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North Carolina lawmakers didn't show much creativity when writing a new state budget. After cutting all the spending they dared, they enacted the usual tax increases to close the remaining funding gap. The big hit to everyone's pocket is a penny boost to the state's sales-tax rate.

It doesn't give legislators much to brag about to their constituents. If only they could have reduced tax rates instead.

That was possible, but lawmakers unfortunately didn't have the foresight or fortitude to do it. It would have required bold tax reform, and they just weren't up to the job of thinking creatively during the chaos of an ordinary legislative session.

Instead, the House and Senate finance committees will attempt to write a tax-reform plan this fall. The potential benefits can make the extra work worthwhile.

Lowering tax rates is a goal that should motivate any politician. It can be achieved without sacrificing government revenues if legislators can broaden the tax base, which means taxing services as well as goods.

North Carolina's service economy has expanded, but the tax code has not kept up. The state is missing out on hundreds of millions of dollars of annual revenue it could collect by taxing personal services, home or auto repairs, warranties, moving expenses, recreation and entertainment activities and so on. But, if it taxed more widely, the state would have to tax at lower rates. While the public shouldn't support a revenue grab, it should demand tax fairness. It's not fair that someone who serves meals has to charge a sales tax while an attorney who sells legal advice does not.

Broadening the tax base also would allow the state to reduce corporate income tax rates, which remain higher in North Carolina than in neighboring states. This drives up the cost of doing business here and creates a competitive disadvantage.

Many other tax-reform proposals have been advanced by business groups, the Emerging Issues Forum and others. Gov. Bev Perdue and leaders in the state Senate have embraced many reform ideas. Resistance from House leaders halted progress during the just-ended legislative session.

The state still can move forward on this front over the next year or two. Not only should the tax code reflect the changes to North Carolina's economy, it should produce a more reliable revenue stream. A broader base should achieve greater stability.

And, while they're at it, the governor and legislative leaders should do more to make sure that state government agencies operate efficiently. The most creative tax reform will be meaningless if revenue isn't well spent.