NC Budget and Tax Center

A fiscally responsible way exists to address Moral Monday priorities

Earlier this week Senator Berger announced that he and his colleagues drafted an amendment that would meet the demands of Moral Monday protestors but couldn’t find any sponsors. That seems curious given that, barring two sections which have no basis in the Moral Monday agenda, the proposal is not only revenue neutral but provides for additional revenue to meet the state’s pressing needs that have been unaddressed since the start of the Great Recession.

In reviewing the amendment for the amendment’s alignment with the Moral Monday agenda and fiscal impact, it is clear that there is a fiscally responsible path forward for meeting the priorities of North Carolinians to ensure that the state’s most vulnerable citizens can access health insurance, our children can be ready and prepared to learn at school with quality childhood experiences, our workforce can be trained for the jobs of the future, working families can be supported as they struggle to get by on low-wages and the human rights and ability to access a fair justice system for all North Carolinians can be protected.

So here is a bit on what we found.

First, it is important to note that the amendment was drafted without a prior conversation with Moral Monday protestors about the specifics of their policy proposals and makes various assumptions, some false or exaggerated, likely for effect. Two particularly egregious examples are in the assumption that government should pay the health insurance premiums on the private sector market for uninsured North Carolinians and that the corporate income tax rate should be 50 percent. These two provisions are likely tied together in that in order because boosting the corporate income tax rate to 50 percent would cover the of the premium payments, thus keeping the budget in balance.

The Moral Monday movement and many other organizations and medical professionals have called explicitly for the expansion of Medicaid and an overall goal that all North Carolinians should be able to access affordable health insurance. The latter is something to aspire to and most policy experts in the field would design a system of coverage in which people contribute to their premiums. No one has suggested that people not contribute to their own premiums. Moreover, it is likely that with the expansion of Medicaid along with the availability of the health care exchange far fewer North Carolinians would be eligible under the provision as detailed in this amendment.

There has never been a call for the corporate income tax rate to rise to 50 percent but rather a call for profitable corporations to pay their fair share in supporting the public investments that not only help their businesses thrive—educating the workforce and building a modern infrastructure—but deliver a quality of life for their employees.

Importantly, too, there are some provisions such as the elimination of the unemployment insurance cuts made last year that have no impact on the state’s General Fund. By undoing the harm of these cuts, policymakers would be ensuring that jobless workers have temporary and adequate support while they search for work in a job market with too few jobs for those who want to work. The Trust Fund debt could then be paid down by employer’s automatic contributions by federal law, a debt that was driven by tax cuts for employers in the 1990s and historic job loss. Of course, alternative approaches to the unemployment insurance debt have been proposed and not considered.

Taking the remaining sections of the amendment as they are written (and again, not necessarily as specifically requested by the Moral Monday movement), the proposal is not only revenue neutral in Fiscal Year 2014-15 given the latest figures on the full cost of the tax plan but provides a potential additional $100 million for other pressing needs that remain unaddressed in the amendment. This positive revenue impact could grow as, for example, the expansion of Medicaid delivers the anticipated cost savings to the state in future fiscal years.

See the net fiscal impact of the amendment for the 2015 fiscal year below. This fiscal analysis is based on publicly available information and estimates of the cost of the tax plan based on an economic incidence model developed by the Institute on Taxation and Economic Policy, a non-profit, non-partisan organization that works on tax and economic policy across the country.Moral Monday Amendment Table

3 Comments

  1. […] Read the full fiscal analysis here: NC Policy Watch – A fiscally responsible way exists to address Moral Monday priorities […]

  2. LayintheSmakDown

    June 13, 2014 at 2:12 pm

    Well, you know this is a flawed analysis when the first line is zero. I guess Alan/ML prepared this with the smoke he usually blows. There is no way that in the future an expansion of Medicaid will be zero, heck the current budget in the billions always runs over by close to hundreds of millions. Where have you ever seen documented “savings” of this corrupt boondoggle. So add 3.1 billion to your number.
    Next, the assumption that eliminating tax cuts will bring in more revenue is completely the opposite of every experience in the history of taxation. And your figure somehow doubles even where Civitas uses a number.
    Also, you leave out the $1 billion per year for teacher salaries. This is a pretty big ommission.
    Ignoring the unemployment benefits? That is another few billion and you think it has no cost. That is dishonest at best.
    You completely ignore the demand to provide healthcare to us all.

    You seem to just be picking a few items that are on the cheaper end of the ransom list Barber sent out and ignoring the real questions and realities out there that we cannot continue to afford the handouts we have put into place. I guess sticking your head in the sand is and accepted financial analysis method in progresso-land

  3. Dick Kistler

    June 17, 2014 at 9:21 am

    Where are your real numbers LayintheSmakDown? All of your “analysis” is based on numbers pulled “out of the air.” If you have an real analysis, put the numbers down on paper where they can be seen and tested.