NC Budget and Tax Center

The N.C. budget stalemate, explained in GIFs

Earlier this summer, NC lawmakers passed a $24 billion conference budget that missed a number of opportunities to provide basic services and improve the lives of everyday North Carolinians. Within 24 hours, Governor Cooper vetoed the budget, calling it a “failure of common sense and common decency.”

On July 1, the Fiscal Year began and we didn’t have a budget.

No budget??!! While you might be confused about how we’re still running as a state, it’s because there’s a statute that keeps public programs funded at prior year levels.

This means that enrollment growth for schools and health care isn’t funded, pay raises and increases in retirement contributions for teachers and state employers aren’t provided, and emerging needs aren’t addressed.

A couple weeks after the start of the fiscal year, Governor Cooper released a compromise proposal that keeps nearly every major component of the conference budget — except it also includes a clean Medicaid expansion and eliminates tax cuts to corporations, using that revenue to invest in teachers and schools.

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NC Budget and Tax Center

Federal shutdown is affecting family-run businesses in N.C.

The ripple effects of the federal shutdown are being felt by family-run businesses in North Carolina, according to an article on Friday by Paul B. Johnson of the High Point Enterprise.

Nick Owens and employees at his family-run business are having to turn away customers through no fault of their own because of a ripple effect of the federal government shutdown.

Lanier’s Super Market in Davidson County accepts food stamps from customers to pay for groceries. But the store in Denton is among businesses across the Piedmont, state and nation caught in limbo because their permits to accept food stamps are on hold due to the shutdown.

“Our customers haven’t been able to use food stamps with us since right after Christmas,” Owens said.

Lanier’s Super Market and other grocers were on a schedule to have their food stamp sale permits renewed in late December or January. But the U.S. Department of Agriculture can’t renew licenses now because of the stalemate from the shutdown.

The article points out that more than 2,500 grocery stores and food retailers across the United States haven’t been able to renew their food stamp sale permits since the shutdown began. That total includes 158 businesses in North Carolina. Read more

NC Budget and Tax Center

Budget & Tax Center Statement: Passage of this budget is a new low for North Carolina

Statement from Alexandra Sirota, Director of the Budget & Tax Center, on the budget passage
RALEIGH (June 1, 2018) – A new low has certainly been reached in North Carolina with the passage of this budget. The question now is how much lower will North Carolina’s legislative leadership take our state.

All along, legislative leaders have maintained their commitment to lowering income tax rates to zero.  They are getting closer, and our communities and families are hurting as a result.

Now, because they don’t want to deal with the realities of just how damaging their commitment to “low taxes above all else” is, they want to set a new low standard for the legislative process.

They ignored the voices of everyday North Carolinians, of those who teach our children, the needs of our youngest children and oldest residents, and the evidence of what works to grow the economy and connect communities to opportunity.

They raided federal money intended to extend the reach of programming to young children, and they cut off rural counties with high poverty from tools to revitalize. They failed to put state dollars toward health care as needed, and they earmarked millions for special interests rather than invest in services for all.  They missed the chance to make genuine progress on investing in each child’s education. This new low is a missed opportunity for our state, made worse by the fact that they kept in place $900 million in new tax cuts that will begin in January 2019 and force more bad choices in the future.

Legislative leaders are willing to lock in their bad ideas no matter the consequences.  They could even pursue radical proposals to put their budget ideas into the state Constitution.

Let’s be clear: The consequences are real, life-changing for our neighbors, and damaging to a state that should be seeking the high ground to prosperity.

NC Budget and Tax Center

Statement from Budget & Tax Center Director on Governor’s Budget Proposal

Statement from Alexandra Sirota, Director of the NC Budget & Tax Center: 

The Governor understands that you can’t both cut taxes and invest in children’s education, pay teachers competitively, or build thriving communities. The move to freeze the corporate income tax rate at an already low 3 percent and the income tax rate at 5.499 percent on incomes over $200,000—those in the top 5 percent of taxpayers—is a first and prudent step to shifting away from an approach that has failed North Carolinians.

For years, the NC General Assembly has prioritized tax cuts for profitable corporations and wealthy taxpayers, making tax choices that failed to deliver benefits to rural communities, working people, children and seniors, in particular.

The Governor’s budget stands in contrast, taking a fiscally responsible approach that seeks to build a thriving North Carolina for everyone.  It is a recognition of our historical commitment to the public good, and it should be a signal to the General Assembly to undo their harmful tax cuts that undermine North Carolina’s future.

NC Budget and Tax Center

North Carolina is a cautionary tale for tax cuts, new series shows

New evidence shows that North Carolina’s economy fell behind other states in the Southeast after cutting taxes, while locking in harmful cuts for schools and widening racial inequalities in the state.

A billion dollar shortfall looms in 2020.

These are the main points of a new blog series released today from the Center on Budget and Policy Priorities (CBPP).

  • Tax cuts haven’t caused economy to surge: The CBPP analysis shows that in the years before the tax cuts, which cost the state $3.5 billion annually, took effect in 2014, North Carolina’s economy generally grew faster than the national economy and in line with neighboring states, even though North Carolina had easily the highest personal income tax rates in the region and much higher rates than it has today. Since the tax cuts took effect, North Carolina has lagged behind the overall region’s growth in jobs and GDP.
  • Thanks to tax cuts, large budget shortfalls loom in NC: North Carolina is harming its future by weakening its education system and other public investments that underlie economic vitality in the long run. Over the past decade, North Carolina has cut per-student funding for K-12 schools and higher education by 7.9 percent and 15.9 percent, respectively, after adjusting for inflation.  The tax cuts make it nearly impossible for North Carolina to restore these education cuts, let alone make new investments — such as expanding high-quality preschool — that would better position the state for the coming decades.
  • NC’s tax cuts reinforce racial barriers: This shift has added to the barriers faced by African-Americans, Latinos, and Native Americans trying to get ahead in today’s economy at a time when states should be working deliberately to undo them. More than three-fourths of the net tax cuts since 2013 have gone to the top 1 percent of taxpayers.  And because the tax cuts were so lopsided in favor of the highest income North Carolinians, black and Latino North Carolinians now pay a larger share of state taxes, while white people pay a smaller share.

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