2017 Fiscal Year State Budget, NC Budget and Tax Center

Missed Opportunities: Investments that are MIA in the preliminary House budget

Deep tax cuts, the pursuit of additional costly tax cuts, and an arbitrary spending limit are preventing House leadership from proposing a bold, visionary state budget for the upcoming 2017 fiscal year, as I explained yesterday.

Once accounting for these three limitations, there are few public dollars available for anything else after the House budget writers set money aside for basic—but again uneven—salary increases and bonuses for teachers and state employees. The 2013 and 2015 tax cuts alone are draining more than $1 billion in revenue annually, squeezing out much-needed reinvestment in the programs and services that help children, families, and communities thrive.

Without those tax cuts, much more could have been possible for North Carolina.  There has been plenty of coverage of what is in the House budget over the last few days; however, what’s not in their budget has gotten little coverage. 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 and Early Education

  • Fails to restore the state Earned Income Tax Credit, which allows low-income workers to keep more of what they earn. We are the only state to eliminate this anti-poverty tax credit in 30 years. The House Finance committee voted down an amendment yesterday that would have restored and strengthened the state EITC to 25 percent of the federal credit, from 4.5 percent prior to its elimination in 2013. Some members pointed to their plan to raise the standard deduction by $2,000 by 2020, which is not as well-targeted to people with low incomes.
  • 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.
  • Fails to make progress on reducing the waiting lists for the child care subsidy program because it keeps spending at current levels. This means thousands of children will not get the early education that they need to thrive and their parents will not have access to this critical work support that helps them stay on the job.
  • Fails to eliminate the waiting list for the NC pre-kindergarten program, which provides high-quality educational experiences to enhance school readiness for eligible 4-year-olds. The budget makes a relatively modest effort to reinvest in early learning by expanding the number of pre-k slots by 800—which is two additional slots per county. Yet, there are more than 7,200 children on the waiting list. This is a classic case of how lawmakers can slightly reinvest but still fall well short of what’s needed.

K-12 and Higher Education

  • Fails to restore the Teaching Fellows Program that lawmakers eliminated in recent years. This means that young adults will not have access to this program that searched for North Carolina’s most talented high school graduates and provided them with scholarships to attend the state’s public universities in exchange for a commitment to teach in a public school.
  • Fails to provide funding to hire additional school nurses to achieve the ratio of one nurse to every 750 students as recommended by the National Association of School Nurses. While the state made considerable progress in lowering the ratio during the mid-2000s, further progress was stalled due to the Great Recession and our ratio stood at 1 nurse for every 1,177 students in 2013. As such, the state has not met that standard in any year in the last 10 years.
  • Fails to reduce tuition in the UNC system and Community College system, which is on an upward trend. In fact, tuition at community colleges has increased by 81 percent since 2009, putting affordable higher education out of reach for some. Tuition and mandatory fees at public four-year universities is up by more than 42 percent while state funding per student has been cut by nearly 15 percent since 2008.
  • Fails to boost funding for UNC Need-Based Financial Aid, which helps make attending public four-year universities more affordable for students from low-income families. State funding for this need-based financial aid, through the use of lottery dollars, has not increased since 2012 despite the rising cost of college at public four-year universities in NC.
  • Fails to restore the senior citizens tuition waiver at community colleges. In 2013, lawmakers eliminated this waiver for tuition that was available for up to six hours of credit instruction and one course of noncredit instruction per academic semester for residents aged 65 or older.

Affordable, Healthy, and Safe Communities

  • Fails to provide a boost to the Housing Trust Fund despite a $12 million drop in state investments since 2007, when adjusting for inflation. Half of renters in the state are unable to afford the cost of fair market housing and unaddressed needs persist.
  • Fails to expand Medicaid, which would give approximately 318,666 North Carolinians access to affordable healthcare and nearly $13.7 billion in economic benefits statewide.
  • Fails to reinvest in local re-entry 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 put forward a robust rural economic development strategy. The allocation of $1 million in main street revitalization for small rural towns will be insufficient to meet the needs in rural communities and the desire for a vision that can guide smart investments over time.
  • 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.
  • 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.

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