New state budget continues to underfund crucial public investments

This week the Budget & Tax Center released a new report on North Carolina’s 2015 fiscal year budget. While other states across the country are beginning to reverse the worst cuts made during the Great Recession, North Carolina continues to underfund crucial public investments in order to pay for tax cuts that took effect this year. Lawmakers failed to provide a high-quality education for all children, protect natural resources, support community-based economic development, or provide adequate health and human services to North Carolina residents.

Under the final budget, state investments are 6.6 percent below pre-recession levels five years into the official economic recovery. The new budget for the 2015 fiscal year is the 7th budget enacted since the Great Recession hit, and North Carolina has yet to bounce back to its pre-recession investment level. This is in contrast to spending during previous economic recoveries – spending did not dip after the 1981 and 2001 recoveries and state lawmakers restored investments to the levels that were in place when the 1990 recession hit within three years.

Fig 1-- Spending Recovery

Since state lawmakers passed the final budget, stories in newspapers across the state continue to highlight how the budget fails to meet the needs of children, students, families, and communities. Schools and colleges across the state are turning to families to help cover the cost of public education—from long lists of classroom materials and supplies to higher tuition and fees. As individuals and families do their best to make ends meet, many remain on long waiting lists for childcare and in-home and community care services.

As a result of the tax plan passed last year that largely benefits high-income households and drains resources for schools and other basic services, there are simply too few dollars available to meet the needs of children, families, and communities. Consequently, state lawmakers are hampering the recovery of struggling communities and failing to build a foundation for an economy that works for all.

Now is the time to rebuild, but the tax cuts already are costing the state much more than expected and will continue to reduce the revenue that is available for public investments next year and beyond. State lawmakers need to face the reality that the state cannot afford further tax cuts and halt the next phase of income tax cuts scheduled to occur in January 2015.

This post is part of the NC Budget and Tax Center’s Blog series on the final budget passed by North Carolina lawmakers during the 2014 legislative session. See the rest of the series here.

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