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Politics
These fact checks of North Carolina politics are a collaboration between PolitiFact and WRAL. You can hear them Wednesdays on WFAE's Morning Edition.

Fact Check: New Attack Ad Says Cunningham Voted For Over $1 Billion In New Taxes As State Senator

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In the race for U.S. Senate in North Carolina this fall, Democrat Cal Cunningham is challenging incumbent Republican Thom Tillis. In a new ad, the National Republican Senatorial Committee attacks Cunningham’s’ voting record when he was a state senator from 2001 to 2003. The ad says Cunningham voted for over $1 billion in new taxes covering sales, health care, alcohol and more. Joining us to assess those claims is WRAL’s Paul Specht.

Marshall Terry: So, did Cunningham, in fact, vote for over a billion dollars in new taxes?

Paul Specht: He did. And this goes back to the year 2001 when he was in the state legislature. The state faced what it believed to be an $800 million budget shortfall. And so to make up for it, the Democrats who controlled the state legislature passed a budget that included $1 billion in new taxes and fees to try to head off that shortfall.

Terry: And were taxes increased on all the things mentioned in the ad?

Specht: Yes, all of that. It was a very broad package. The income tax was mostly on the wealthy, but there were various fees. I mean, even for obscure things like satellite dish installation and things like that. And back then, more people had landline phones and those were taxed at a higher rate. The biggest thing that stood out to the experts we spoke to was the half-cent sales tax increase. The statewide sales tax jumped from 4% to 4.5%. But, yes, it's sort of across the board increases in that budget.

Terry: What has Cunningham said about that vote?

Specht: He says that it saved North Carolina's financial standing. At the time, back in 2001, because of this shortfall, people were worried that it would affect the state's credit rating, which was AAA. Obviously, if that were to go down, the state would have to pay more to borrow money, which eventually could also affect taxpayers. And so he's defended the vote, saying that it helped preserve North Carolina's credit rating and also just shored up the budget and saved jobs. It went toward teachers and he says it established more pre-K classes and things like that. And so he's defended it. He hasn't shied away from it.

Terry: And did it do all those things that he said it did?

Specht: We didn't look into every single one of his claims. He hasn't put that those claims in an ad. But from what we can tell, it did reduce class sizes and it did help teachers.

Terry: As part of your reporting, you reached out to two think tanks about the 2001 budget decision to get a kind of historical perspective on it. What did they say?

Specht: What was interesting about speaking with Civitas, which is conservative, and the North Carolina Justice Center, which is more liberal, is they both said that there was a sense of a threat of losing that AAA credit rating. There was shakiness just around North Carolina's financial standing and that the state did have to do something.

Now, obviously, the conservative think tank, Civitas, would prefer that the state cut spending, whereas the liberal think tank, they did say that they agreed that actions were necessary to preserve North Carolina's financial standing.

And what I found most interesting was that Civitas, the conservative group, and the North Carolina Justice Center, the liberal group, both agreed that the sales tax increase was what they call regressive, meaning it affected people at the lowest rung of society. People who are lower middle class and lower class. This affected them because the sales tax was applied to items that everyone needs every day.

Terry: So how did you rate the claim that's in this ad?

Specht: We rated this true. Now, the ad said Cunningham voted for over $1 billion in new taxes. It didn't mention the 2001 budget or all the circumstances surrounding that state budget vote, but it's accurate. Cunningham was a state lawmaker. He voted for that budget and he's defended it. And so we rated it true.

Terry: All right. Thanks, Paul.

Specht: Thank you.

Terry: That's Paul Specht of WRAL. These fact checks are a collaboration between PolitiFact and WRAL. You can hear them at Wednesdays on WFAE's "Morning Edition."

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