NC Budget and Tax Center

Another round of tax cuts for corporations, extended tax breaks for selected industries, and considerable fee hikes for families and businesses are included in the tax and budget package that the House leadership unveiled yesterday afternoon. Because tax changes affect the level of state resources that are available for investment, lawmakers must decide on its tax priorities ahead of approving their budget bill for the upcoming 2015-17 biennium. The House Finance committee tweaked the tax changes last night and now the budget bill is moving through the committee process with the expectation of a final vote on the House floor by Friday.

How the state raises the money that supports public schools, health care, courts and other core supports to the economy and communities should get just as much scrutiny as the spending side of the budget debate—but this is rarely the case. Examining how lawmakers pay for the budget is important in light of the 2013 tax plan that continues to drain resources, which otherwise could have been used to build opportunity and replace the worst cuts enacted since the economic downturn.

The House leadership pays for its FY2016 budget proposal in the following way: Read More

NC Budget and Tax Center

This piece was originally featured on Women AdvaNCe’s blog and is cross-posted here.

Working Tar Heel moms are never off the clock. From laboring at the workplace all day to tucking kids in at night, we put in a lot more than a full day’s work. Much of the work is tireless, thankless, and unpaid. But for the paid work, every dollar moms work for is hard earned. These are some of the many reasons why we celebrated moms this week.

Flowers and breakfast were great, but this Mother’s Day we needed to keep our sights on what’s happening in Washington, D.C. Congress can help 750,000 moms right here in North Carolina by making permanent improvements to tax credits that put money back into the pockets of moms who’ve earned it. Without action from Congress, these credits expire at the end of 2017.

The state’s economy is experiencing a boom in low-wage work—a trend that is falling disproportionately hard on women. For more than 21 million working moms across the country, including 763,000 in North Carolina, the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are important tools that help them make ends meet in today’s economy. By offsetting income and sales taxes, these credits boost income, support work, and reduce poverty—especially among children.

Allowing moms to keep more of what they earn also helps keep poverty in check. Read More

NC Budget and Tax Center

Last week, state officials announced that revenues are estimated to come in $400 million above projections set by the state. This is good news for North Carolina, as we previously noted, but it’s important to remember that it is a relatively small boost that doesn’t come close to covering the cuts to services made since the recession and is likely one-time money driven by the improving national economy, not North Carolina’s tax code. These considerations are timely as the House plans to fast track its budget, with the goal to release and approve a proposal by the end of next week ahead of the holiday weekend.

Most importantly, this revenue announcement will not come close to addressing the challenges that state budget writers face. There remains a very deep level of underinvestment in schools, higher education, and communities, and lawmakers’ choice to pass cut taxes that primarily benefit the wealthy and profitable corporations in 2014 and again in 2015 means that there are far fewer dollars available to position the state competitively.

Here are a few things about the revised revenue estimates that state lawmakers should keep in mind as they work on the state budget:

  1. A surplus means we have more than we expected, not that we have more than we need.

Read More

NC Budget and Tax Center

The Budget and Tax Center’s weekly posting of Prosperity Watch takes a look at how North Carolina’s communities are grappling with stark racial income disparities. Economic exclusion has its roots in predatory and discriminatory economic policies dating back centuries.

The harm of that economic exclusion is stark. Communities of color are far more likely to live in poverty than their white counterparts. To match the state’s white poverty rate of 12.3 percent, approximately 464,000 North Carolinians of color would have to be lifted above the poverty line. Racial disparities keep the economy from reaching its full potential to the tune of $63.53 billion, meaning bringing down poverty among people of color is an economic imperative. It’s also a moral imperative too.

Check out the latest Prosperity Watch for the details.

NC Budget and Tax Center

Food assistance for vulnerable communities would be slashed deeply under budget resolutions that the US House and Senate budget committees approved last week. The cuts would likely increase hunger, thrust more people into poverty, and push families that are poor even deeper into poverty. Considering that North Carolina has the 5th highest level of food insecurity in the nation, the proposals would deliver a huge blow to North Carolinians living paycheck to paycheck and struggling to provide food to their families.

Under the House plan, the SNAP program—formerly known as food stamps—would be block-granted and cut by at least $125 billion, or one-third, between 2021 and 2025, according to experts at the Center on Budget and Policy Priorities (CBPP). There is some flexibility in terms of how states would be able to carry out the deep funding cuts. If states decided to rely solely on benefits cuts, the average SNAP recipient would face a $55 per month cut in food assistance. For a family of 4 that cut is about $200 a month—or worth about one-quarter of a very low-cost meal plan. States could also turn to eligibility cuts and reduce income limits to achieve the cuts. Either way, cuts of this magnitude will bring harm to families, children, and other vulnerable groups.

North Carolina would lose at least $3.8 billion in food aid over those five years. That would force North Carolina policymakers to make some very difficult decisions about whose food assistance to reduce or terminate, impacting many Tar Heel families who already find it difficult to pay the bills and meet their most basic needs. Read More