NC Budget and Tax Center

Federal cuts threaten key NC priorities; State Senate budget makes matters even worse

The Senate budget passed last week sets out the ways in which federal dollars will be invested in various key priorities for the health, well-being and infrastructure of our communities. But, unlike previous years, it is not guaranteed that North Carolina will receive these funds. North Carolina already faces an uncertain future in 2018 as the state is projected to lose $1.1 billion (8.7 percent) in federal discretionary grant funding compared to 2016 levels. If these dollars do not arrive from the federal government, it will present a serious challenge to how North Carolina will pay for important investments.

As we have detailed since the release of President Trump’s budget blueprint, proposed elimination of key programs and unspecified cuts will hurt North Carolinians and our communities. It will also shift costs to states.

North Carolina can ill afford further abandonment by the federal government of its commitment to strengthen the state’s economy and communities. These are dollars that help to ensure hungry children have access to nutritious food, that children can receive a good education regardless of the wealth of their community, that housing can be kept to code and accessible to seniors and people with disabilities, and that water and sewer infrastructure is sound.

Indeed, federal cuts and program eliminations could force state policymakers to let more needs go unmet or raise taxes.

Here is how the Senate would like to allocate just three of the 20 major federal grants on the chopping block.  Importantly, there is no mention by Senate leaders of how they would address the loss of these funds.

Community Development Block Grant Allocates $43 million for state administration, neighborhood revitalization, economic development and infrastructure primarily in rural areas Elimination
Community Services Block Grant Allocates $26.8 million to Community Action Agencies, Limited Purpose Agencies and the Office of Economic Opportunity to address poverty Elimination
Low Income Energy Assistance Program Allocates $36.4 million to weatherization and assistance of low income households who are energy poor Elimination

In addition to outright of elimination of the above and other programs that fund valuable community programs in North Carolina, there are many more federal funding streams that are at risk and threaten a number of priorities for North Carolinians.

For example, the U.S. House has voted to shift an estimated $6.6 billion in Medicaid costs over 10 years to North Carolina, and it is widely known that this will exacerbate budgetary challenges to all states and local governments.

Notably, many programs likely to see reductions as well, like the Temporary Assistance for Needy Families block grant, are relied on by the Senate to fund their increase in NC Pre-K slots.

In the face of such uncertainty, the North Carolina General Assembly should not be limiting our ability to deal with the potential fallout from federal budget decisions by cutting taxes for the wealthy again. Instead, they should be putting together a plan that ensures the state can meet the commitments to serve North Carolinians and build thriving communities.

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