A NC Seante bill (S.717) would place a constitutional amendment on the November 2022 ballot to limit the growth of state spending. The proposed constitutional amendment, known as the Taxpayer Bill of Rights or TABOR, would make several changes:
- It would limit growth in state spending to a formula based on population growth and inflation. State legislators could only exceed this formula by a two-thirds vote of both the NC House of Representatives and the NC Senate (which would be unlikely to happen in most circumstances).
- If the state collected more tax revenue than the spending allowed in the constitutional formula, legislators would have to put 15% of the excess revenue into the state’s savings reserve fund. Legislators could only use the state savings reserve fund – or put in less than 15% of excess revenue into the fund each year – by a two-thirds vote of both the House and Senate.
- State and local governments would only be able to “impose or increase any tax” if the majority of voters in the relevant jurisdiction approved of the tax increase (or new tax). This provision would make it much harder for the state of North Carolina or for counties or cities to generate new revenue. It is unclear whether this provision would protect nonprofits from tax law changes that effectively create new taxes on nonprofit organizations (e.g., new limits on sales tax refunds or exemption).
In the past, the Center has opposed similar proposals to create a TABOR constitutional amendment in North Carolina. If enacted, TABOR would limit the ability of state and local governments to pay for services provided by nonprofits, while at the same time relying on nonprofits to provide more public services that governments can no longer afford to offer. Colorado is the only state that has fully implemented a version of TABOR. According to the Colorado Nonprofit Association: “TABOR has undermined the ability of Colorado nonprofits to meet current demands for services and respond to future changes in economic conditions, population growth, and the costs of delivering public services.”
To become law, the constitutional amendment would need to pass both the House and Senate by 60% super-majority votes (meaning it would need bipartisan support). If legislators approve it, a majority of voters would need to vote in favor of it on the November 2022 ballot. Unlike most bills, the Governor cannot veto constitutional amendments (and does not need to sign them into law).