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Overview of the House budget proposal, with an eye to the impact on low-income North Carolinians

Late last evening, the House leadership released their full $20.6 billion budget proposal [1] (with money report [2]) for the next fiscal biennium. This proposal includes a placeholder for their long-awaited tax reform plan, which anticipates deep reductions in tax rates and significant revenue losses [3], putting North Carolina on an unfortunate path to mediocrity.  Along with the effort to repeal the estate tax, the House tax plan represents a major tax shift [4] and would strip the state of more than $525 million that could be used to fund vital public services, help get North Carolinians back to work, and build a strong economy.

North Carolina cannot afford to pay for tax cuts for the top at the expense of teacher layoffs, growing waiting waits for critical public services, and higher tuition rates. As the chart below illustrates, state spending under the House proposal would continue to remain well below pre-recession levels even though spending over the base budget would slightly increase thanks to the slight uptick in revenue. See this chart [5] to see how the House proposal compares to the Senate and Governor’s proposals.

CHART-House Proposal Compared to Base Budget and Pre-Recession_June10pptx [6]

The full House Appropriations Committee will meet tomorrow morning to review, discuss, and vote on the appropriation items and special provisions. Here’s a short list of noteworthy items in the major budget areas:

K-12 Education

Community Colleges and UNC System

Health and Human Services

Natural and Economic Resources

Justice and Public Safety

Miscellaneous

The North Carolina Budget and Tax Center will continue to closely examine the House proposal.  And tomorrow, we will break down the general fund availability statement to give you an idea of how the House leadership pays for their budget.