The Senate Rules Committee gave approval Friday to a suite of constitutional changes that would undercut our state’s economy permanently by setting a low, arbitrary income tax rate and limiting access to the state’s savings in times of emergency.

It is an entirely unnecessary move that seeks to permanently limit future budget choices to the ones that our current leaders prioritize above all else.  It is not only an insult to the wisdom of the framers of our state Constitution, but also to future North Carolinians and legislators whose priorities may differ from their own.

To recap just why such a move is completely unnecessary, let’s review how policymakers have already pursued these approaches to budgeting through public policy.

First, policymakers have already set a low, arbitrary income tax rate for individuals and profitable corporations, which will drop to 5.499 percent for individuals in January 2017 and eventually to 3 percent for businesses.  These changes began in 2013 and will continue to phase in, ultimately reducing the dollars available to invest in schools, parks and public health by at least $2.5 billion each year. More than two-thirds of the tax cut from the low individual income rate has benefited the top 20 percent of taxpayers. Policymakers continue to pursue a shift to the sales tax to make up for the revenue loss, which means the tax load has shifted to middle- and low-income taxpayers. Read more

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Last week the Center for American Progress and National Employment Law Project released a review of unemployment insurance as a federal and state partnership and the choices in recent years that have made it less effective at reaching jobless workers.

North Carolina policymakers, of course, aggressively pursued the worst changes in unemployment insurance. The result is a system that ranks among the least effective at providing temporary wage replacement for jobless workers while they search for work and delivering a stabilizing force in local communities and the economy overall.

The challenges they outline in the report face North Carolina acutely:  too few unemployed workers have access to tools for successful re-employment, first employment and/ or training; American workers are more vulnerable than ever to involuntary unemployment, yet fewer are protected by unemployment insurance; and finally, the unemployment insurance system is unprepared for the next recession.

The report authors provide a set of policy recommendations that would address these challenges and go a long way to not just protecting workers and communities from the shock of unemployment but would actually prepare for jobs loss by investing in the re-employment, training and other measures that retain jobs and support smoother transitions to new ones.  Here are some their recommendations: Read more

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There is now more news that state income tax cuts are forcing local governments to pursue bad deals as they scramble to deliver basic services. While state leaders claim to be looking out for rural North Carolina, it is ever clearer that income tax cuts put many local governments and residents in a bind.

Tax cuts have reduced available state revenue by billions of dollars, resulting in less support for many rural communities. Unfortunately, many rural communities lack the tax base and economic activity needed to make up for lost state funds, forcing them instead to consider alternatives that may ultimately cost rural governments more over the long run. Already, local government’s commitment to public schools through per-pupil spending has already increased significantly since 2008.

Instead of revisiting the choice to slash income taxes, a bill moving through the Senate would give local governments more ways to finance new school buildings at great costs to residents and while putting at risk other classroom investments.  The legislation would expedite the process under which lease-purchase agreements move forward and make available state funds for students and teachers to go to private developers. Such a deal is already on the table in Robeson County where the Treasurer’s Office estimates that the increase in debt load for Robesonians will go from $200 to $4,000. Not only could there be job losses as teachers and teaching assistants lose their jobs through consolidation of schools, the prioritization of repayment of this debt above other local government obligations and the allocation of sales tax revenue to private developers would be harmful to many other public services in communities.

And, as Terry Stoops of the John Locke Foundation notes, there is little research to suggest that new facilities will improve educational outcomes, and certainly not when they risk other investments proven to drive student achievement and teacher retention.

Why would local leaders and community members need to seek out such a bad deal for its citizens?  Because the backlog for renovating and upgrading schools is just one of the things that has fallen behind as a result of income tax cuts for the wealthy and profitable corporations. In the past, school construction received direct support through allocation of lottery funds and corporate income tax collections. Now, both of these streams have had to be used to patch other holes in the education budget as income tax cuts have sapped the availability of state revenue.

Given that income tax cuts will continue to phase-in, it is unlikely that North Carolinians will stop seeing such costly deals. The only question is when will local communities make sure their leaders make better choices and call for an end to income tax cuts that aren’t helping build stronger communities?

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