NC Budget and Tax Center, News

Without coming right out and saying it, proposed budget could kill light rail in North Carolina

A single sentence buried on page 179 of the budget bill could effectively kill light rail in North Carolina by creating a kind of Catch-22 for transportation officials.

The seemly innocuous passage reads: “A light rail project is ineligible for scoring, prioritization, and State funding until a written agreement is provided to the Department establishing that all non-State funding necessary to construct the project has been secured.”

While this may not seem so bad on the surface of things, these few words could make it practically impossible to build light rail systems to serve North Carolina’s booming metropolitan areas. Because the state generally must provide matching funds to access federal grants for light rail, this provision could make it impossible to draw down the federal dollars that are available for these kinds of projects. If the provision is not fixed, federal funds would likely flow to other states while North Carolina communities that want light rail would have little recourse.

The provision also flies in the face of legislative leaders’ stated goal of removing politics from transportation investments. In 2013, the legislature created a new system for making Strategic Transportation Investments, a system that was meant to make transportation choices more evidence- and need-based. While defending the plan, Senate President Pro Tem Phil Berger outlined his desire to “be sure that our process is one that’s not political, it should be one that is data driven, focuses on prioritization and encourages planning.” By those standards, the proposed budget language would be a disaster. It would prevent cities from planning for their current and future transportation needs and reinserts politics into the heart of mass transit investments.

Forestalling light rail is also bad for working North Carolinians that lack reliable vehicles of their own. As our cities grow, many low-income residents are being forced to move farther and farther from their places of employment, and expanded mass transit options are vital to closing that gap. Light rail is not the answer everywhere, but it can be a vital piece of the solution in many communities.

Finally, this proposal could make it harder for North Carolina to compete for the jobs of the future. Technology-heavy companies know that many of the people they want as employees like using mass transit, particularly in densely populated urban areas. Relying on cars is already burdensome in some of our state’s biggest cities, and only likely to get worse as these areas continue to grow. North Carolina has been able to compete for many of these jobs based on the low cost of living, at least compared to places like San Francisco and Boston, but as it becomes more expensive to live in our state’s major cities, amenities like light rail will become increasingly important to landing the jobs of today and tomorrow.

Even though the budget will likely pass without the opportunity for amendment, there is still time fix this particular problem. The provision could be removed when the legislature works up a “technical corrections” bill, and that would help keep transportation investments rooted in the kinds of 21st Century options we truly need.

Patrick McHugh is an Economic Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

“Pork” proliferates in the 2018-19 budget

We saw once again this week that backrooms and private meetings are the native habitat of that never-endangered species, political pork. When legislative leaders pulled the curtain back to reveal their 2018-19 budget, it became quickly apparent that deviating from the traditional budget-writing process gave political pork room to grow and proliferate. To be clear, many of these line-items go to reasonable and valuable projects, but the unusually opaque process should give everyone heartburn.

By our count, appropriations that could be seen as pork add up to nearly $35 million in this year’s budget (see table below for the full list). While many of these projects serve important public services, this kind of legislative process is the wrong way to make good policy.

Building budgets is inherently about priorities and investing in the communities that everyone can thrive in.  There is often debate about how much to invest in education versus health care or parks versus roads, and that is particularly acute when lawmakers continue to limit what is possible with a focus on cutting taxes year after year.

But what is most clear over time in the difficult choices of budgeting is that the legislative process does a poor job of making more nuanced decisions about which town deserves a new roof for its community center, or which food bank most desperately needs an infusion of funds. The budget, in the end, should be about prioritizing the systems that will connect every place and every person to the services they need to thrive.

After all, legislators can’t be expected to understand enough about every community’s needs to make wise choices about which specific projects to fund, and even if they could, political pressures and legislative deal-making often intrude on the efficient use of public funds. In large part, the executive branch exists precisely to make specific allocations of funds more evidence-based and rooted in merit. Administrative agencies have the expertise and processes in place to minimize the influence of politics, require that local needs are well-documented, and ensure that recipients of public funds are accountable. Very little of this exists when the legislature steps in and starts directing funds to extremely specific local projects.

Even if many of the specific local projects funded in the current budget have merit, we have no idea how these priorities were chosen or which vital local needs are going unmet. (We also don’t know how the General Assembly’s experiment worked with the last round of hyper-local investments in the final budget last year. Is there evidence out there that taxpayers got a positive return?)

North Carolina has many systems in place to ensure that public funds are spent intelligently and transparently, but the amount of pork in this year’s budget represents a step in the wrong direction.

Patrick McHugh is an Economic Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

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NC Budget and Tax Center, Trump Administration

Trump administration turning its back on refugees, a moral and economic failure

The Trump administration is following through on its threat to bar America’s doors against people fleeing violence and persecution. Trump’s cruel words are matched with devastating deeds, snuffing out America’s light of liberty in many corners of the world.

A new report from the Fiscal Policy Institute shows how dramatically refugee resettlement has declined on Trump’s watch and provides compelling evidence that we are turning away the very people that have long made America the economic power of the world.

Beyond documenting how dramatically the Trump administration has reversed America’s history offering safe harbor to people facing persecution the world-over, the report shows that these policies will hurt the U.S. economy.

The report’s authors interviewed business owners about their experiences hiring and working with people who arrived in the United States as refugees, and the results show that Trump’s policies are cutting businesses off from precisely the kind of dedicated employees that proprietors love to find. For example:

  • Refugees tend to be more loyal employees: Most business owners reported that, once hired, refugees tend to stay in their jobs longer than other workers. As any employer will tell you, replacing good employees is expensive and challenging, so having reliable refugees as part of a workforce can be an enormous plus.
  • Successful refugee hiring can help employers find more reliable workers: Once companies figure out how to successfully support refugees as they become employees, these businesses often find it easier to recruit more people from refugee communities. Just as with retention, finding skilled and dedicated employees efficiently can be an enormous boon for businesses.

Turning our back on people facing war and torment is wrong, and this moral failing will come with economic ramifications now and into the future.

NC Budget and Tax Center

Days before teacher march, architects of slashing taxes defended cuts while providing no evidence of economic benefits

Senate President Pro Tem Phil Berger

Sen. Thom Tillis

A mere two days before thousands of teachers and parents arrive in Raleigh to voice their displeasure at the lack of investment in education, several architects of tax cuts enacted since 2013 (including former House Speaker and current U.S. Senator Thom Tillis and Senate President Pro Tem Phil Berger) defended their policies, often without acknowledging that their tax cuts are the central reason that we have under-invested in schools and communities for years. The event, hosted by the UNC Tax Center, brought together a group of elected leaders, scholars, and business people to discuss the impacts of tax cuts passed in North Carolina starting in 2013.

Elected leaders who slashed taxes largely did not address the harm of subsequent spending cuts. There was virtually no acknowledgement from the elected leaders who spearheaded the effort, that cutting taxes for wealthy taxpayers and profitable companies was the central reason that we have systematically under-invested in schools, roads, healthcare, digital infrastructure, and a host of other vital public needs since 2013. The question was raised by some business leaders, scholars, and audience members, but the elected leaders who bear the most responsibility for passing tax cuts largely avoided the harm that their policies have created.

No evidence presented that tax cuts boosted North Carolina’s economy. Absolutely no compelling evidence was presented that tax cuts have boosted North Carolina’s economy in a meaningful way. Scholars warned that state tax cuts often have very modest effects, even in the best cases, and that it is virtually impossible at present to isolate a unique effect in the North Carolina case.

Cutting corporate taxes more won’t help. Corporate executives and academic scholars largely agreed that cutting taxes on corporations doesn’t make sense right now. We’ve already reduced the corporate rate from 6.9 to 3 percent, and the rate is set to drop again to 2.5 percent in 2019. Both business people and scholars doubted that the additional cut would yield any economic benefits.

Tax cuts made inequality worse. The effect of recent tax cuts on inequality did not receive all that much attention in the discussion, but where it did come up, it was largely acknowledged that the tax cuts in North Carolina since 2013 have made inequality worse. Because the largest share of the benefits have gone to high income taxpayers, personal and corporate income tax cuts have shifted even more capital to the very wealthy. There was no counterpoint to the evidence presented that affluent taxpayers were the big winners.

Patrick McHugh is the Economic Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, News

Is your community paying to enforce Trump’s immigration agenda? More communities saying “no”

While media attention often focuses on President Trump’s stream of insulting and divisive comments about immigration, less attention has been devoted to the administration’s ongoing effort to enlist local communities to carry out his agenda. The Trump administration wants to expand a program called “287g,” which effectively deputizes local law enforcement agents to act as agents of Immigration and Customs Enforcement (ICE).

These agreements can tear communities apart, and have potentially serious fiscal, economic, and legal risks. That is why many communities are looking to end existing 287g agreements or thinking twice before signing up to be the agents of Trump’s immigration agenda. For example, the primary elections on May 8th saw the incumbent sheriff in Mecklenburg, who reauthorized that county’s 287g program, go down to defeat.

The Trump administration did not invent the 287g program, but it clearly sees it as a tool for implementing its agenda. The administration has signed up over 45 new localities to enforce its immigration priorities since January 2017 and currently has agreements in place with six sheriff’s offices in North Carolina (Wake, Mecklenburg, Gaston, Cabarrus, Nash, and Henderson). Alamance County had its 287g agreement terminated due to allegations of discriminatory practices, but has subsequently applied to have it reinstated.

Beyond creating fear and fostering distrust, 287g agreements have far-reaching fiscal, economic, and legal implications for local communities.

Click HERE to receive updates on immigration enforcement issues

Large cost to local taxpayers

When local sheriffs’ offices sign 287g agreements, they are pledging to pay for a big part of the cost of doing immigration enforcement work. This even includes paying for travel and lodging for employees to receive the training required to participate in the program.

This is from the Wake County’s sheriff’s office 287g agreement: “The WSCO is responsible for the salaries and benefits, including overtime, of its personnel being trained or performing duties under this MOA… The WCSO will cover the costs of all WSCO personnel’s travel, housing, and per diem affiliated with the training required for participation in this MOA.”

The local resources that 287g agreements consume could be utilized for other vital public safety needs. When the sheriff in Harris County, Texas pulled out of its 287g agreement, the sheriff’s office was able to reassign ten deputies, and their $675,000 in salary costs to other local priorities.

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