NC Budget and Tax Center

Missed Opportunities: Investments that are MIA in the joint budget deal

Many pundits and outlets are describing the joint budget deal as a “compromise” between the inadequate House and Senate budgets. But North Carolinians from Murphy to Manteo know that we cannot compromise our future.

By pursuing deeper tax cuts, policymakers have failed to strengthen public education, public health, and safety, and the other building blocks of a strong economy.

The new tax plan will lose $383.6 million over a two-year period, with the annual loss ballooning to $692.9 million by the fifth year. Revenue losses will grow by another $458 million over the next two years when accounting for corporate tax breaks that are already scheduled to go into effect. All of these revenue losses will add to the damage from the 2013 tax cuts, which result in $1 billion in lost revenue each year when fully implemented.

That’s why it’s no surprise that there are a lot of investments in vital public services that are needed but missing from the new budget deal, like public education, public health and safety, and rural economic development. There has been plenty of coverage of what is in the budget over the last day and a half but there has been little coverage of what’s not in the budget.

Below is a short list of investments that are missing in action but still greatly needed to build a stronger, more inclusive economy for us all.

Economic Security

  • Fails to restore the state Earned Income Tax Credit (which allows low-income workers to keep more of what they earn) in the tax package attached to the budget.
  • Fails to provide a raise for all teachers and state employees. Beginning teachers get a promised raise to $35,000 from $33,000, and raises are available for other state employees on a selective basis while the majority of workers get a $750 bonus. But teachers and state employees have seen their pay fail to keep up with the rising costs of goods and services and continue to fall further behind the national average in pay for their professional peers.
  • Fails to provide a cost of living adjustment (COLA) for state retirees despite shrinking purchasing power due to changes in the economy.
  • Fails to strengthen programs that provide families struggling with job loss or a lack of sufficient income. Rather than take a look at ways North Carolina can ensure people living in deep poverty can make ends meet and secure a pathway out of poverty for their families, this budget fails to address the economic challenges.

Early Childhood Education, Public Schools, and Higher Education

  • Fails to restore previous income eligibility guidelines for the child care subsidy program that made the program more accessible to moderate-income families with children ages 6-12 years old. Also fails to provide a subsidy market rate increase for Tier 3 counties.
  • Fails to make progress on reducing the waiting lists for the child care subsidy program and NC pre-kindergarten program because it keeps spending flat.
  • Fails to restore the Teaching Fellows Program or an equivalent teacher preparation program.
  • Fails to invest in the equipment and programming needed to train the workforce for 21st century jobs. Retraining workers will increasingly be necessary due to advancements in technology. Community colleges and other institutions need to have the required equipment to meet this need and be able to design accessible skills training program that support adults seeking basic education and pathways to career advancement.

Affordable, Healthy, and Safe Communities

  • Fails to provide boost to the Housing Trust Fund despite a $12 million drop in state investments since 2007. Half of renters in the state are unable to afford the cost of fair market housing.
  • Fails to expand Medicaid, which would give approximately 500,000 North Carolinians access to affordable healthcare and boost the economy by creating more jobs.
  • Fails to invest in the Healthy Corner Store Initiative to help address food deserts—which impact more than 1.5 million North Carolinians—by making healthier food options more accessible. The program also supports the sustainability of small businesses.
  • Fails to restore investments in youth tobacco prevention programs that aim to prevent and reduce smoking among teenagers.
  • Fails to reinvest in local reentry efforts that help ex-offenders reintegrate into their communities.
  • Fails to restore drug treatment courts that were eliminated in the aftermath of the recession. These courts are a more cost-effective treatment option for nonviolent, high-risk, repeat drug offenders.

Re-employment and Economic Development

  • Fails to develop a comprehensive plan for retraining the long-term unemployed. This budget does not devote sufficient resources to ensure that everyone who wants to work can get the training they need to find a job in the post-recession economy.
  • Fails to restore the Displaced Homemaker Program, which provided important workforce development services to residents with barriers to self-sufficiency—such as a recently divorced or widowed low-income working parent.
  • Fails to put forward a robust rural economic development strategy. The allocation of resources from the sales tax proposal will be insufficient to meet the needs in rural communities and the desire for a vision that can guide smart investments over time.
  • Lacks a plan to end the digital divide in North Carolina: Much of rural North Carolina still lacks reliable high-speed internet access that is increasingly essential to participating in the global economy. This could leave struggling rural communities further and further behind.
  • Fails to support local innovation economies and business start- The erosion in support for small business start-ups and expansion in North Carolina has missed a promising opportunity for sustainable economic growth in more than just urban centers.  By failing to consider the ways in which public policy can support innovation—small business development funds, incubator and accelerator infrastructure, research & development at public universities and the support to entrepreneurs—the budget does not reflect the growing national focus on building innovation economies.
  • Fails to update North Carolina ports to handle the largest cargo shipping. North Carolina lacks the port capacity to capture additional trade that will be made available by the Panama Canal expansion project.

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