NC Budget and Tax Center

North Carolina is the fifth hungriest state in the nation. Yet, the state Senate gave tentative approval to a bill that unnecessarily restricts food aid for childless adults who are very poor and live in areas where jobs are scarce—regardless of how hard they are looking for work.

States can temporarily suspend work-related time-limits on federal food aid for areas with sustained high levels of unemployment. North Carolina officials applied for a waiver in July for 77 of the state’s 100 counties due to a severe lack of jobs available that hampers North Carolinians’ ability to meet the work requirements (see map below). The Senate measure, however, would permanently ban the state from pursuing this option irrespective of how local economies are faring or whether employment and training opportunities actually exist.

Between 85,000 and 105,000 unemployed childless adults in North Carolina would lose food aid in 2016 because they can’t find a job if legislators prohibit the Governor’s administration from seeking a new waiver.*   Read More

NC Budget and Tax Center

Economic hardship persisted at high levels in the nation and North Carolina in 2014, according to new figures released today from the Census Bureau’s Current Population Survey (CPS). The 2014 national poverty rate remained flat at 14.8 percent and still well-above pre-recession levels five years into the official economic recovery. There were 46.7 million Americans living below the official federal poverty line, which was $11,670 for an individual and $23,850 for a family of four in 2014.

In the Washington Post today, Jared Bernstein—a well-respected national economist—explained that poverty is stuck high despite economic growth because the gains of economic growth are accruing mainly to top earners:

“Clearly, the improving economy and falling unemployment have yet to adequately lift the living standards of middle- and low-incomes. The census data show that almost 3 million more people were working year-round in 2014 than in 2013, yet real median earnings were unchanged for both men and women. Poverty remains higher and median incomes lower than before the recession, and this pattern — taking longer in the upturn to make up the losses from the downturn — seems dangerously embedded in the economy.

What explains this economic disconnect between growth, income and prosperity? While longer-term trends — globalization, technology, the absence of full employment, low bargaining power for many workers — have been in play for decades now, in recent years, fiscal policy has been insufficiently supportive of growth, and, in our age of increased income inequality, it takes longer for expansions to reach middle and low-income households.”

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NC Budget and Tax Center

Many pundits and outlets are describing the joint budget deal as a “compromise” between the inadequate House and Senate budgets. But North Carolinians from Murphy to Manteo know that we cannot compromise our future.

By pursuing deeper tax cuts, policymakers have failed to strengthen public education, public health, and safety, and the other building blocks of a strong economy.

The new tax plan will lose $383.6 million over a two-year period, with the annual loss ballooning to $692.9 million by the fifth year. Revenue losses will grow by another $458 million over the next two years when accounting for corporate tax breaks that are already scheduled to go into effect. All of these revenue losses will add to the damage from the 2013 tax cuts, which result in $1 billion in lost revenue each year when fully implemented.

That’s why it’s no surprise that there are a lot of investments in vital public services that are needed but missing from the new budget deal, like public education, public health and safety, and rural economic development. There has been plenty of coverage of what is in the budget over the last day and a half but there has been little coverage of what’s not in the budget.

Below is a short list of investments that are missing in action but still greatly needed to build a stronger, more inclusive economy for us all. Read More

NC Budget and Tax Center

Yesterday, legislative leadership unveiled a joint budget deal that puts the train on the wrong tracks by pursuing deeper tax cuts at the expense of strengthening public education, public health and safety, and the other building blocks of a strong economy. The deal includes another costly round of income tax cuts, additional tax breaks for selected industries, and an expansion in the sales tax base to include installation, repair, and maintenance services. The tax plan will lose $383.6 million over a two-year period, with the annual loss ballooning to $692.9 million in by the fifth year.

The state Senate is scheduled to give preliminary approval of the 500-plus page deal at 2pm today and final approval tomorrow, despite its 11:30pm release last evening. The House is expected to vote on the deal as early as Thursday, with it headed to the Governor’s desk after a final vote. The stop-gap spending measure that is currently in place expires Friday at midnight and would need to be extended for a fourth time if a final budget deal is not in place by then.

While most of the public budget debate this week will be on the spending side, examining how lawmakers pay for the budget deal is just as important. This is especially true due to this new round of costly tax cuts that come on top of the $1 billion annual tax cuts approved two years ago. Both tax plans drain resources that otherwise could have been used to build opportunity and replace the worst cuts enacted since the economic downturn. Read More

NC Budget and Tax Center

As we edge closer to the 16th anniversary of Hurricane Floyd, it is important to review the vital role that state emergency funds play when disaster strikes. Lawmakers in North Carolina tapped into state “rainy day funds” to help cope with the storm’s aftermath: the cost of providing assistance to families in need and rebuilding destroyed communities. Unfortunately, the North Carolina Senate is seeking to weaken access to our rainy day fund, even in times of true emergency.

Floyd, which hit about a week and a half after Tropical Storm Dennis, caused some Tar Heel families to lose loved ones, jobs, and all of their possessions in drowned cities. The storm caused $6 billion in damage and destroyed entire communities, including homes, farms, and businesses. Response efforts also put stress on the state budget, causing mid-year budget freezes and cuts totaling $504 million.

There is no doubt that the state’s response would have been far weaker in the absence of state and federal emergency funds. Then-Governor Hunt called a special session and North Carolina lawmakers approved nearly $286 million to be pulled out of the rainy day fund, which supplemented $838 million in federal emergency funds to support the response efforts. Read More