NC Budget and Tax Center

Revenues that fuel the state budget are growing so slowly that they are not even keeping pace with population-plus-inflation growth, according to Barry Boardman who is the chief economist for the state legislature’s non-partisan Fiscal Research Division. Weak economic growth and tax cuts are keeping state revenues low, Boardman explained during a presentation that he gave to lawmakers earlier this week.

More tax cuts are looming too—a move that will sustain the damaging trend of slow revenue growth that makes it harder to meet basic needs and build a stronger economy. The House and Senate leadership put forward budgets that included additional tax cuts totaling approximately $652 million and $950 million, respectively, over the next two years.

The presentation shows that during the immediate years before the Great Recession, state revenues were growing faster than the inflation-plus-population benchmark. At that time, the state tax code was better suited and comprised of a progressive income tax based on ability to pay. The trend reversed after the 2008 fiscal year, with the population-plus-inflation growth rate outpacing revenue growth. The economic downturn caused revenues to plummet. And before revenues were able to fully recover back to pre-recession levels, lawmakers cut taxes deeply as part of the 2013 tax plan.

Revenues are not expected to outpace population-plus-inflation growth in either of the next two years; they are expected to remain below the long-run historical average. Read More

NC Budget and Tax Center

North Carolina is losing ground on key economic indicators such as child poverty and family economic security. A new report from NC Child  paints a bleak picture of how children are suffering from the fallout of an economy that is downright broken for many North Carolina families, as well as state lawmakers’ recent policy decisions. Genuine progress is within the state’s reach if lawmakers make smart investments and enact better policy choices.

More than a half of a million children belong to families that are living in poverty and struggling to pay the bills, even though the state just entered into the sixth year of the official economic recovery. In fact, child poverty is higher now than it was when the recession hit: 1 in 4 children currently live in poverty compared to 1 in 5 children in 2008. And, poverty has the fiercest grip on children of color and children under age five here and across the United States.

Previous research shows that three-quarters of these children have at least one parent that works, but low wages and unstable employment keep families in the economic struggle. This economic reality is further confirmed in the NC Child report, which finds that nearly 1 in 3 children live in families that lack secure employment, an increase since the recession hit. Read More

NC Budget and Tax Center, Uncategorized

As state lawmakers negotiate behind closed doors on a final budget deal, North Carolinians came together on Twitter to have their say on the smart investments that will best move the state forward. North Carolinians know that if we want to build a more inclusive and prosperous state for everyone, the state budget is key to getting there. Securing that goal, however, requires state lawmakers to pursue fiscal policies that enable North Carolina to reinvest and rebuild in the foundations of a strong economy.

Better choices are available than the ones that the Senate and House leadership are pursuing. That’s why every day North Carolinians and representatives from advocacy groups participated in a Twitter Chat, using the #MyNCBudget hashtag. Participants quickly pointed out that further tax cuts—as proposed in both the House and Senate budgets—would hamper the state’s ability to realize their vision for investments that benefit children, families, and communities across the state. They urged lawmakers to reinvest in early childhood education, K-12 and higher education, healthy communities, justice programs, living-wage policies, and a lot more.

There were so many strong voices that the conversation was trending in the Raleigh market. You can check out the conversation on Twitter at #MyNCBudget. Below is a preview of the discussion. Read More

NC Budget and Tax Center

Within the last month, policymakers in three states approved tax changes that will strengthen family economic security and support a stronger, more inclusive economy. Policymakers in New Jersey and Rhode Island approved expansions in their state Earned Income Tax Credits (EITC) and California officials adopted its first state EITC, which goes to people that work but earn low wages so that they can better make ends meet and avoid raising their children in poverty.

North Carolina is no longer among the 26 states that have a state EITC. Our state lawmakers allowed the state EITC to expire in 2013 when they enacted deep tax cuts that primarily benefited the wealthy and profitable corporations. The result was a tax shift—away from the wealthy and onto everyone else—that did nothing to improve the financial well-being of people who work hard for low pay and struggle to pay the bills.

On the other end of the spectrum, New Jersey lawmakers approved an increase in its state EITC to 30 percent from 20 percent of the federal credit that will benefit over half a million families. Read More

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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