NC Budget and Tax Center

The News & Record had an editorial this weekend on the inconsistent choices policymakers have made as it relates to tax code spending. Some tax breaks have ended while others remain and even may get expanded this session. From the piece:

Tax breaks for movie productions and historic property renovations are out. Tax breaks for more data centers are in. The North Carolina legislature is still picking “winners and losers,” but the criteria have changed.

The bottom-line is that policymakers have not established the appropriate processes to evaluate tax code spending and base their decisions on the results of such analysis. Nor do they have a set of economic development goals that reflect the realities of different regions and the needs of North Carolinians.

The result is that the pursuit of ideological purity by eliminating all tax breaks no matter their public good often falls prey to the influences of various political forces that continue to carve out special tax breaks, often inconsistently.

As we noted in a recent piece on the options available to policymakers to address the revenue shortfall, a renewed look at tax code spending is needed. So too is a criteria and process for evaluating that spending against a set of shared and relevant goals for our economy.

News

After a slow start thanks to snow and ice wreaking havoc on legislative meeting schedules for the past two weeks, members of the House K-12 Education committee finally gathered this morning to get acquainted and begin moving legislation.

Rep. Craig Horn (R-Union), co-chair of the committee, introduced House Bill 18, “Planning Year for CIHS,” which would provide institutions seeking Cooperative Innovative High School (CIHS) status (also known as early college high schools) with a planning year prior to opening.

Members of the committee approved the bill, but stripped its $750,000 appropriation that was recommended by the House Study Committee on Education Innovation.

Also up for debate was HB35, “Education Innovation Task Force,” which Rep. Elmore said would offer a more permanent solution for the work of the Education Innovation study committee by establishing a permanent entity to examine innovative practices happening in schools across the state of North Carolina.

The task force would comprise 19 politically appointed members that would include teachers, parents, administrators and lawmakers.

Rep. Jimmy Dixon (R-Duplin, Wayne) stressed the importance of choosing for the task force teachers and school officials who are near the end of their careers. “I have found in my district a tremendous hesitancy for school teachers and school personnel to speak up out of various concerns that they have from the administrative level,” said Dixon.

“There’s great wisdom to be gained once teachers who have been in the trenches for a long time understand where the problems are and are unencumbered by the fear of retaliation if they speak up,” said Dixon.

Members approved HB35.

Earlier this morning, the joint education appropriations committee met to continue the orientation process before getting down to work on the state education budget. For a thorough look at how the state funds North Carolina’s schools, check out this presentation by the Fiscal Research Division’s Brian Matteson.

NC Budget and Tax Center

Senate Bill 20 passed another hurdle this morning, moving out of House Finance and to the floor for a full vote.  As I recently highlighted, state lawmakers are pursing tax changes that would further shift responsibility for paying for public investments and services to low- and middle-income taxpayers and away from the wealthy and profitable corporations.

Senate Bill 20 includes a provision that would no longer allow taxpayers to deduct expenses for tuition and related expenses such as course-related books, supplies, and equipment. The federal tax code includes this deduction, but state lawmakers are proposing that the deduction be done away with.

Eliminating this deduction would come at a time when North Carolina students and families have seen a steady increase in the cost of a college education. And this trend will likely continue, as another round of tuition increases look to be on the horizon for students attending public universities in the state. Meanwhile, state funding for need-based financial aid has not increased in recent years, meaning students likely have to incur increasing amounts of student loan debt. Read More

Commentary

There are new numbers out out today that confirm the remarkable, ongoing and encouraging growth of North Carolina’s immigrant population. As the American Immigration Council reports:

“Immigrants, Latinos, and Asians account for growing shares of the economy and population in the electoral swing state of North Carolina. Immigrants (the foreign-born) make up 7.6% of the state’s population, while more than one in 10 North Carolinians are Latino or Asian. Moreover, Latinos and Asians wield $25.7 billion in consumer purchasing power. At last count, businesses owned by Latinos and Asians had sales and receipts of $10.1 billion and employed more than 63,000 people. As the economy continues to grow, North Carolina can ill-afford to alienate such a critical component of its labor force, tax base, and business community.”

The following infographic provides more details:

Immigrants infographic 2015

Commentary

The good folks at Environment North Carolina and Environment America are out with a new report that flags one of North Carolina’s biggest industrial polluters for polluting our national policy debate as well. This is from the release that accompanied the report:

New Report Links Smithfield River Pollution to Political Spending

Raleigh, NC – The owner of Smithfield Foods spent $1.4 million on lobbying in a single year, according to a new report by Environment North Carolina The enormous spending came after Smithfield Packaging dumped over 2.3 million pounds of toxic chemicals into North Carolina’s waterways in 2012.

“Spending millions on lobbying and campaign contributions shouldn’t give polluters a free pass to dump toxins into our waterways,” said Liz Kazal, Environment North Carolina Field Associate. “We need to do more to ensure that the streams that flow into places like Jordan Lake and the Deep River are protected.”

Environment North Carolina’s report links discharges of toxic chemicals as reported in the EPA’s Toxics Release Inventory for 2012 with federally reported campaign contributions and lobbying expenditures for 2014.

Major findings of the report include:

  • Smithfield Foods dumped 2,339,770 pounds of toxic pollution into North Carolina’s waterways.
  • Smithfield Packaging Company spent $1.4 million dollars on lobbying and $204,006 on 2014 campaign cycle.

Right now, polluters are lobbying their allies on Capitol Hill to derail EPA’s plan to restore Clean Water Act protections to 135,907 miles of streams in North Carolina. Loopholes in the law currently leave the waterways that feed the drinking water for 4.7 million North Carolinians at risk.

The report goes on to explain the horrific impact of water pollution like Smithfield’s (both on our natural environment and surrounding businesses). Click here to read more and learn about corporate lobbying to block clean-up efforts by the federal EPA.