airplanes and a helicopter to kill 191 bears in a remote part of Southwest Alaska between Dillingham and Bethel where the Mulchatna caribou herd calves each May.
Proponents of the program in the department and on the state Board of Game argue that predation from bears is a primary reason the Mulchatna herd has drastically declined over the last decade, and that they are required by state statute to implement policies that will increase the abundance of prey species for subsistence users and hunters.
At issue in Friday’s hearing is a dispute over whether policymakers used sufficient biological data to justify the program when it was authorized. The Mulchatna predator control policy was initially approved by the Board of Game in 2022, and in the years since, a series of legal challenges has played out in lawsuits and regulatory meetings.
The lawyer for the plaintiff, Michelle Sinnott, said the emergency request for an injunction is needed because there could be irreparable environmental harm if the state goes forward with aerial gunning this month.
“The state will start killing bears any day now under an unconstitutional predator control program,” Sinnott argued.
Much of the plantiffs’ argument that the program is illegal under Alaska laws hinges on the assertion that the Board of Game and state wildlife managers don’t have enough credible data on the region’s bear population to responsibly justify removing hundreds in a few years without causing ecological devastation. The injunction, they argued, is necessary because time is of the essence, and letting the constitutional challenge play out along the court’s normal timelines is insufficient.
“(The state) could kill a hundred more bears before being told once again that it needs bear population data,” Sinnott said. “Killing a bear permanently removes that bear from the landscape. That harm is irreparable.”
Kimberly Del Frate, the lawyer for the state, disputed that there was insufficient data weighed by the Board of Game when it reauthorized the bear cull program last summer.
“The plaintiff’s case is built upon a foundation of an incorrect and faulty premise. What became clear through the plaintiff’s argument is that their understanding of the record is that the Board considered nothing new and no data in July of 2025,” Del Frate said.
She pointed to several different metrics evaluated by policymakers in reapproving the predator control program after it was halted last spring by a separate lawsuit. Among the data managers presented to the board, Del Frate said, was an estimated 19% increase in the Mulchatna herd’s population. The state needs to continue with aggressive bear culling this spring, she argued, for that trend to continue and not be prematurely “stunted.”
Sinnott raised a point made by critics asserting that managers have relied on shoddy data collection methods far below the standards of sound wildlife biology in justifying the Southwest bear culling.
The rebuttal to that criticism from the state during Friday’s hearing is that it is not the court’s job to evaluate the relative merits of data used by officials setting policy.
If the court agrees to an injunction, state crews would be legally barred from killing bears this season. Should the state prevail, however, aerial gunning could begin in mid-May and last approximately three weeks with no limit on the number of bears killed.
Zeman concluded Friday’s hearing by clarifying that his ruling “won’t be today, but it will be soon.”
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California
How Tom Steyer’s unexpected alliance with progressives vaulted him into the top tier of California’s governor race
When the Bernie Sanders-aligned Our Revolution endorsed Tom Steyer in the unwieldy California governor’s race, the irony of a progressive group founded on an anti-billionaire ethos backing a multibillionaire wasn’t lost on its leader.
“If you had asked me a year ago, ‘Oh, are you going to endorse a billionaire for anything? I think that would have been highly unlikely,” Joseph Geevarghese, Our Revolution’s executive director, said in an interview.
But Geevarghese said he’d been impressed with Steyer’s policy platform and engagement with liberal groups in the state.
“The most energizing and ideologically aligned candidate just happens to be a billionaire,” he said.
The unexpected alliance between progressives and Steyer — a hedge fund founder who’s faced criticism for past investments in controversial spaces like private prisons — has helped vault him into the top tier of a California governor’s race that lacks a clear favorite one month out from the all-party primary.
Despite initial skepticism from liberal groups and politicians in the biggest Democratic state in the country, Steyer managed to stay in the conversation with his consistent push for progressive priorities, like single-payer health care, taxing the profits of oil companies and a billionaire tax that is likely to appear on the ballot this fall.
Former Rep. Eric Swalwell’s exit from the crowded race last month and the struggles of other progressive candidates — including former Rep. Katie Porter, who’s backed by Sen. Elizabeth Warren — to gain traction helped further clear a lane for Steyer as he pumped more than $120 million of his own money into his campaign.
Irene Kao, the executive director of the progressive group Courage California, said their endorsement of Steyer in April “came as a surprise to us.” “But a lot of our work has to do with holding corporations and the wealthy accountable — so in some ways, we feel like it is a good thing that voters and people are approaching Tom Steyer in this race with that sort of skepticism and holding him to account, trying to get him to respond to his past investments and to talk about his story and development since then,” Kao said.
“But again,” she added, “it is really important for people to be really wary about the wealthy, how they generated their wealth and what they do with it.”
Steyer has noted that his hedge fund sold its holdings in the private prison space and that he exited the fund itself in 2012. He has apologized for the investment too, calling it a “mistake” and has run ads responding to the criticism.
Democratic state Rep. Alex Lee, the chair of the California Legislative Progressive Caucus, was one of the first state lawmakers to endorse Steyer in February. But even he recalled feeling “skeptical” about Steyer when he heard that he was running.
“I’m very sympathetic to voters who are skeptical of voting for a billionaire,” he said.
But as the field became clearer in recent months, Lee felt like Steyer had firmly taken over the progressive lane among Democrats in the race.
“Frankly, look at the other options,” Lee said.
Progressive support for Steyer didn’t come out of nowhere. Following his career at Farallon Capital, Steyer emerged as an outspoken climate advocate and founded NextGen America, a progressive PAC working on climate, health care and reproductive rights. His unsuccessful 2020 presidential run focused heavily on climate issues.
Steyer launched his gubernatorial campaign in November, and even before his latest endorsements, he’d already secured the backing of the state’s largest nursing union.
Still, even after deploying his massive war chest and picking up a stream of progressive endorsements, Steyer remains lumped together with a handful of other candidates in the polls in the race to succeed Gov. Gavin Newsom. Candidates from all parties will appear on the same June 2 primary ballot, with the top two vote-getters advancing to the November general election.
Democrats have been desperate to unite behind one candidate to avoid a dreaded outcome of two Republicans emerging, but have struggled to do so. Ballots go out in the mail for early voting this weekend.
At the outset of the race, many Democrats assumed that the progressive lane was Porter’s to lose. A former student of Warren’s, Porter rose to prominence as a member of Congress for her sharp questioning of Trump administration officials during his first term and for her use of whiteboards to help unwind how big pharmaceutical companies hiked drug prices and to uncoil bank fraud scandals.
But her gubernatorial campaign got off to a rocky start after videos showing her yelling at a staffer and engaging in a tense interview with a local TV reporter both made waves nationally. (Porter apologized after each clip surfaced last year).
Progressive groups and lawmakers acknowledged that those videos contributed to their decisions to endorse Steyer.
“Some of that came up,” Geevarghese said. Kao said the videos “certainly were part of the equation.”
But California progressives also said they had questions about Porter’s consistency when it came to certain policies, and they ultimately felt that Steyer had simply advocated for their priorities more forcefully and more frequently.
Lee, who had endorsed Porter during her unsuccessful 2024 Senate run, said he chose Steyer this time around because he is “running a progressive policy-first campaign and that is what a lot of people wanted to see — and I just think people didn’t feel that or see that her in her gubernatorial run.”
Nonetheless, Porter has been endorsed by a number of prominent progressive elected officials, including Warren — who appeared in a campaign ad for her released Friday — Rep. Robert Garcia, D-Calif., and the group End Citizens United. A tracking poll released April 20 by the California Democratic Party found that Porter was still earning the most support among self-identified progressive voters.
“Steyer made his billions off of investments in Big Oil, Wall Street, and private prisons — the very industries that Katie’s spent her entire career holding accountable. Katie has consistently fought for disenfranchised Californians, while Steyer’s fought only for himself,” Porter campaign spokesperson Peter Opitz said in a statement.
Meanwhile, progressives interviewed by NBC News also offered criticism of former Health and Human Services Secretary Xavier Becerra, who’s seen his standing in the polls rise following Swalwell’s exit.
“I get very bristled by the fact that people are trying to pretend that he’s something he’s not. He has never on the campaign trail even claimed to be progressive,” Lee said.
Lee and others have criticized Becerra in particular for his role in handling the migrant crisis when he was in the Biden administration; for refusing to release certain police records related to officers who used deadly force when he was California’s attorney general; and for taking campaign contributions from Chevron.
A Becerra campaign spokesperson didn’t respond to questions from NBC News.
Recent polls show the gubernatorial field remains jumbled. A CBS News/YouGov survey released this week showed that 15% of registered voters backed Steyer. Becerra was at 13%, Porter was at 9% and no other Democrat had above 4%.
The poll also found that the two prominent Republicans in the race — former Fox News host Steve Hilton and Riverside County Sheriff Chad Bianco — were still in the top tier. Hilton, who is endorsed by President Donald Trump, led all candidates, with 16%, while Bianco got 10%. All of these top-polling candidates fell within the survey’s margin of error.
A debate Tuesday night at Pomona College featured frequent sparring between Becerra and Hilton, as both candidates attempted to appear as their party’s frontrunners. They’ll all meet again for two debates on Tuesday and Wednesday.
As for Steyer, he repeatedly referred to himself during his closing statement as a “change agent” and made the case for why progressives should rally around him.
“We’re going to have to take on the corporate special interests that are driving up your costs and profiting off you,” Steyer said. “I am the person who is willing to do that. I am the change agent.”
“The people who support me are progressive — progressives, environmentalists and unions, including teachers and nurses,” he added. “If you want change, there’s only one person on this stage they’re scared of.”
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