Commentary, NC Budget and Tax Center

Learn the facts that proponents of more tax cuts often ignore

As the Senate passed yet another round of tax cuts (which would largely go to wealthy people and companies), proponents tried to claim that past tax slashing has fixed our economic wagon. Not so fast. Hard numbers and lived experience tell us that several years of tax cuts have not addressed North Carolina’s most pressing economic problems.

A job does not guarantee escape from poverty or that people can afford the basic necessities.

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2018 Fiscal Year State Budget, NC Budget and Tax Center

Tip-toeing in the right direction: Gov. Cooper’s budget expands economic, cultural & environmental investments

Logo for Natural and Economic Resources BudgetGovernor Cooper’s first budget for Natural and Economic Resources makes a number of moves in the right direction, albeit mostly modest steps more than ambitious strides. After years of giving away big tax breaks to wealthy people and profitable corporations, there is no funding for truly bold initiatives. That said, several specific provisions in the Governor’s budget seek to fill some of the holes left by years of neglect and to extend some important economic development initiatives.

  1. Expanding broadband to under-served households. The Governor’s budget would set aside $20 million in the 2017-18 fiscal year for grants and planning to bring broadband connectivity to under-served communities. $14.5 million would create a grant program to support local governments, telephone cooperatives, and electrical cooperatives that are extending broadband connectivity to currently unserved communities. The remainder of the funds would support planning and implementation activities at the state level. This level of investment would come nowhere near addressing the lack of reliable and high-speed internet across much of North Carolina, but it could move us in the right direction.

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NC Budget and Tax Center

Is North Carolina going to break its promise to retired state employees?

Unless you’re a fiscal policy wonk (don’t be ashamed if you are), you may not know that North Carolina needs to figure out how to keep a more than $25 billion promise.

House Bill 24 and Senate Bill 22 would create a committee to study options for covering the future cost of paying for the future health care costs of retired state workers. There is no easy fix, but here are a few things to keep in mind as this debate unfolds.

We’re not in crisis yet, but this is a serious concern. Like most states, North Carolina currently relies on a pay-as-you-go model for covering the health care costs of retired state employees, meaning that we are paying now for the health costs of retired state workers, essentially paying for service to the state that has already been rendered. This also means that we have not set aside funds for future retiree health care costs, which is commonly referred to as an “unfunded liability.” North Carolina’s unfunded obligation to state workers has increased over the last few years and it is projected to continue growing. Unfunded retiree health benefits are not broadly seen as a crisis yet, but the current trajectory is toward needing larger and larger yearly appropriations to pay for retired state workers’ healthcare.

We should not balance our books on the backs of people who have served our state. HB 24 and SB 22 identify several possible options for reducing the size of North Carolina’s unfunded obligation to retired state workers (all of which were previously studied by the Program Evaluation Division of the General Assembly in a 2015 report). Unfortunately, several of the specified alternatives would impose the costs on current and retired state workers, the people who teach our children, pick up our mess, safeguard our communities, and do myriad other jobs that make North Carolina a great place to live. In the future, these moves could dramatically undermine our ability to recruit dedicated and talented people into public service. Many state employees have not seen a meaningful raise in years, which is already making it hard to recruit workers, and that challenge would only compound if we start walking back promises we have made to secure the retirement of state workers. Read more

Commentary, NC Budget and Tax Center

Recent executive actions and rhetoric could weaken North Carolina’s economy

Recent executive actions and words are likely to cost more lives than they save, and they are already eroding the United States’ standing as a bulwark for democracy and human rights. Beyond the social and political consequences, these decisions could have profound and long-lasting economic ramifications as well.

As we documented in a report from 2015, immigrants are essential to the economic health of communities across North Carolina, both rural and urban. Among other important economic facts, the report provides evidence for three central economic lessons that we should keep in mind right now.

Welcoming communities are more prosperous: On average, counties with large immigrant populations have lower unemployment rates, lower levels of poverty, and higher wages than counties with few immigrants. Even just comparing among rural communities, counties with larger immigrant populations generally fare better than counties with fewer immigrant residents.

Immigrants are essential to the small business community: Main street North Carolina would suffer dramatically if immigrants were not swelling the ranks of willing local entrepreneurs. More than 20% of Main Street business owners in North Carolina are immigrants and immigrants account for more than 80% of the new Main Street business owners since 2000. The next time you drive down Main Street, or visit your local shopping mall, imagine what it would look like if 4 out of every 5 business opened since 2000 were still shuttered.

Revitalizing neighborhoods and reversing population decline: Both as entrepreneurs and residents, immigrants have helped to breathe renewed life into communities across the state. The majority of immigrants live in North Carolina’s urban areas, but some of the most profound local benefits have been felt in small towns and rural communities where immigrants have muted or reversed population decline and bolstered local economies. In fact, nine of the ten counties that have seen at least a tenfold increase in immigrant residents since 1990 are in rural parts of the state.

NC Budget and Tax Center

Change of administrations comes amid longest run of growth in modern U.S. history, but also fundamental economic challenges

Depictions of the North Carolina economy range from overly rosy to falsely apocalyptic, but the reality falls squarely in the middle, according to labor market data released today. The final state-level economic readings for 2016 show a decidedly mixed economic picture.

“These have not been the best of times, but they haven’t been the worst of times either,” said Patrick McHugh, policy analyst with the Budget & Tax Center, a project of the NC Justice Center. “The United States has experienced the longest period of a national economic expansion in generations over the last six-plus years. But growth has been modest, wages are just starting to improve, and some communities have never fully recovered.”

The December labor market data underscore a number of important economic realities, including: Read more