2015 Fiscal Year State Budget, NC Budget and Tax Center, Raising the Bar 2015

Raising the Bar in North CarolinaThis post was written by Michael C. Behrent, associate professor of history, Appalachian State University and is part of the Raise the Bar series featuring expert views on the North Carolina budget debate.

Is our state government doing all that it can to offer North Carolinians the affordable, high quality education they need to secure twenty-first century jobs? Based on data in a recent report from the Center on Budget and Policy Priorities, the answer is clearly “no.”

Affordable public education in North Carolina is a right. Our state constitution states that the legislature must ensure that “the benefits of The University of North Carolina and other public institutions of higher education, as far as practicable, be extended to the people of the State free of expense.” Yet today, free public education is little more than a distant memory. To make matters worse, our citizens find themselves in a college crunch: they are being asked to pay more and more for public universities that are providing less and less.

According to the report, since 2008, tuition at North Carolina’s public universities has grown by 35.8% (or $1,759). The main reason? The 2008 recession, which cut the flow of tax dollars into state coffers at the very moment when many people were choosing college over a grim job market. As state funds dried up, most public universities turned to tuition hikes as an easy fix.

Yet the recession doesn’t bear all the blame: many state legislatures, including North Carolina’s, took advantage of the budget crisis to push questionable ideological agendas. Specifically, they rejected a balanced approach that would combine spending cuts with tax increases, preferring to slash budgets. Universities thus had little choice but to ask students to pay the balance. Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

As an exercise in reflecting the state’s priorities, the House budget falls short. North Carolinians know that ensuring our children’s education is of the highest quality, that our communities can thrive and that our public services—from courts to transportation to environmental inspections—are effective and efficient means committing to fund those things together.

The House budget, like the Governor’s budget before it, assumes that the state can’t afford to invest. But our current availability is limited by policymakers’ own tax choices that reduce resources that support the foundations of an economy that will work for everyone. Policymakers already allowed a second round of tax cuts for profitable corporations and wealthy taxpayers go into effect in January and will cut taxes again for profitable corporations because revenue collections exceeded expectations and met the trigger for further tax cuts. Because the trigger threshold was set arbitrarily low, however, meeting the trigger does not reflect the realities of needs in our communities.

This choice—to hold back the state from reinvesting by prioritizing tax cuts over building a stronger economy—means that there is a lot missing from the House budget. In light of the historic decline in revenues resulting from the recession and its aftermath, policymakers have effectively curbed the state’s ability to reinvest due to tax cuts. The result is missing investments that can mean the difference for children, families, businesses and communities in doing well in our state and the missed opportunity to grow our economy stronger and more competitive.

Here are five missing investments that the Budget & Tax Center has identified: Read More

NC Budget and Tax Center

The House budget continues to ask less from the state’s wealthiest taxpayers and profitable corporations and more from everyday North Carolinians while underinvesting in the foundations of a strong economy.

By failing to pause the corporate income tax cuts and also prioritizing further tax breaks to big business, policymakers are missing the opportunity to build opportunity and ensure that where you are born does not determine your ability to do well as an adult. Investments in early childhood, education, job training, health care, and public safety ensure that North Carolina’s communities thrive.

While the House budget reflects some of these investments, there are many others—school nurses, affordable housing, professional development for teachers, community economic development—that don’t receive the funding needed to truly make an impact on people’s lives.

NC Budget and Tax Center

Policymakers are beginning to put the finishing touches on their budgets this week in the House. The Senate will soon follow.  While the April surprise has some thinking of investments in core services that are needed or, even more disturbing, proposing more tax cuts, a cautious approach is warranted.  Not only does the revenue announcement last week not signal that the state has what is needed to support strong and effective public services, it is quite possibly a one-time event.

The Washington Post today reported that a number of states  have announced revenue collections higher than anticipated largely on the personal income tax side and due to strong investment income performance.  North Carolina’s Fiscal Research Division and Office of State Budget Management identified similar sources for our own state’s revenue surplus.  From the article:

“This year’s April surprise will likely help more states meet or exceed revenue projections for fiscal 2015, which ends on June 30th for 46 states,” NASBO’s Brian Sigritz writes in the blogpost. “However, most of the gains are due to an increase in income tax collections, partly from the strong stock market performance in calendar year 2014, and are viewed as one-time occurrences.”

The fact that North Carolina appears to be mimicking national trends means that tax cuts also can’t serve as an explanation for the surplus. It also means, again, that policymakers should be very cautious in how they consider this money in their budgets.  It seems increasingly clear that a fiscally responsible approach would be not to expect the bump from current economic conditions to be a permanent feature of the new tax code and certainly not reason for more tax cuts.

NC Budget and Tax Center

We were surprised to learn today that the official estimates suggest North Carolina will have a $400 million surplus this fiscal year. This is certainly good news for our state – we won’t have to cut quite as much as we thought we would to the core public services that help our communities and families connect to economic opportunity and enjoy a high quality of life.

The revenue uptick, however, does not mean that the state has more than what we need to get families and the economy back on track. Nor is it a result of the failed economic theory that tax cuts spur economic growth and certainly it is not a sign that North Carolina is in a stronger position as a result of the tax cuts.

Here are a few things to keep in mind. Read More