NC Budget and Tax Center

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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NC Budget and Tax Center

With lawmakers set to hammer out a final state budget, North Carolinians are hearing a lot of misleading claims about the inability to afford important investments in the state’s economic future. Unmentioned is that the state’s constrained finances – at a time when the economy is improving – stem from the decision to sharply cut taxes over the past three years instead of building a strong foundation for lasting growth.

So when policymakers say that making investments in one area of the budget limit the ability to invest in other areas, they are right in lamenting limited resources. But they are offering false choices because they leave out the fact that the limits on resources available to help North Carolinians build a secure future come from House and Senate leadership prioritizing tax cuts over investments that drive the economy forward. And these constraints are likely to continue far into the future because the proposed House and Senate budgets include tax cuts that cost anywhere from $650 million to $1 billion over the next two years, depending on which version of the budget the two houses eventually agree to enact.

By locking themselves into these false choices legislators fail to acknowledge that halting further tax cuts would help ensure that schools have the resources they need and that important supports are available to promote healthy and safe communities.

Let’s sort out some of these false choices and shed light on how different it could be if the state had taken the common-sense path of avoiding such damaging tax cuts.

  • Classroom Teachers vs. Teachers Assistants. Today, our schools have nearly 4,800 fewer classroom teacher positions and more than 7,000 fewer state-funded teachers’ assistants than in 2009, which is especially bad considering there are 43,000 more students in our schools. The Senate budget drastically reduces funding for teachers’ assistants and provides some additional funding for classroom teachers. But neither the House nor Senate budget would restore the number of teachers and assistants to the 2009 level. Without tax cuts, North Carolina could invest in teachers and teachers’ assistants, providing the next generation a better shot at getting the skills to compete in a global economy.

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2015 Fiscal Year State Budget, NC Budget and Tax Center, Women and the Economy

One of the most pressing concerns for any working family with children in North Carolina is to figure out a child care arrangement for children that allows parents to work and provide for their family, and allows children to learn and grow in a safe and stimulating setting when not in parental care. This is especially challenging because of the high cost of child care, as noted in these recently released state fact sheets by Child Care Aware of America. There are a few options available for families who earn low to moderate wages including the child care subsidy program which provides financial assistance to working families who need help paying for child care. Unfortunately this critical building block that makes life work for working families has been crumbling due to recent policy decisions by North Carolina lawmakers.

In our newest edition of Prosperity Watch, we feature a report released this month by NC Child detailing the impact made by child care subsidy policy changes passed by North Carolina lawmakers last year. These changes amounted to the loss of financial assistance for thousands of North Carolina families, including reducing income eligibility levels to qualify for the program, elimination of prorated fees for part-time child care (meaning many families will no longer be able to afford care), as well as counting income of a non-parent relative caregiver like a grandparent against the child’s eligibility for subsidies.

The map below provides a county by county breakdown of the more than 6,000 children who have lost or will lose access to child care subsidies from the change to the income eligibility provision alone.

PW 50-4

 

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NC Budget and Tax Center

State legislators are expected to pass a stop-gap measure today to address the expiration of the current spending plan, which runs through June 30 or next Tuesday. The measure, known formally as a Continuing Resolution, would allow North Carolina to avoid a shutdown and keep state government operating. The measure would give the leadership in the state Senate and House additional time to iron out the stark differences between their respective spending plans and approve a final budget.

Absent the stop-gap spending measure, the governor would only be authorized to spend money on “essential” programs and services.

It is not uncommon for state lawmakers to pass a stop-gap spending measure, which can last as long as they choose. In the recent past, the measures have lasted between two weeks and thirty days. Lawmakers last approved a stop-gap spending measure in 2013. That resolution permitted state agencies to spend up to 95 percent of their authorized budgets from the current fiscal year. The Office of State Budget and Management determined how to trim the other 5 percent. Before that, lawmakers approved the measure three times in 2009.*

If lawmakers miss the deadline at the beginning of the second year of a two-year budget, that budget simply continues unless the governor provides further instructions. That’s what happened last year when Governor McCrory directed budget cuts. Read More

NC Budget and Tax Center

During the Senate budget debate last week, some lawmakers demonstrated a lack of understanding—or a willingness to ignore the economic reality—of how money loses its value overtime. By ignoring inflation, Senate leadership readily claimed that education spending in the state is the highest that it has ever been. This claim, however, when placed in proper context is not factually accurate, as pointed out in a new Fact Check from WRAL.

In fact, when accounting for inflation, the largest state education budget was in the 2008 fiscal year, the last budget enacted before the recession hit.

The “fairy tale” denial of how inflation works—a basic Economics 101 concept—signals that the Senate leadership is sensitive to public concerns over the erosion of the state’s funding commitment to services such as high-quality public schools, health care, and child care. North Carolinians have seen and felt too much to be fooled into thinking that today’s investment in these public services exceeds pre-recession levels. That just doesn’t bear out in the data or in our current lived experience.

Here is an excerpt from WRAL’s fact check: Read More