A thorough look at the new two-year state budget
The NC Budget and Tax Center released a new report today showing that the two-year budget approved by state legislators and signed by Governor McCrory falls far short of what is required to meet the needs of children, working families and communities. Although the 2014 budget exceeds last year’s in overall dollars, spending falls short of what is needed in 4 of the 6 major budget areas—including public education (see the chart below). And, spending as a share of the economy is still below the 40-year average.
Instead of investing adequate resources in schools and the other building blocks of a strong and enduring economy, state lawmakers chose to make room for tax cuts for the wealthy and profitable businesses that will cost more than $2 billion over the next five years. State lawmakers could have made better choices by pursuing true tax reform that would have strengthened revenues and allowed the tax system to grow with the economy. That would have put North Carolina on a stronger path to recovery. Instead, they chose to go in the opposite direction.
Consequently, the budget fails to keep up with a growing population and changing needs, weakening a number of vital services that directly benefit families and the state’s economy. Here are a few of the noteworthy items in the budget:
- The budget fully funds the enrollment growth in K-12 schools but makes harmful cuts—such as reducing funding for teachers, which could increase the number of students in each classroom, and eliminating funding for 1 in 5 teacher assistants—that will make it harder for kids to learn. It also provides $10 million for children to attend private and religious schools through a voucher program.
- The budget increases funding for Medicaid to cover enrollment growth, higher drug prices and other cost increases, but cuts the number of doctor visits it will pay for to 10 from 22, increases co-payments, and lowers reimbursement rates for providers.
- The budget cuts 2,400 at-risk students from pre-Kindergarten education. It uses lottery receipts to fund 2,500 additional slots for kids in the NC Pre-K program, down from the 4,900 additional slots that were temporarily funded last year.
- Economic development investments will be shifted from low-income, distressed populations and communities and directed toward more broad-based efforts that appear focused on attracting more businesses to North Carolina.
To learn more about what made it—or didn’t make it—in the final budget, check out our new report that provides an overview of the funding changes with a specific focus on how it would affect low- and moderate-income North Carolinians.