NC Budget and Tax Center

Charlotte increases minimum pay for city workers, anticipates reaching $15/ hour by 2020

Like local governments across North Carolina, the City of Charlotte passed its budget a few weeks ago in time for the start of a new fiscal year last Friday.  Like a growing number of City leaders across the state, the City Council and Mayor approved a budget that sets the minimum pay for a city worker higher than the state and federal minimum wage standard of $7.25.  That is good news for workers and their families and good news for the local economy in Charlotte:  when workers earn what it takes to make ends meet they are able to spend locally on the basics and thus support their families and boost economic activity.

The new minimum pay schedule for City of Charlotte employees starts at $13.58 which is now among the highest in the state for City workers.  It still, however, falls far short of what it takes to make ends meet in that City where rising housing, child care, and transportation costs are squeezing workers in public and private sector jobs.   The Budget & Tax Center produces a Living Income Standard for each of North Carolina’s 100 counties.  For a single worker with one child, the hourly wage it takes to just break even on the basics without public assistance is at a minimum $17.16.  MIT’s Cost of Living Calculator sets that figure at the higher rate of $22.06.

The move to $13.58 is thus an important step and one that should be taken by more cities across the state.  But it must also be the first on a road to ensuring that workers earn what it takes to make ends meet and contribute to a thriving community. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Statement of Final Budget Passage from Alexandra Sirota, Budget and Tax Center Director

A budget is the set of choices our policymakers make to lay a foundation for North Carolina’s future.  Will it stand future tests of economic challenges and opportunities? Will it extend to every corner and household of our state? The answer for this budget is that it will not.

For those who say this is as good as we can get, the reality is we can do better. Our leaders have chosen to limit our sights.

There is no great mystery about what has happened in this year’s budget debate. Policymakers have set a low bar based on a rigid formula and ignored the realities of our growing state and the families who strive to do well. They have continued to allow tax cuts to phase in that benefit the wealthy and profitable corporations, and they even pursued more poorly targeted tax cuts that will fail to effectively address the increase in sales taxes that North Carolinians will pay.

To those satisfied with baby steps, this final budget may be okay. As those who seek leadership that charts a stable path into the future and embraces the challenges of our changing state, we are disappointed.

2017 Fiscal Year State Budget, NC Budget and Tax Center

More evidence that limiting our Constitution puts NC’s coveted AAA bond rating at risk

The Bond Buyer, an insider investment industry publication, has taken note of North Carolina Senators’ passage of a proposed change to the state’s Constitution that would limit the income tax rate to the low and arbitrary level of 5.5 percent.

In a recent article on the risk to the state’s “gilt-edged credit rating,” the reporter quotes a Moody’s analyst who provided general comments about the challenges with the direction that Senators seek to take North Carolina in. From the article:

“A majority of state budgets rely on a combination of income and sales tax revenues, according to Nick Samuels, vice president and senior public finance credit officer with Moody’s Investors Service. … Whatever the source, state budgets are sensitive to volatility in revenue, depending on how spending plans are structured, said Samuels. He declined to comment directly on North Carolina’s bill because it hasn’t passed. …

“Illinois has a flat income tax rate mandated by the state’s constitution that can be difficult to change, he pointed out.

“Moody’s rates Illinois’s senior debt Baa2 with a negative outlook as the state nears its second fiscal year without an adopted budget due to a political stalemate over spending issues between parties.

“In North Carolina, Moody’s rates the state’s general obligation bonds AAA because of its strong fiscal management and economic growth, which benefits tax collections, the agency said in a report in February. …

“Samuels said state ratings tend to be high because budget leaders have flexible governing strength.”

Read the full article here.

NC Budget and Tax Center

Floor debate brings false claims, misses key facts

Tuesday night, the Senate debated and passed House Bill 3, a proposal containing multiple changes to the state Constitution including provisions that would set arbitrary and low income tax rates in the state Constitution and limit access to the state’s savings in times of emergency.

The debate itself was full of false claims, and it represented a failure to embrace the reality of how North Carolinians are doing and communities are faring under the tax-cut-for-millionaires regime of the current General Assembly leadership.

Here are some of the false claims made and key facts missed:

False Claim #1: Cutting the income tax and expanding the sales tax base has given North Carolinians a net tax cut.  Changes to the tax code have resulted in nearly $1.3 billion less in revenue coming in to the state, which has made it impossible for policymakers to provide teachers and state employees a pay raise or make sure college remains affordable for students with low-incomes, children have textbooks and pre-schoolers at risk are prepared for kindergarten.  Those losses in revenue have generated losses for families and communities, and the broader economy has missed opportunities.

At the same time, it has not given every North Carolinian a net tax cut.  In fact, those taxpayers with incomes below $34,000 have seen their taxes go up on average, and those with incomes averaging $1 million (the top 1 percent of taxpayers) have seen their taxes cut by $15,000 on average. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

First look at the Health and Human Services Budget in the joint budget agreement

The joint budget relies on two particular sources of dollars for narrow expansions to targeted programs and services that promote the health and well-being of North Carolinians through Health and Human Services. The first is the $318 million reduction in Medicaid that   is largely due to projections that suggested the demand for Medicaid services would grow even beyond what has been experienced in recessionary periods, as NC Health News reports.  The second is an increased use of federal funds through available block grants to expand access to programs like child care, which limits the state commitment to fund these programs.

Here are a few of the key items in the HHS budget: Read more