2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s higher ed budgets that fail to ensure affordable higher education

Here are key highlights from Gov. McCrory’s proposed higher education budgets.

Community College System

Consists of 58 community colleges across the state serving all of North Carolina’s 100 counties.

The community college budget follows a larger trend of failing to boost public investment in the state’s education pipeline, with the exception of some additional funding for one-time bonuses, equipment upgrades, and a locally-driven initiative to promote post-secondary success. After years of steady increases in tuition, the proposed budget does not reverse this trend, failing to make post-secondary training and education at community colleges more affordable.

  • Funding provided for discretionary one-time bonuses, maximum $3,000, to selected state employees at NC community colleges ($29.4 million).
  • Savings recognized due to decline in enrollment ($26.2 million).
  • Funding provided for locally-determined support services to help ensure students earn a credential or degree ($16.6 million).
  • One-time funding provided to upgrade and maintain instructional equipment at NC community colleges ($7.5 million).

UNC System

Consists of 16 four-year public universities across the state serving more than 220,000 students, as well as the NC School of Science and Mathematics. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s K-12 education budget: Falls short of ensuring public schools have adequate resources

Gov. McCrory’s proposed revised budget for K-12 education for the upcoming fiscal year maintains the status quo for public investments in public schools. Under the Governor’s budget, state funding per student remains well below pre-recession spending when adjusted for inflation and schools will continue to be hurting for resources.*

Teacher pay is just one thing on a long list that needs to be addressed so that public schools are able to deliver a top-notch education to all students. And while additional funding for pay increases for educators is much welcomed, this increase is largely delivered as one-time bonuses. As the only major component of the Governor’s education budget that is possible under the tax-cut constrained reality, it leaves far more needed to ensure every child’s access to a quality education.

Consequently, the Governor’s proposed budget once again challenges schools to do more with fewer resources and support despite heightened expectations regarding student achievement.

Here are key items in the K-12 education budget. Read more

NC Budget and Tax Center

State leaders need to know: Cash-strapped N.C. homeowners do exist

Simply saying something doesn’t exist doesn’t create a new reality. The Senate Finance Committee voted in favor of a bill yesterday that includes a provision that will continue to require cash-strapped homeowners to pay state income tax on mortgage debt forgiven by lenders, even though no cash is provided to the homeowner. State leaders pushed through this tax change last year and plan to keep it in place this year.

In rejecting a request by Sen. Ford, who represents Mecklenburg, to exclude the provision from the bill, committee co-chairman Sen. Rucho, who also represents Mecklenburg, stated that he had not heard of any North Carolinian benefiting from the tax provision. He made the same assertion last year when making his case for targeting cash-strapped homeowners.

Could it truly be the case that the massive and pervasive mortgage fraud committed by financial entities that ushered in the disastrous national economic downturn bypassed North Carolina? The simple answer is no. In the wake of the crisis, a number of financial institutions agreed to settlements that provide consumer relief to affected homeowners with unaffordable mortgages, which include reducing the amount of principal debt owed on mortgages to make them more affordable. SunTrust Mortgage, for example, agreed to provide as much as $21 million in relief to North Carolina homeowners in a national settlement. The General Assembly’s Fiscal Research Division estimates that requiring cash-strapped homeowners to pay state income tax on mortgage debt forgiven by lenders will generate $8 million in revenue for this fiscal year – an indication that North Carolina homeowners who may be eligible to receive such mortgage relief exist.

Yet state leaders continue to adopt this out of sight, out of mind thinking that was on display yesterday. To the contrary, they expend the necessary energy and effort to push through tax cuts that largely benefit the wealthy and profitable corporations at the expense of hardworking North Carolinians who struggle to make ends meet. This effort to once again target cash-strapped homeowners is yet another example of the disconnect between rhetoric and actual policy decisions by state leaders.

NC Budget and Tax Center

A disconnect between Governor’s guiding principles and policy decisions

Helping those who can’t help themselves and preparing North Carolina for continued growth: These are two of the guiding principles that Gov. McCrory said were behind his proposed budget for the fiscal year that begins in July and that will be released this week. However, these two stated principles in particular, on a list of many, highlight a disconnect between rhetoric and actual policy decisions enacted in recent years.

The Governor made a case for how his proposed budget meets these two particular principles by highlighting the $2 billion infrastructure bond that North Carolina voters passed earlier this year in March. The Governor’s proposal also includes about $36.3 million additional dollars for mental health and substance abuse treatment, health services for individuals with Alzheimer’s, and developmental disabilities services. These proposed public investments are positive steps, yet fall far short of meeting the needs of a growing state.

Here are just a few examples of decisions made by the Governor and state leaders in recent years that do not align with the Governor’s “guiding principles.” Read more

NC Budget and Tax Center, Raising the Bar 2016

Sound fiscal policy choices needed to build a stronger, more inclusive NC economy

This post concludes a series on the state budget featuring the voices of North Carolina experts on what our state needs to progress so that all North Carolinians have a fair shot to get ahead.

State lawmakers will return to Raleigh next week to convene this year’s short legislative session. One primary task for lawmakers is to revisit the state budget for the upcoming fiscal year that begins in July and make needed and desired revisions. More tax changes may also be pursued, which would have implications on what the final state budget looks like and whether spending priorities to meet growing needs can be met.

raise the bar

The desire for more income tax cuts by state leaders would build onto tax changes passed in recent years that have largely benefited the wealthiest in the state and that have significantly reduced revenue available for public investments.

A recently released BTC report highlights the tax swap that has resulted from recent tax changes. Costly income tax cuts have given tax breaks to the wealthiest and profitable corporations. Meanwhile, the sales tax has been expanded to include more goods and services, which particularly harms families and individuals that struggle to make ends meet. Consequently, this tax swap – a greater reliance on sales tax and less on income taxes – has shifted the tax responsibility to low- and middle income taxpayers and away from the well-off. Since 2013, the tax burden on low income taxpayers has increased by $30 on average while it has decreased by around $15,000 on average for millionaires.

The significant revenue loss from the tax cuts cannot be overlooked. The annual revenue loss once all tax changes are fully in place is at least $2 billion. These are dollars that otherwise would be available for the economy-boosting public investments that have been lifted up in the Raise the Bar blog series this week – investments such as reducing persistent Pre-K waiting lists, ensuring that public schools have adequate resources, making higher education more affordable, ensuring healthcare services for the elderly and poor, and helping ensure that economic growth extends to rural and distressed communities across the state.

The results are clear: Even as the tax swap delivers big tax breaks to the wealthy, it reduces resources available for public investments that build a strong economy. North Carolinians should be alarmed by state leaders’ short-sighted focus on tax cuts and their desire to continue North Carolina down this path. Sound fiscal policy choices are needed to build a stronger, more inclusive economy and a brighter future that all Tar Heels want and deserve. It is this vision of building an economy that works for everyone that should guide lawmakers’ decisions during the upcoming legislative session.