NC Budget and Tax Center

Predictions of Minnesota’s economic demise were greatly exaggerated

This guest post was contributed by Nan Madden, director of the Minnesota Budget Project in St. Paul, Minnesota.

Minnesota is basking in some attention in news outlets across the nation highlighting its strong economy, low unemployment numbers and a median wage sitting above the national average.

That’s not the scenario painted two years ago by opponents of Minnesota’s tax reform bill. At the time, opponents predicted economic catastrophe. Instead, Minnesota is thriving.

In the last two years, Minnesota has made smart changes to its tax system that positions the state well for long-term economic growth. The 2013 tax reform plan came after years of budget deficits and deep cuts to public services, and it allowed the state to make investments that lay a strong foundation for prosperity, including increased funding for early childhood education, schools and more affordable higher education. These investments will pay off in the long run by producing the highly-educated workforce that has been one of the keystones to Minnesota’s economic success.

These changes also modernized the state’s tax system so that it generates adequate revenue for a thriving state in a 21st century economy, and made the distribution of taxes across income groups more even.

A vital component of the 2013 tax reform was the creation of a new income tax rate on the 2 percent of Minnesotans with the highest incomes. The package also raised revenues by ending several corporate tax preferences and increasing tobacco taxes. The 2013 tax reforms – as well as actions in 2014 – took additional steps to make Minnesota’s tax system less regressive. Lawmakers expanded Minnesota’s state Earned Income Tax Credit and increased property tax refunds for renters and homeowners.

And a study released earlier this year from the Minnesota Department of Revenue shows those efforts have moved us in the right direction. Overall, the tax changes made the past two years raised taxes on the highest-income Minnesotans closer to the state average, and lowered taxes for all other income groups. While our tax system is still regressive, meaning the percentage of income paid in taxes goes down as incomes rise, it will be significantly less so in 2017 than 2012. The highest-income Minnesotans still pay the smallest share of their incomes in total state and local taxes, but the gap between them and other Minnesotans has closed considerably.

After more than a decade of frequent budget deficits, Minnesota now is fortunate to have a $1.9 billion surplus for the upcoming two-year budget cycle. The surplus doesn’t mean the state should reverse course. As Minnesota’s legislative session enters its final weeks, we’re urging policymakers to continue on the path of making our tax system more fair and not offer large, unsustainable tax cuts to a privileged few.

While Minnesota’s economic success is making headlines today, the tax reforms taken over the last two years have set the stage for economic progress for years to come.

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

Raise the Bar: Paying more for less in higher education

This post is part of a series on the budget featuring the voices of North Carolina experts on what our state needs to progress.  Elizabeth Grace Brown is a student at UNC Chapel Hill and is the author of this piece.

I’ve spent my entire educational life in North Carolina public schools, from kindergarten to today. My schools have always been excellent. I had good classroom sizes, dedicated and attentive teachers, and curricula rich in science, arts and literature. My schools strove to maintain a balance between supporting and challenging me. The guidance I received from teachers and faculty (and from my mother, who’s also a public school teacher in NC) led me to UNC Chapel Hill. But as I grew older and closer to graduation, I could already see that quality eroding. My elementary school’s magnet status was threatened, my high school had no books for us, teachers quit and students dropped out at alarming rates. I have benefited greatly from excellent public education, and budget cuts have put that education in jeopardy.

And I spent my primary education believing that if I worked hard enough, I could graduate and get an affordable, world-class college education in my home state, too. That promise, if it was ever true, certainly seems less and less within my reach every day. Every time tuition is raised, by the Board of Governors at the urging of the legislature, I go more into debt. Policy makers seem like their concerns about student debt revolve around parents and families paying tuition, but that’s not the case – my loans are on me. Asking your parents for help paying for college is a luxury that’s already out of reach for so many North Carolina students.

And I refuse to believe any longer that the increasing cost and declining quality of education in this state is something that these policy makers can’t help. Funding isn’t a just a question of allocating resources efficiently, it’s a question of values. And it’s clear that NC leadership doesn’t value education — not as much as they value tax cuts for the wealthy, or corporate subsidies. The most recent funding increases barely scratch the surface of the damage that’s been done under the guise of fiscal responsibility. Among this state’s politicians and leaders, talk of supporting education is plentiful – but talk is cheap.

And the lip service they pay to the value of education is selective, too. They love fields that will bring more profit to the already wealthy: finance, business and STEM, but not one of the forty-six degree programs that the Board of Governors just decided to cut. They don’t care for us to become critical thinkers, to know our own histories and the histories of our marginalized communities, to grow as people.

Steven Long of the Board of Governors made it clear when he said, regarding these program cuts: “We’re capitalists, and we have to look at what the demand is, and we have to respond to the demand.” They treat our education like it’s a commodity —  but they still expect us to pay more for less! As an Economics major, as a student, as an organizer and as a North Carolinian, I can tell you plainly — this doesn’t make sense, and this can’t last.

NC Budget and Tax Center

New interactive data tool to assess how your county is faring

The release of the 2013-2014 Economic Snapshots for all 100 counties provides another opportunity to reflect on how our communities are faring in today’s economy. The official economic recovery began in mid-2009 but has been slow to replace the jobs lost during the Recession and quick to produce primarily low-wage jobs that are holding incomes down and keeping poverty high.

A new interactive at NC Policy Watch features a few socio-economic indicators from the snapshots, including the change in employed persons since 2007, the poverty rate, the graduation rate, life expectancy and nominal median hourly wage change over the recovery. Below is a preview of the findings but you can find all the county profiles here and one for North Carolina too. Read more

NC Budget and Tax Center

Immigrants and North Carolina’s economy

This week at Prosperity Watch, we featured analysis of the role that immigrants are playing in communities that would otherwise be experiencing population decline. Immigrants represent not only a benefit in changing the demographic picture in a county.  Since immigrants are more likely to be of prime-working age, participate in the labor force and own a business than the native-born population, immigrants can make a powerful economic contribution to North Carolina’s rural counties in particular. Research has shown that immigration supports employment growth, that immigrant integration into diverse occupations delivers greater resiliency to a region and that immigrant-owned businesses can have a powerful revitalization force in communities.

Now new analysis from the Center for American Progress finds that, not surprisingly given the work referenced above, that the Executive Orders on immigration that would provide temporary status to parents of children born in the United States (DAPA) and enhance the program for childhood arrivals would generate economic benefits for the country.  From their analysis: Read more

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

Raleigh keeps North Carolinians in a college crunch

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