NC Budget and Tax Center

What I want to hear in the State of the State

Tonight Governor McCrory will lay out his vision for North Carolina and his policy ideas for getting us there. He is also likely to give us a glimpse into his view of current economic, fiscal and social conditions in the state.

At the Budget & Tax Center, we have noted that the central challenge for the governor and all policymakers is building an economy that works for everyone. One of the essential tools in that effort is the state budget.

Unfortunately, while other states are reinvesting as their economies recover from the recession, North Carolina continues to underinvest in the education of our children, the skills of workers and the public health of our communities. In fact, if we were investing at pre-recession levels as a share of the economy today, there would be $3.2 billion more for our schools, courts, clinics and colleges.

But as the economic recovery strengthened—benefiting primarily the wealthiest 1 percent, who have captured all of the income growth since the start of the recovery—policymakers pursued a tax plan that shifted the tax load onto middle- and low-income taxpayers while giving a tax break to the state’s wealthiest and profitable corporations. It also reduced the dollars available for core investments in our economy, costing the state almost $900 million this current fiscal year and a projected more than $1 billion in the fiscal year that begins in July. In tonight’s State of the State, I want Governor McCrory to talk about how he will address the cost of that tax plan and make sure everyone is contributing to the infrastructure of opportunity that has made our state great.

Yesterday the BTC released a brief outlining five strategies that could address the cost of the tax plan and provide some revenue for much-needed investments. These strategies include: establishing an income tax rate structure based on ability to pay; reinstating a critical tax credit for working families before expanding the sales tax; making sure that large, profitable corporations pay to support the services they enjoy; eliminating special tax breaks that don’t help our economy; and avoiding short-sighted budget cuts and the privatization of services that can cost us more down the road. These are sound policy ideas that should be part of lawmakers’ approach in this long legislative session.

An economy won’t grow nearly as strong for nearly as long without a focus on providing opportunity to everyone. The barriers to the middle class will only be higher if policymakers don’t ensure that all communities and all North Carolinians can work, earn a living wage and participate in their communities’ economic and civic life.

I certainly hope that the governor doesn’t ignore the reality of today’s economy. There are more unemployed people in North Carolina than before the start of the Great Recession and fewer people working. There has been a boom in low-wage work since the start of the recovery, with more than half of the jobs created paying less than poverty wages. And despite the economy growing due to increased productivity of workers, all of the income growth since the recovery began has gone to the top 1 percent in North Carolina.

My vision of North Carolina is one of communities of opportunity across the state. To get there, we need a sustainable state budget that is based on a tax code that both raises enough money for core services and doesn’t give tax cuts to the wealthy at the expense of everyone else. Without either of those foundations in place, we can’t provide quality education from birth to career or protect the health of our families from cradle to old age or support vibrant main streets. In sum, we can’t be the North Carolina we all want to be.

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