NC Budget and Tax Center, Trump Administration

GOP’s health plan secrecy and Medicaid per-capita caps should raise alarms in NC

As Americans we should always expect a transparent and open government. An open government strengthens our democracy and promotes accountability, efficiency and effectiveness in government. Unfortunately, the U.S. Senate has continued to promote secrecy when it comes to its draft legislation to repeal the Affordable Care Act.

Yesterday, the New York Times covered this topic and was precise in pointing out that this secrecy has raised concerns among both Republicans and Democrats, stating:

“Senate Republican leaders are aiming to transform large sections of the American health care system without a single hearing on their bill and without a formal, open drafting session. That has created an air of distrust and concern — on and off Capitol Hill, with Democrats but also with Republicans.

I’ve said from Day 1, and I’ll say it again,” said Senator Bob Corker, Republican of Tennessee. “The process is better if you do it in public, and that people get buy-in along the way and understand what’s going on. Obviously, that’s not the route that is being taken.”

“In theory, the bill-writing process is open to any of the 52 Republican senators, but few seem to have a clear, coherent picture of what will be in it. Senator Ron Johnson, Republican of Wisconsin, offered a hint of the same frustration felt by Democrats seeking more information about the bill.

“I come from a manufacturing background,” Mr. Johnson said. “I’ve solved a lot of problems. It starts with information. Seems like around here, the last step is getting information, which doesn’t seem to be necessarily the most effective process.”

This secrecy, along with the fact that Senate Republicans plan to retain the Medicaid per-capita caps without major changes in their version of the House bill, is bad news for North Carolina. While per-capita caps would shift substantial Medicaid costs and risks to all states, North Carolina would face disproportionately larger cuts. [Note: Under a Medicaid per capita cap, the federal government would set a limit on how much to reimburse states per enrollee.]

The reason is simple, North Carolina is a state that meets most of the criteria laid out by the Center on Budget and Policy Priorities for states that would be most harmed by Medicaid per-capita caps. Below is a table with the criteria and a brief assessment of North Carolina against it. Read more

2018 Fiscal Year State Budget, NC Budget and Tax Center, Trump Administration

Report: North Carolina’s state budget needs to plan for at least $13 billion more over the next 10 years to address federal funding cuts

As the N.C. House and Senate continue their Conference Committee to talk about the state budget, federal funding cuts loom overhead. President Trump’s proposed 2018 budget would cut non-defense programs by an estimated $2.5 trillion nationally over the next decade – the largest dollar cuts to programs for low-and moderate-income people proposed by any president’s budget in the modern era.

Given the massive cuts to federal funding proposed by the President, North Carolina would have to come up with at least $13 billion in additional revenue over the next 10 years to maintain existing vital programs, according to a new report from the NC Budget & Tax Center.

The report finds the proposed federal budget would shift significant costs to North Carolina by cutting federal funding for health care, food assistance, and many other areas. The report points out:

  • Under the proposed budget all low and moderate-income programs would see increasing cuts in spending over the next ten years, reaching a 33 percent cut in 2027.
  • The President’s budget would require North Carolina to pay $562 million annually (25 percent) of SNAP (formerly known as food stamp) benefits by 2023. For NC, this means $3.9 billion over the next 10 years.
  • NC would need to come up with at least $6 billion over the next 10 years to maintain Medicaid.
  • In 2018 alone, North Carolina would need to make up $306 million to replace the loss of discretionary grant funding proposed by Trump’s budget. This includes cuts to Social Services Block Grant, the Low Income Home Energy Assistance Program, and the Community Development Block Grants.

Considering both the U.S. federal budget outlook and the need to continue to support thriving communities here in North Carolina and across America, the report concludes with a timely recommendation:

“An important first step will be for North Carolinians and policymakers to oppose further cuts in state revenue in order to adequately plan and prepare for a challenging fiscal environment.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.
NC Budget and Tax Center, Trump Administration

North Carolina to lose $306 million in federal grant funding for important programs under proposed budget

North Carolina would lose $306 million in discretionary grant funding under President Trump’s proposed budget for 2018. This would represent a cut of 10.3 percent compared to the 2017 budget.

Furthermore, analysis shows that 9 important programs that help North Carolinians thrive across the state would be completely eliminated and 14 other programs would see significant cuts. Those affected most significantly by these cuts include women and children, low-income families, dislocated workers, teachers, and students.

The table below shows the major grants to North Carolina that would be eliminated and cut the most under President Trump’s budget.

North Carolina: The major state and local grants that would be cut the most under President Trump’s 2018 Budget
Program FY 2017 Presidents 2018 Budget Percent Cut
Low Income Home Energy Assistance Program $       84,509,000 $0 100%
Social Services Block Grant $       49,176,000 $0 100%
Supporting Effective Instruction (Teacher Quality) $       45,500,000 $0 100%
Community Development Block Grant: Non-Entitlement $       43,433,000 $0 100%
Community Development Block Grant: Entitlement $       27,652,000 $0 100%
Community Services Block Grant $       18,680,000 $0 100%
Student Support & Academic Achievement $       11,287,000 $0 100%
Weatherization Assistance Program $      4,154,000 $0 100%
State Criminal Alien Assistance Program $         3,118,000 $0 100%
WIOA – Youth Activities $       25,235,000 $         15,130,000 40%
WIOA – Adult Employment and Training $       24,109,000 $        14,496,000 40%
Dislocated Workers $       31,023,000 $         18,700,000 40%
Employment Service State Grants $       19,512,000 $         12,086,000 38%
Career and Technical Education – State Grants $       37,165,000 $        26,620,000 28%
Justice Assistance Formula Grants $         6,882,000 $           5,338,000 22%
CDC: Public Health Emergency Preparedness $       14,815,000 $         12,369,000 17%
State Homeland Security Grant Program $         5,489,000 $           4,654,000 15%
Temporary Assistance for Needy Families $     300,440,000 $       271,746,000 10%
Medicaid – Administration $     443,939,000 $       424,383,000 4%
Head Start $     182,170,000 $       174,237,000 4%
Title I – Grants to Local Education Agencies $     450,764,000 $       434,034,000 4%
Child Care and Development Block Grant $       94,311,000 $         91,174,000 3%
Women, Infants & Children (WIC) $   182,514,000 $       176,698,000 3%

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, Trump Administration

Report: “Budgets” a top 5 issue for cities, particularly 98% of all towns in North Carolina (and why Trump’s budget could bankrupt them)

President Trump and the NC Senate have already proposed drastic budgets that would hurt millions of low and middle-income households across the country and here in North Carolina. If all politics is local, it is important to listen to what cities and towns have to say.

The 2017 State of the Cities report released this week by the National League of Cities (NLC) finds that economic development, public safety, infrastructure and budgets are the top issues for communities around the nation.

The report points out that ‘budgets’ are particularly a top issue for states in the South, especially in towns and cities that have populations under 100,000. For NC, this is very concerning considering that 98 percent of all cities and towns in the state, spread across 89 mainly rural counties, have populations under 100,000. Moreover, 75 percent of all cities and towns in North Carolina have populations under 5,000. In other words, 543 cities and towns in NC – out of 552 – are highly likely to be concerned about their budget and therefore see it as a top issue.

The report points out that ‘budgets’ has remained one of the top 4 issues for cities each of the past 4 years.

Here’s the full list of the top 10 issues that matter to cities in 2017:

  1. Economic Development: (Job creation, business attraction, downtown development)
  2. Public Safety: (Investing in police and fire departments, increasing transparency)
  3. Infrastructure: (Addressing maintenance issues with roads and aging infrastructure)
  4. Budgets: (A focus on planning for the future amid grand funding concerns)
  5. Housing: (Affordable housing, homelessness, and zoning ordinances)
  6. Education: (Preparing the workforce of the future)
  7. Energy and Environment: (Impact of climate change and the need to be resilient)
  8. Health: (Addressing the opioid crisis and creating a culture of health)
  9. Demographics: (Countering national fervor by embracing diversity)
  10. Data & Tech: (Becoming innovative by integrating technology into city operations)

Trump’s Proposed Budget Could Bankrupt Cities and Towns

As it pertains to budgets, it is worth noting the National League of Cities issued the following statement this week after President Trump released his proposed budget:

“The administration’s budget proposal would be devastating to cities and towns. No community in America would be better off with this budget, and it could bankrupt smaller cities and towns. It does nothing to create jobs in our communities, and violates the president’s core campaign promise to lift up Americans in communities across the nation.

The White House ignored more than 700 city officials who urged the administration to protect crucial programs, including Community Development Block Grants, TIGER grants and the HOME Investment Partnership Program. These vital programs allow communities to invest in public safety, economic development and infrastructure, and create private-sector jobs.

The budget proposal would have a disproportionate impact on America’s small cities and towns, whose budgets are already stretched thin. In these communities, the programs being targeted are a lifeline for maintenance and investment. For those communities, this budget would spell disaster — and, in many cases, bankruptcy.

As the leaders of America’s cities, we call on Congress to throw out this budget proposal and develop a new plan focused on building prosperity, expanding opportunity and investing in our future. Congress must reject this budget proposal or risk derailing local economies nationwide.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.
NC Budget and Tax Center, Trump Administration

President Trump’s budget does not add up ($2 trillion math error)

President Trump’s proposed budget was unveiled earlier this week and it includes a $2 trillion math mistake.

According to the proposed budget, “a comprehensive overhaul to our tax code will boost economic growth and investment”, and assumes an aggressive 3 percent growth in the economy. This of course differs significantly from the Congressional Budget Office (CBO) projection of moderate 1.9 percent economic growth over the next ten years reported in its most recent budget and economic outlook. [Note: this large a gap between an administration’s growth forecast and CBO’s is unprecedented (see graph).]

Due to the exaggerated growth assumption, Trump’s budget assumes a $2 trillion increase in revenue through economic growth that will balance the budget. However, the math does not add up as the Trump tax cut is also supposed to pay for the Trump tax cuts. So the $2 trillion is a double-counting error.

In other words, the assumed $2 trillion from higher growth is a double-count as it pays for the Trump tax cuts, and then it pays again for balancing the budget.

Overall, it is clear that Congress must step up and craft a budget that actually adds up and is grounded in serving all of the American people.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.