NC Budget and Tax Center

Hidden elephant that contributed to mediocre House budget

The budget passed by House members last week makes clear that North Carolina remains hampered by costly decisions made in recent years. Despite modest improvements in some areas of the budget, important public investments that drive the state forward remain well below pre-recession spending levels. The House budget is a reflection of choices and an example of missed opportunities.

Modest funding increases in the House budget are primarily the result of moving the goal post. For example, fully funding enrollment growth for our public schools and providing teachers and state employees a two-percent pay increase are typical budget practices, particularly in budgets crafted during a recovery.

The budget hikes various fees, increases tuition at community colleges, fails to reinstate the state Earned Income Tax Credit, and resorts to cutting funding from certain programs to fund others (e.g., the House reduced funding for textbooks in order to fund other areas of the public education budget).

Rather than address persistent underinvestment and seize opportunities to support a stronger economy, state lawmakers will allow another round of corporate tax cuts to go into effect – reducing annual revenue by $100 million in the first year, $350 million the second year, and more than $500 million in subsequent years.

Revenue lost just from these additional corporate tax cuts, which state leaders seem unwilling to debate, could provide funding for much-needed public services that strengthen our communities and the state’s economy.

In 2015, these dollars could fund a targeted tax credit for working families at a time when low-wage jobs are growing and poverty remains persistently high. The Earned Income Tax Credit, eliminated in 2013, has proven to be an effective anti-poverty tool.

For the upcoming school year, these dollars could restore funding cuts to public schools for professional development and classroom instructional supplies. They could help more kids go to Pre-K or quality childcare programs, make sure seniors and those who continue to struggle can get health care, and make college more affordable. Those are just a few of the possible public investments.

In the years after this two-year budget, the annual cost of these corporate tax cuts will grow to more than $500 million. These dollars could halt the steady tuition increases at public colleges and universities, which contribute to students graduating with huge amounts of debt. These dollars could help address child hunger and ensure that children attending high-poverty schools arrive to class fed and ready to learn each day. These dollars could provide access to health care to more than 400,000 North Carolinians who cannot afford private health insurance.

At a time when we should be restoring and boosting public investments to gain ground lost in the wake of the Great Recession, North Carolina instead faces a self-imposed revenue challenge. State lawmakers can turn the tide in part by repealing the corporate tax rate cut that is expected to go into effect next January. Otherwise, all North Carolinians will continue to lose as a result of the continued pursuit of costly tax cuts.

One Comment


  1. LayintheSmakDown

    May 27, 2015 at 7:14 pm

    Boy Cedric, you are going against the progressive grain in criticizing the budget. Did you run this by Fitzy and Rob before posting this? They and others on your side seem to love the way this budget continues out of control spending on the tired old liberal policies.

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