NC Budget and Tax Center, Raising the Bar 2016

Reinvestment should be top priority for lawmakers during the Short Session

This blog post raise the baris the first post in our week-long 2016 Raise the Bar blog series that will recap the state of the North Carolina budget and make the case for reinvestment so that all North Carolinians have a fair shot to get ahead.

Next Tuesday, state lawmakers will return to Jones Street for the start of the Short Session. The primary focus of the session will be to make adjustments to the second year of the two-year budget that lawmakers approved last year. That means that lawmakers have an opportunity to strengthen economic security for all North Carolinians and help build a more robust economic recovery.

Seizing that opportunity, however, will require lawmakers to refocus on evidence-based fiscal policies that are smart, targeted, and equitable—rather than policies that lead them further down the tax-cut and tax-swap paths that they’ve pursued. As a reminder, state lawmakers once again chose last year to cut taxes that primarily benefit the wealthy and profitable corporations, while also expanding the sales tax to new services like maintenance, repair, and installation, effectively further shifting the tax load onto middle- and low-income taxpayers.

Those tax decisions are closing the doors of opportunity for some North Carolinians and won’t fix what is wrong with our state’s economy (like too few jobs and a boom in low-wage work). The tax plans since 2013 will reduce revenue by more than $2 billion annually when fully implemented, cutting off pathways to greater economic success like early childhood development, public schools, affordable health care, supports for older adults, and community economic development while also failing to boost the economy or create the jobs North Carolina needs.

Below are four key points about the current state budget that would be good for lawmakers to reflect upon as they head into the new budget season. Read more

NC Budget and Tax Center

Governor McCrory provides glimpse into his budget proposal that he will unveil in late April

At a press conference earlier today, Governor Pat McCrory provided a narrow and preliminary look into his budget proposal for the 2017 fiscal year that begins in July 2016. His remarks focused solely on the investments that he would make in the health and services (HHS) section of the budget. The Governor stated a desire to boost investments targeting vulnerable communities such as at-risk children, adults who suffer from mental health and substance abuse disorders, and older adults with Alzheimer’s.

Governor McCrory did not mention any additional rounds of tax cuts that primarily benefit the wealthy and profitable corporations—a genuine concern given his willingness to sign into law such tax breaks in the last few budgets. He also did not mention any details for other investments that the state budget funds such as education, community economic development, and the justice system.

Without knowing all of the details of his likely $22+ billion budget and tax plan, it is unclear how he pays for the investments in his new proposal. He could pay for them with money expected to be left on the table this year, new revenues that are coming in due to a slowly improving economy here and across the nation, and/or by relying on a mix of new revenues and tax cuts. Several fiscal scenarios exist.  As such, a complete analysis of today’s news must wait until the Governor releases the full proposal later this month.

Below are topline summaries of the Governor’s health and human services budget for the upcoming fiscal year. Read more

NC Budget and Tax Center

Investing in early childhood would have substantive, long-lasting benefits for children and North Carolina

Yesterday, early education workers and thought leaders joined together at the North Carolina Child Care Coalition’s annual Early Education Forum to discuss ways to use research, policy, and advocacy to address the high cost of early education as well as to transform the early care and education workforce.

Those concerns are substantiated in a new Economic Policy Institute report that details the high cost of child care in every state. In the new report, It’s time for an ambitious national investment in America’s children, the authors outline the benefits of public investment in early childhood care and education (ECCE), to children, families, society, and the economy. They also propose that lawmakers enact critical public investments, including:

  • The public provision of early childhood education, including high-quality pre-kindergarten education;
  • Subsidies to allow parents to afford high-quality child care; and
  • Expanded public funding for home visits by trained nurses to help parents both before and after childbirth.

These recommendations would help address some of issues that attendees raised at the forum yesterday. Child care is one of the biggest expenses that North Carolina families face. It’s so sizeable that infant care in North Carolina now costs $2,677 more than in-state tuition for 4-year public college. High costs mean that many families cannot send their children to high-quality education centers—even for low-income families because long waiting lists persist for subsidies. That hurts children, families, and our economy. Read more

NC Budget and Tax Center

SNAP time limit is problematic because there are too few jobs, not too few people willing to work

Most non-disabled, childless adults on Supplemental Nutrition Assistance Program (SNAP) who can work do so, according to new analysis published by the Center on Budget and Policy Priorities — an important finding given that the harsh three-month time limit for SNAP returns for this population in North Carolina over the course of 2016. More than 100,000 of the state’s poorest adults could be cut off SNAP if they can’t find a job, job-training program, or volunteer opportunity for 20 hours per week.

Due to federal law, the time limit returned for 23 of North Carolina’s 100 counties last month. The remaining 77 counties qualified for a year-long waiver due to a very weak labor market but the Governor and legislature permanently banned state waivers after July 2016. Now, the three-month time limit is returning at least six months sooner for those 77 counties, potentially harming very poor adults who are doing their best to get by in a weak economy.

Lawmakers supporting the ban and voluntary re-implementation of the time limit claimed that the policy change would encourage people to find a job or an education opportunity. Yet, the Center’s new report shows that claim is rooted in misunderstanding. Most childless adults on SNAP are in fact strongly attached to the labor force and they stay on assistance for shorter periods of time compared to the average participant.

Among the key findings in the Center’s report include: Read more

NC Budget and Tax Center

Policymakers should be wary of most policy proposals discussed at the Kemp Forum on Poverty

2016 may be the year that families working in low-wage jobs get the spotlight that they deserve from policymakers. Policymakers and candidates on both sides of the political spectrum are finally discussing economic policies that they purport will improve the lives of people who work hard to provide for their families but struggle to afford the basics.

Several Republican presidential candidates turned their attention to economic hardship and income inequality at the Kemp Forum on Poverty last weekend. In a positive development, one candidate voiced his support for expanding the Earned Income Tax Credit for low-income childless workers so they can keep more of what they earn and make ends meet. Another candidate lifted up the benefit of adopting and expanding state EITCs—advice that is in line with a growing body of research that shows how the credit helps at every stage of life. Both policies would reduce poverty for children and families.

Unfortunately, such endorsements for stronger EITCs are out-of-step with GOP policy choices here in North Carolina, where state lawmakers axed the state credit in 2013—despite the fact that in one in three Tar Heel workers earn poverty-level wages.

While it is welcome news for candidates to pay unprecedented attention to poverty, it is concerning that a good share of the discussion falsely portrayed fundamental truths about poverty trends, the effectiveness of work and income supports (i.e. the safety net), and how the proposals discussed would in reality increase material hardship and poverty. Read more