NC Budget and Tax Center

The 2013 tax plan continues to rear its ugly head. The final budget deal released late last night is yet another reminder that the state cannot afford cost of the tax plan that primarily benefits the wealthy and profitable corporations.  If the state could afford those deep revenue cuts, budget writers would not be relying on more federal dollars and lottery revenues to make their budget balanced nor including another round of harmful budget cuts and policy changes to early childhood education, public schools, higher education, and social programs. But, those are the conditions North Carolinians will be facing over the next year as we enter year six of the official economic recovery.

While the budget delivered on its promise to provide an average 7 percent teacher pay raise, that boost in much-needed pay came at the expense of dollars needed to pay for other state priorities—even within the public education budget for programs that serve at-risk students, for example. And unfortunately, it’s just a snapshot of what we should expect to see in future years. Meanwhile, other states are moving full steam ahead and replacing the most damaging cuts made during the aftermath of the recession.

The cost of North Carolina’s personal income tax cuts will be much higher than previously expected, at least $200 million more each year. Read More

NC Budget and Tax Center

Budget writers announced over the weekend that the Senate and House leadership agreed to a basic framework for a final budget deal. That framework includes a pay raise for teachers averaging roughly 7 percent and further cuts to the Medicaid program that provides health insurance and long-term care to children and adults who are poor, disabled, and elderly. There is no question that other vital programs and services will be cut due to a lack of adequate funding, resulting from lawmakers’ choice to make room for unaffordable tax cuts for the wealthy and profitable businesses in 2013.

While the full details of the final budget deal will not be released until this afternoon at 1:30pm, below are five things we expect to be true in the final budget deal: Read More

NC Budget and Tax Center

Plans to finance both public education and transit at the local level would be stopped in their tracks under HB 1224 that passed the state Senate Finance Committee yesterday. The bill not only places a hard cap on the local sales tax rate at 2.5 percent but also only allows counties to levy a sales tax increase for either education or transit—not both.  This bill joins a slate of other bills that would restrict local control. The full Senate is scheduled to vote on the bill Monday night.

In effect, the bill restricts local governments’ authority to meet local needs and balance their budgets. Importantly, the bill is aimed at shifting the responsibility of funding public education away from the state and towards local governments. The state clearly cannot afford last year’s tax plan and now legislators are proposing budgets that would make serious cuts to public education as a result. Those cuts would have to be absorbed by children in the classroom or addressed at the local level, putting local governments in a tough spot having to choose whether or not to make up the difference via a local tax.

Local governments are dealing with the fallout from last year’s tax plan in other ways too. They no longer have access to the school Capital Building Fund, which received a portion of revenue generated from the state corporate income tax. Schools used this fund to help them meet their education obligations, as my colleague explained last month. The result is a $382 million dent over the next five years. This loss is on top of the looming $63 million-annual dent resulting from elimination of the local privilege tax in 2015. Read More

NC Budget and Tax Center

North Carolinians are being dealt a bad hand. The deep revenue losses resulting from the 2013 tax plan is creating a reality in which there are too few dollars available to meet the needs of children, families, and communities. Budget writers are facing a self-imposed budget crisis and finding it difficult to agree on just how large the cut to public schools and public health should be to meet its priorities and balance the budget. To be clear, budget writers agree that those core budget areas should be cut compared to the enacted 2015 fiscal year budget but have yet to agree on the size of the cut.

That’s the main reason why North Carolina is more than two weeks into the new fiscal year without a revised state budget.

For weeks budget negotiators in the House and Senate have been shuffling the deck, making proposed cuts in core areas of the budget and moving that money around in order to finance much-needed pay raises. This budget shuffle is further proof the state is facing a revenue problem. Read More

NC Budget and Tax Center

Among the nation’s 50 states, North Carolina experienced the biggest increase in the proportion of people living in high-poverty areas between 2000 and 2010, according to a new U.S. Census Bureau  report.The growing number of North Carolinians living in disadvantaged neighborhoods is problematic because they face restricted access to the jobs, education, and networks that can improve their financial standing.The new report signals the need for policymakers to focus on the investments and policies that support ladders of opportunity, from Murphy to Manteo, to all North Carolinians.

The report defined high-poverty areas as places that have poverty rates of 20 percent or higher. The federal poverty level for a family of 4 is stingy, a mere $23,550—which is far lower than the $52,275 needed to make ends meet in North Carolina, per the Budget and Tax Center’s 2014 Living Income Standard. And, the 2010 data reflects the 2008-2012 five-year average.

The extent of people (poor and non-poor) living in high-poverty areas is far worse in North Carolina than in the nation, according to the report. In 2010, 31.8 percent of all North Carolinians lived in high-poverty areas compared to 25.7 percent of all Americans. If you’re poor, however, the chances of also living in high-poverty areas are far higher: more than 1 in 2 poor North Carolinians live in high-poverty areas—a concept known as the “double burden.”

In the entire nation, the share of people (poor and non-poor) living in high-poverty areas grew the fastest in North Carolina from 2000 to 2010, jumping 17.9 percentage points (see graphic below). Read More