Falling Behind in NC, NC Budget and Tax Center

As North Carolina continues to recover from the Great Recession, most of the jobs that have been added pay low wages, making affording even basic necessities difficult for many hard-working North Carolinians. Raising the state minimum wage and reinstating a state Earned Income Tax Credit (EITC) are two policy tools that North Carolina state lawmakers can use to help boost wages, widen the path out of poverty, and reduce income inequality, a report released this week by the Center on Budget and Policy Priorities (CBPP) highlights.

Wages for the least paid workers are no higher than they were 40 years ago, the CBPP report highlights. Yet evidence shows that lifting the income of families earning low wages provides a range of benefits, including improved learning and educational attainment and higher future earnings in adulthood for low-income young children. Furthermore, raising the minimum wage and an enhanced state EITC together works to put families and individuals on a path to financial stability and self-sufficiency. Read More

Back to School Series, NC Budget and Tax Center

This is part of a Back to School blog series that highlight various issues to be aware of as the 2014-15 school year kicks off. (See Part 1, Part 2, Part 3, and Part 4)

Little things can make big differences in children’s lives. Something as simple as arriving to class with food in your stomach can enhance a child’s learning experience. Many schools across North Carolina recognize this and are offering breakfast and lunch to all of their students at no charge this school year.

As part of the nationwide Community Eligibility Program (CEP), high-poverty schools in at least 36 school systems across North Carolina will provide breakfast and lunch to all students free of charge. This effort not only aims to help end childhood hunger – one in five American schoolchildren can’t count on getting enough nutritious food at home – but also aims to enhance the classroom experience of students. Ensuring that children show up in classrooms each day fed and ready to learn increases the chances of students being more focused, attentive, and engaged.

The school year marks the first year in which eligible schools nationwide can participate in CEP. With all students provided breakfast and lunch free of charge, participating schools are no longer required to collect school meal applications, which reduces administrative costs. These cost savings can now be directed towards covering the cost of the school meals that are provided. Read More

NC Budget and Tax Center

It hasn’t taken long for the costly tax plan passed last year to replace grandiose promises with an unfortunate reality. State officials recently confirmed that the 2013 tax plan passed by state policymakers will cost at least $200 million more each year than initially projected, with a price tag of at least $5.3 billion over the next five years. Our own estimates point to the potential for the total revenue loss to reach $1.1 billion by 2016.

As the prolonged negotiated budget for fiscal year 2015 highlights, North Carolina’s revenue challenge hampers our ability to invest in public education, healthcare services, and other public investments that serve as the foundation of economic growth.

The General Assembly’s Fiscal Research Division (FRD) was charged with assessing the fiscal impact of the tax plan and confirms that the personal income tax rate reduction is having a greater immediate impact on revenue collections. FRD attributes the larger-than-expected eventual revenue shortfall to slower wage growth. But it’s difficult to imagine that the income tax cuts are not driving the greater revenue losses given what we know about who benefits from the tax changes and slower wage growth suggests that the tax changes should cost less, not more. Moreover, slow wage growth raises additional concerns about the reality of a Carolina Comeback. Read More

Falling Behind in NC, NC Budget and Tax Center

Governor McCrory signed a final budget into law for the current 2015 fiscal year, which runs from July 2014 through June 2015, this morning. The $21.1 billion budget includes new spending initiatives – largely pay raises for teachers and state employees – but fails to include additional revenue to sustain this spending in the long-term. Contrary to fueling North Carolina’s economic comeback, as Governor McCrory claims, the final budget continues to fund core public services at diminished levels, well below pre-recession levels, and compromises the ability of the state to get ahead and prepare for the future.  Moreover, it puts North Carolina on a fiscally irresponsible path that will continue to create budget challenges in the years ahead, largely as a result of the tax plan that was little debated and discussed in the final budget.

North Carolina faces a revenue challenge, and actions taken within the final budget make this reality clear. The final budget signed by the Governor spends every available dollar and uses dollars from last year’s budget as a result of the Governor requiring agencies to cut their respective budgets. No funding is available to build up the state’s Savings Reserve fund, which is meant to position the state to weather a future economic downturn. Furthermore, the budget relies on one-time funding sources that, once depleted, cannot be replenished with such low revenue and shifts funding for core public investments such as K-12 education to lottery receipts and early childhood programming to federal block grants.

Such budget decisions are driven largely by the tax plan the governor signed into law last year, which significantly reduces revenue available for public investments. Revised analysis by the General Assembly’s Fiscal Research Division estimates that the income tax rate cuts in the plan will cost at least $200 million more annually than initially expected – more than $1 billion less in annual revenue once the plan is fully implemented. The Governor and state policymakers failed to account for this reality in the final budget, which means that, absent new revenue, more budget cuts to core public services are likely to occur in future years as the tax plan continues to be implemented. Another round of tax cuts is set to occur in January 2015.

Under the final budget signed by the Governor, state spending remains 6.6 percent below pre-recession levels (see chart below). Read More

NC Budget and Tax Center, Poverty and Policy Matters

With a new school year approaching, many local school boards across North Carolina will join an effort to help end childhood hunger. For the 2014-15 school year the nation-wide Community Eligibility Program (CEP) allows high-poverty North Carolina schools to eliminate collecting school meal applications and offer breakfast and lunch to all of their students at no charge.

One in five American schoolchildren can’t count on getting enough nutritious food at home, which can have a negative impact on a student’s academic performance and development. Ensuring that children show up in classrooms each day fed and ready to learn increases the chances of students being more focused, attentive, and engaged.

At least 36 school systems across North Carolina have confirmed their plans to adopt CEP for the upcoming school year. (See map below) Some local school boards plan to adopt CEP district-wide while others will offer a universal meal program in selected schools within their district.

Slide1

A big kudos goes to these school systems that will adopt CEP next year. This serves as a positive step in helping ensure that all North Carolina students are afforded a high-quality, enriching education.

A listing of all North Carolina school districts and individual schools that are eligible for community eligibility for the 2014-15 school year can be found via the NC Department of Public Instruction website.