NC Budget and Tax Center

With one day left in the current 2015 fiscal year, state lawmakers reached a stop-gap spending deal today that would avoid a shutdown and keep state programs and services operating until August 14. The House approved the deal—known formally as a Continuing Resolution—tonight, with the Senate poised to follow suit tomorrow morning.  The deal is required because the state House and Senate leadership will not be able to iron out the differences between their respective budgets by time the new fiscal year begins on Wednesday, July 1.

State legislative leadership opted for a 45-day continuing resolution to fund state government. It would fund current programs and services at existing levels, with three major exceptions that are listed below.

  • Budget cuts to programs, services, and vacant positions would not receive funding under the temporary deal if the House and Senate included identical cuts (i.e. items that are not in controversy). Filled positions that are cut and not in controversy would receive a 30-day notice before termination. It is unclear how many positions would be cut under the temporary deal.
  • Public schools would receive additional money to cover the costs of student enrollment growth. There is no additional money for Teacher Assistants, driver’s education, or reduced classroom sizes—which are major points of contention between the House and Senate approved budgets. As such, local school districts are left waiting for a complete budget picture for the upcoming school year.
  • Beginning teachers would receive another boost in pay, to $35,000 from $33,000. But the deal freezes pay for the remaining teachers and all state employees. Raises will be negotiated upon going forward.

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NC Budget and Tax Center

State legislators are expected to pass a stop-gap measure today to address the expiration of the current spending plan, which runs through June 30 or next Tuesday. The measure, known formally as a Continuing Resolution, would allow North Carolina to avoid a shutdown and keep state government operating. The measure would give the leadership in the state Senate and House additional time to iron out the stark differences between their respective spending plans and approve a final budget.

Absent the stop-gap spending measure, the governor would only be authorized to spend money on “essential” programs and services.

It is not uncommon for state lawmakers to pass a stop-gap spending measure, which can last as long as they choose. In the recent past, the measures have lasted between two weeks and thirty days. Lawmakers last approved a stop-gap spending measure in 2013. That resolution permitted state agencies to spend up to 95 percent of their authorized budgets from the current fiscal year. The Office of State Budget and Management determined how to trim the other 5 percent. Before that, lawmakers approved the measure three times in 2009.*

If lawmakers miss the deadline at the beginning of the second year of a two-year budget, that budget simply continues unless the governor provides further instructions. That’s what happened last year when Governor McCrory directed budget cuts. Read More

NC Budget and Tax Center

During the Senate budget debate last week, some lawmakers demonstrated a lack of understanding—or a willingness to ignore the economic reality—of how money loses its value overtime. By ignoring inflation, Senate leadership readily claimed that education spending in the state is the highest that it has ever been. This claim, however, when placed in proper context is not factually accurate, as pointed out in a new Fact Check from WRAL.

In fact, when accounting for inflation, the largest state education budget was in the 2008 fiscal year, the last budget enacted before the recession hit.

The “fairy tale” denial of how inflation works—a basic Economics 101 concept—signals that the Senate leadership is sensitive to public concerns over the erosion of the state’s funding commitment to services such as high-quality public schools, health care, and child care. North Carolinians have seen and felt too much to be fooled into thinking that today’s investment in these public services exceeds pre-recession levels. That just doesn’t bear out in the data or in our current lived experience.

Here is an excerpt from WRAL’s fact check: Read More

NC Budget and Tax Center

The state Senate is set to take a third and final vote on its two-year spending plan today, nearly a month after the House approved its budget. Next, each chamber will select respective leaders to negotiate in “conference” to iron out differences between the two budget proposals. The final budget agreement will head back to each chamber for another vote and then to the Governor’s desk.

How the state budget is funded and what it ultimately supports matters for all North Carolinians’ daily lives. We know that high-quality public systems beget economic growth and prosperity. Research and the lived experience of North Carolinians prove it. That’s why we should all be concerned that both the House and Senate budget plans include sizeable tax cuts that hamper our ability to rebuild and replace the most damaging cuts enacted in the aftermath of the recession and 2013 tax plan. Read More

NC Budget and Tax Center

The state Senate unveiled a proposal yesterday that would take the modest revenue gains that our state is experiencing and give them away in the form of tax cuts rather than reinvest them in the building blocks of community well-being. That would be a mistake. Lawmakers already deeply cut revenue collections in 2013 and this plan would double down on those cuts and flawed strategy.

The proposal would hand out more costly tax cuts to large, profitable corporations, lower the personal income tax for the third time, and slightly expand the sales tax to more services—all at the expense of everyday North Carolinians. It will neither enable the state to replace the worst cuts enacted in the aftermath of the recession nor restore the state’s economy to a sound footing, as my colleague explained yesterday.

The cost of the Senate leadership’s proposal grows to nearly $1.1 billion per year once the plan is fully phased in.* That cost is roughly the amount of money that the state invests in the entire Community College system, which serves all 100 counties and is tasked with preparing today and tomorrow’s workforce. Over the next biennium alone, revenue losses would total $951 million. That means a lost opportunity to catch up, rebuild, and keep up with the needs of children, families, and communities across the state.

All North Carolinians will the pay price. The graphic below illustrates the potential reach of those revenues and highlights how the revenue could instead be reinvested in things that benefit us all. Read More