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

NC Budget and Tax Center

With the start of the New Year, some will lose food aid across parts of North Carolina

For some of North Carolina’s poorest adults living on the edge, the New Year is not bringing cheers or hopeful expectations. For these folks, the year kicked off with the return of a policy that could push them further into material and economic hardship regardless of their efforts to find work.

More than 100,000 of the state’s poorest adults face losing federal Supplemental Nutrition Assistance Program (SNAP) benefits this year due to the return of the harsh three-month time limit for childless, non-disabled adults aged 18-49. These adults will lose their food aid after three months if they can’t find a job, job-training program, or volunteer opportunity for 20 hours per week regardless of labor market and economic conditions in their community.

Last summer, state lawmakers elected to re-implement the time limit statewide even though parts of North Carolina qualify for a waiver this year due to sustained high levels of unemployment. The time limit would have returned this month for 23 of the state’s 100 counties regardless of state action because of an improving economy in those counties. The remaining 77 counties qualified for a year-long waiver but the governor and legislature permanently banned state waivers after July 2016. Read more

NC Budget and Tax Center, Uncategorized

Top 10 state budget missteps in 2015

The 2015 year brought plenty of budget missteps on Jones Street—from another round of tax cuts to state investments that are mired at historic lows. Here’s a look at the top 10 missteps that state policymakers should address in 2016.

  1. State lawmakers once again chose to cut taxes that primarily benefit the wealthy and profitable corporations over meaningful levels of reinvestment. The tax plan will reduce revenue by $1 billion annually when fully implemented, cutting off pathways to greater economic success like early childhood development, public schools, and community economic development while also failing to boost the economy or create jobs.
  2. State lawmakers failed to restore the state Earned Income Tax Credit (EITC), which benefited nearly 1 million families and their 1.2 million children. Yet, they chose to expand the sales tax to new services like maintenance, repair, and installation, effectively further shifting the tax load onto middle- and low-income taxpayers.
  3. The 2015 tax changes make our tax system more upside-down by asking even more from people who are already struggling to pay the bills. Under full implementation of the tax package, the lowest income working families will end up paying a tax increase of $7, on average, whereas millionaires are the big winners again with a tax cut of more than $1,800 on average.
  4. This budget doesn’t address falling wages, just as the last two budgets failed to do. In 2013 an hour’s work in NC earned around $2.50 less than the national average; now that gap has grown to almost $3.00. Allowing the state’s lowest-income families to keep more of what they earn through an EITC is a key way to build a stronger economy, along with a higher minimum wage and collective bargaining rights, but legislators failed to restore the tax credit and raise the minimum wage.
  5. State investment is at historic lows. State lawmakers passed a budget that keeps state spending as part of the economy below the 45-year average. That would be fine if needs have shrunk but they’ve grown. State budgets typically allow spending to grow as the population grows and the economy changes, especially after an economic downturn when revenues plummet and services are frozen or cut.
  6. State investments break an unwelcome modern record as they remain diminished. Lawmakers passed a budget that caps off the only period since 1971 in which state spending declined as a part of the economy for seven and eight straight years while the economy itself grew. Continuing on a tax-cut path means there simply won’t be enough revenue left over to repair critical investments or to position our state to compete.
  7. Eight years later, state investment remains below pre-recession levels despite more children to educate, more older adults to care for, and more citizens to serve and protect. Such long-term disinvestments have translated into significant unmet needs for our state’s growing population—a shortage of K-12 textbooks, school nurses, and community services for older adults.
  8. This budget continues to hold us back from ensuring educational success for every child. For the current school year, lawmakers invested more per student compared to the 2015 fiscal year budget but well below 2008 pre-recession levels—nearly $500 less per student. This will cause real harm to the classroom and educational outcomes. The number of students in North Carolina schools has continued to increase since 2008, yet the amount of funding per student— and, therefore, the resources available to educate each student—has not been state lawmakers’ priority over tax cuts.
    • For example, textbook spending is below half its 2010 peak level, leaving some schools with outdated textbooks or with no textbooks at all.
  9. Continuing down a tax-cut path is deepening cracks in NC’s opportunity structure—and it has left several vital areas of public programs and services inadequate.
    • For example, lawmakers kept year-over-year spending flat for the pre-kindergarten program that serves at-risk 4-year olds. They failed to restore the more than 6,400 slots lost since 2009 or give opportunity to the 7,200 children stuck on the waiting list.
    • For example, tuition at community colleges rose for the seventh consecutive year to $76 per credit hour from $72—an 81 percent increase since 2009—increasing the likelihood of a college education being out of the reach of many.
  10. This tax-cut path—and the revenue losses that come with it—also mean that some investments are completely missing from the budget.
    • For example, there is no cost-of-living adjustment for retired public employees like former state troopers and teachers despite their shrinking purchasing power due to changes in the economy.
    • For example, there is no Medicaid expansion, which means lawmakers denied affordable health care to about 500,000 North Carolinians.
    • For example, there is no support to ensure that all rural communities have reliable high-speed internet access that is increasingly essential to participating in the global economy—which leaves struggling rural communities further behind urban areas.

Read more

NC Budget and Tax Center

Anti-poverty programs matter all year long

The holiday season is a time to reflect on our personal journey over the past year and spend time with family and friends. For many, it is also a time of compassion and willingness to help less-fortunate neighbors make ends meet and secure basic needs.Coming up short image

In Governor McCrory’s Thanksgiving video message, he spends a brief moment encouraging North Carolinians to think of and help people who are struggling to get by. It is rare for the Governor to lift up the plight of families in need. But, a small act of kindness is never wasted and his call for supporting our neighbors is welcome.

The big question remains, however: what have lawmakers done this past year to address poverty?  The scourge of poverty that exists in every Tar Heel community demands sustained and systemic attention. Very few lawmakers give people struggling with economic hardship the attention that they deserve—not in policy agendas, not at the policy tables, and not in public speeches.

These end-of-the-year-only messages that pop up about helping people in need remind me of that one uncle—and we all have one—who talks a big game at family holiday gatherings but lacks follow through when it matters most. Read more

NC Budget and Tax Center, News

Congresswoman Alma Adams urges Governor McCrory to veto measure that unnecessarily restricts food aid for childless adults

Earlier this month, Congresswoman Alma Adams of the 12th District penned a letter urging Governor McCrory to veto a bill that would unnecessarily restrict 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.Adams_McCrory

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. The bill, however, would permanently ban the Governor from ever 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 if the Governor signs this bill into law.* See this map of where they live.

“House Bill 318 is [a] significant step backwards for supporting the hungry as they look for work,” wrote Congresswoman Adams. “All this bill does is punish people in high unemployment areas and limits the state’s ability to meet the needs of the unemployed,” she continued.

Congresswoman Adams is part of a growing chorus of voices calling upon the governor to veto this measure, including the NC Justice Center, the NC NAACP, and the state Legislative Black Caucus. Governor McCrory has until October 30th to veto or sign the bill, which will become law if he takes no action.

See Representative Adams’ letter to the Governor below.

Adams_Letter

*Special data request to the Center on Budget and Policy Priorities. September 2015.