NC Budget and Tax Center

There is a lot more that North Carolina policymakers could be doing to ensure that the state’s jobless workers get back to work. Despite the improving economy there remain too few people employed across the country and in North Carolina relative to pre-recession levels. And the changing nature of work characterized most clearly by the lack of a formal employee-employer relationship but also by lower-wages and fewer employers provided benefits is requiring systems to better align and address these conditions.

A new report released by NELP identifies the need for a state-level response in the face of this challenging labor market that is both recovering from the harm of the Great Recession and being transformed into a more precarious and less secure future for work. The strategies outlined in the report, based on the best available evidence of effectiveness, would not only seek to prevent long-term unemployment—a condition that researchers point to as increasingly likely—but also provide greater help for long-term unemployed jobseekers while ensuring a sound unemployment insurance infrastructure.

Here are some the recommendations that are particularly relevant for North Carolina: Read More

NC Budget and Tax Center

A report released this week by Pew Charitable Trust provides new insights into how states can regularly evaluate their use of economic development tax expenditures to ensure that the intended outcomes are being achieved and inform decisions about ongoing commitment of public dollars to those efforts. Just this week the Budget & Tax Center highlighted the importance of such an approach as a way to reduce investments in policies that have proven ineffective and address the revenue shortfall.

Indeed by strengthening the capacity of North Carolina to evaluate tax expenditures, policymakers can make sure that public dollars are put to work building a stronger economic foundation through proven strategies like education. As the Pew report notes, 10 states and the District of Columbia have passed laws since 2012 to require regular evaluation of economic development tax expenditures. The report largely focuses on tax credits available to all businesses in a qualifying industry, rather than on individual tax incentive “deals” signed with specific companies, but the findings are equally important for those types of corporate subsidies. Here are some key findings from their review of other state practice: Read More

NC Budget and Tax Center

This year’s Super Bowl Sunday shed new light on the for-profit college industry after advocates took to twitter to share the latest disturbing facts about the industry’s practices. The Super Bowl was held in the University of Phoenix Stadium, which is named for the largest for-profit college in the country. The university agreed to pay more than $150 million over 20 years for the naming rights on the new stadium in 2006.

In the past year, greater scrutiny of for-profit colleges, those that are managed by companies accountable to shareholders and, or publicly traded, has led to a series of legal actions and rising concern from policymakers about the role of these institutions in a context in which post-secondary attainment is the path to the middle class.

The problems with for-profit colleges are many. First, they tend to cost students at least three and half times as much as the same education at a community college. Second, their students are more likely to leave a program without a degree but with a significant level of debt. Leading to the next issue that default rates are far higher among students who attended for-profit institutions relative to their share of the total population: for-profit students represent 12 percent of all enrolled and 44 percent of those who default on their student loans.

Now, new data secured by the Center for Investigative Reporting shows that taxpayers are subsidizing the for-profit college industry to the tune of $9.5 billion a year. This is because the majority of for-profit institutions rely on public funds through Pell Grants, Stafford loans and various military tuition assistance programs to fund their operations. In fact, the analysis finds that more than 90 percent of these institutions’ revenue is from public funds. Read More

NC Budget and Tax Center

Governor McCrory’s talk about efficiencies, investments and customer service is likely to fall on deaf ears throughout North Carolina. The evidence is clear at this point that we can no longer “do more with less.” We are doing less with less. And we are not seeing our economy strengthen or well-being improve for most North Carolinians. Job growth is concentrated in poverty-wage occupations and has not been sufficient to keep up with our growing population. All income growth since the start of the recovery has gone to the top 1 percent. Without a fair and adequate tax system, North Carolina won’t be able to build the kind of infrastructure of opportunity that will grow our economy to the benefit of all.

NC Budget and Tax Center

Tonight Governor McCrory will lay out his vision for North Carolina and his policy ideas for getting us there. He is also likely to give us a glimpse into his view of current economic, fiscal and social conditions in the state.

At the Budget & Tax Center, we have noted that the central challenge for the governor and all policymakers is building an economy that works for everyone. One of the essential tools in that effort is the state budget.

Unfortunately, while other states are reinvesting as their economies recover from the recession, North Carolina continues to underinvest in the education of our children, the skills of workers and the public health of our communities. In fact, if we were investing at pre-recession levels as a share of the economy today, there would be $3.2 billion more for our schools, courts, clinics and colleges.

But as the economic recovery strengthened—benefiting primarily the wealthiest 1 percent, who have captured all of the income growth since the start of the recovery—policymakers pursued a tax plan that shifted the tax load onto middle- and low-income taxpayers while giving a tax break to the state’s wealthiest and profitable corporations. It also reduced the dollars available for core investments in our economy, costing the state almost $900 million this current fiscal year and a projected more than $1 billion in the fiscal year that begins in July. In tonight’s State of the State, I want Governor McCrory to talk about how he will address the cost of that tax plan and make sure everyone is contributing to the infrastructure of opportunity that has made our state great.

Yesterday the BTC released a brief outlining five strategies that could address the cost of the tax plan and provide some revenue for much-needed investments. These strategies include: establishing an income tax rate structure based on ability to pay; reinstating a critical tax credit for working families before expanding the sales tax; making sure that large, profitable corporations pay to support the services they enjoy; eliminating special tax breaks that don’t help our economy; and avoiding short-sighted budget cuts and the privatization of services that can cost us more down the road. These are sound policy ideas that should be part of lawmakers’ approach in this long legislative session.

An economy won’t grow nearly as strong for nearly as long without a focus on providing opportunity to everyone. The barriers to the middle class will only be higher if policymakers don’t ensure that all communities and all North Carolinians can work, earn a living wage and participate in their communities’ economic and civic life. Read More