N.C. Budget and Tax Center Statement on Senate Budget Vote

The Senate Budget passed today will move to the House for a vote as early as Saturday.  The Senate Budget fails to strengthen the public structures necessary to put the state on a path to economic recovery and long-term prosperity at a critical time.

Recent national data points to the potential for a double-dip recession driven primarily by weak consumer confidence, ongoing housing challenges and the failure of private businesses to add jobs. The increased unemployment, declines in public investment and impacts on private markets that will result from the Senate Budget is likely to further undermine North Carolina’s slow climb out of the Great Recession.

While the Senate budget may spend more than legislative leaders initially announced, it did so by putting the state in a more precarious fiscal position in future years and moving us further away from the fundamental goal of providing for the common good.  This is not the path to a stronger economy, better quality of life and more broadly shared prosperity for all North Carolinians. 

Instead of taking meaningful steps to ensure the fiscal health of the state, the Senate budget uses only one-time funds, fee increases, and diverted deposits to pension commitments to only partially address the increased demand for public structures in communities across the state.  These demands will not go away.

Indeed, as the Budget and Tax Center has documented, over the Great Recession the need for everything from early childhood education to Medicaid outpaced state investments.  Since the state has divested from many preventive programs that can reduce long-term costs and generate significant long-term benefits to the state, North Carolina can continue to expect growing needs into the future.

Moving forward, the State’s problems are two-fold: the Great Recession has created tremendous job loss and economic hardship, and the state’s revenue system is out-of-date and unable to support the public structures that build a stronger economy in an equitable way. Make no mistake, the Senate budget will cost North Carolina far more than it claims to save by generating negative economic and employment impacts that will ripple through the broader economy.

Furthermore, rather than taking a meaningful first step to modernize the state’s revenue system, the Senate instead proposed a costly exemption for business income that will not create jobs.  Also, rather than thoroughly reviewing North Carolina’s many significant tax expenditures in order to assess their purpose and effectiveness, the Senate abandoned their proposal to cut a select few.  The result is a revenue system that remains inadequate, volatile and asks even less from those who have benefited the most from an economy supported by strong public structures.

This short-sighted approach does not provide a sustainable solution to the current fiscal crisis and will lead to a longer period  of uncertainty and hardship.  North Carolina is in need of leadership that will set North Carolina on a sustainable path for the long term and call us all to a more collective purpose again.

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