2018 Fiscal Year State Budget, NC Budget and Tax Center

Why won’t North Carolina leaders think long-term?

Governor Cooper announced a clear vision for where North Carolina should aim: one of the top 10 most educated states in the country, an attractive place for people and business, and a state that supports the health and well-being of all residents.

Thinking long-term isn’t the norm for many leaders in North Carolina. Many argue that it’s the nature of elected officials to think in terms of their next election cycle. That may be part of the answer, but a very practical issue exists in North Carolina:  We literally can’t afford to think long-term.

Included with the Governor’s recommended biennial budget that was released last week is a chart that projects out the state’s revenue and anticipated expenditures over the next five years. The chart provides a troubling picture of just how close we are budgeting, even as we fail to meet all our existing needs. By 2021, revenue collections for North Carolina are anticipated to be $100.7 million above anticipated expenditures. These anticipated expenditures account for enrollment growth in public schools and Medicaid, costs of maintaining capital investments, paying debt obligations and maintaining a commitment to get teacher pay to the national average.

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2018 Fiscal Year State Budget, NC Budget and Tax Center

Governor’s budget proposal invests in higher education, workforce training

The Governor’s budget continues investments in the education pipeline beyond K-12 education so that North Carolinians have access to the training and education that prepares them for the workforce and participation in civic life.  The post-secondary budget comprises investments in the state’s Community College system and the UNC Public University system. Here are five things you should know about what Gov. Cooper proposes.

  1. The basics are covered by fully funding enrollment growth. The Community College system projects an increase in enrollment over the next fiscal year, the first since 2012, requiring $8.3 million in investment. The UNC system also projects two years of enrollment growth that is fully funded by the Governor’s proposal ($46.5 million and an additional $48.1 million respectively). Various efforts are funded to ensure that students in both systems are also in classrooms with adequately compensated faculty, including the UNC Faculty Retention Fund ($3 million) and salary increases for faculty.
  2. Post-secondary education is made more affordable through investments in need-based aid, scholarships and tuition is held steady. No additional increases in tuition at Community Colleges or the UNC system are proposed after years of increases. The Governor has also prioritized making post-secondary education more affordable through investments in the UNC Need Based Aid program (an additional $2 million); fully funding the NC Promise Tuition plan for UNC Pembroke, Western Carolina University and Elizabeth City State University ($11 million of lottery dollars in the second year of the biennium); and two new programs in the second year of the biennium: NC Grow ($19.4 million of lottery dollars) and the NC Best and Brightest ($5 million of lottery dollars) programs.  NC Grow would provide a “last-dollar” scholarship to all eligible graduates of a North Carolina high school to cover the cost of community college tuition and fees. NC Best and Brightest would establish a new forgivable loan program for high achieving students who pursue undergraduate education degrees and agree to teach in an NC Public school upon graduation.
  3. Workforce training is prioritized through evidence-based investments. The Governor proposes the first significant commitment of state dollars to workforce programs since the recovery began. The investments would use lottery dollars to fund continuing education courses at the same level as curriculum courses ($15 million in each year), provide financial assistance to those seeking industry credentials up to $1,000 per student ($2.5 million in the first year and an additional $2.5 million in the second), double the number of NCWorks career coaches in high schools ($1.1 million in the first year, $1.8 million in the second), provide start-up funding for new specialized workforce programs ($3 million in each year), and fund the support services that have been proven to increase completion rates at both Community Colleges and UNC.
  4. Research and broader connections of community colleges and universities to economic opportunity are funded. The Governor expands support for the translation of research and development into market opportunities ($2 million), supports University centers targeting fields of work like bio-pharmaceuticals and food processing that present growth opportunities and invests in health services and education that reach the surrounding communities.
  5. Measuring performance of post-secondary investments. The Governor also proposes investments that would allow taxpayers and policymakers to better understand the effect of a community college education on wages ($3 million in each year), would study the true costs of workforce programs to ensure they are fully covered in current funding allocations, and develop the information technology systems in the UNC system to monitor student success and institutional performance (one-time investment of $11.9 million in the first year, and a total of $11.5 million in second year).

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2018 Fiscal Year State Budget, NC Budget and Tax Center

Statement from Budget & Tax Center on Governor Cooper’s budget

Statement from Alexandra Sirota, Director, Budget & Tax Center

Governor Cooper has laid out a vision that serves as a positive step toward a higher quality of life for more North Carolinians and communities while seeking to reclaim our national reputation as a state committed to building opportunities and an economy for all.

Rather than follow arbitrary flawed formulas, the Governor has recognized the range of needs in communities and for families and put together a pragmatic plan to respond as a state.

The Governor emphasized, in particular, the role of public employees and teachers in delivering high quality services across the state, as well as the importance of a fortified education pipeline from birth to career in driving better economic outcomes. He acknowledged that public policy can make sure health care, housing and child care are affordable and accessible. He has set aside savings for future Rainy Days while also making additional modest investments in rebuilding those communities hit hard by natural disasters last year.

Governor Cooper could have made even greater progress toward realizing the goal of a thriving North Carolina if his decisions weren’t constrained by the tax cuts that have primarily benefited the wealthy and profitable corporations since 2013.

To sustain and build upon the Governor’s first steps toward a thriving North Carolina, it will be critical that all of our state leaders commit to ensuring the tax code is able to meet the state’s long-term needs and doesn’t continue to ask more from those living on middle and low incomes.

NC Budget and Tax Center, Trump Administration

Three reasons to be concerned about President Trump’s announcement about the federal budget

Today, President Trump announced directions to federal agencies that suggest his plan for the federal budget will be deep cuts to non-defense discretionary spending to pay for significant increases in the country’s defense budget.

President Trump suggested that he would seek a 10 percent increase in defense spending and find cuts to meet the estimated $54 billion required to do so in programs that protect the health and well-being of Americans, provide quality and affordable education and job training and support the infrastructure of a global economy.

Here are just three reasons to be concerned about this preliminary direction for the federal budget process:

  1. Areas of the budget that will likely be cut to pay for increases in defense spending are portions that help Americans access economic opportunities and support institutions that are vital to a healthy economy and democracy. Many of the poverty reduction programs likely to be hit hard play a critical role in the economic security of working-age adults who lack a bachelor’s degree and help strengthen the broader economy.
  2. The 2011 Budget Control Act put in place spending caps on defense and domestic programs, some of which will come into direct conflict with President Trump’s proposal. Changes to this act have the potential to shift costs elsewhere, increasing cuts in certain budget areas or growing the long-term budget deficit. As has been evidenced by sequestration, or automatic budget cuts to date, access to child care, housing and other programs supported with federal dollars ripples through local communities in ways that limit improvements in developmental and economic outcomes of children and their families.
  3. President Trump’s budget announcement today doesn’t detail the various ways in which competing proposals, like plans for infrastructure development, campaign promises to protect entitlements and efforts to cut taxes for the wealthy, will be reconciled in a final budget.
NC Budget and Tax Center

Kansas’ Republican-controlled legislature votes to raise revenue, responsibly address Brownback’s failed tax cut experiment

Here is a little hope on Saturday morning for North Carolina as we enter a budget debate that should have learned the lessons of failed tax cut experiments by now.

Yesterday, the Kansas legislature voted to raise revenue to address another year of budget shortfalls.  Since the failed tax experiment began in 2012, Kansas has seen significant cuts to public schools, health services and community corrections programs to name just a few of the areas hit hard by the lack of revenue.

After two years of addressing the budget shortfalls through more spending cuts and tax increases that hit low-income taxpayers hard,  Kansas leaders finally pursued a more permanent solution to their failure to responsibly budget for the state.

Here is more context from the Washington Post/ AP article:

Kansas’ Republican-led Legislature voted Friday to roll back a deep tax cut championed by Republican Gov. Sam Brownback, conceding it helped put the state in dire financial straits and setting up a possible showdown with him…

The state faces projected budget shortfalls totaling nearly $1.1 billion through June 2019. Even with a big tax increase, lawmakers still would have to approve some stop-gap measures such as internal government borrowing to pay bills through June, until new revenue started flowing in.

Brownback and his allies continue to argue that the personal income tax cuts he championed in 2012 and 2013 are creating economic growth and the state’s problems were largely caused by slumps in agriculture and oil production. Voters rendered a different verdict last year, ousting two-dozen Brownback allies from the Legislature and giving Democrats and GOP moderates more power.