NC Budget and Tax Center

Governor McCrory still spinning economic record, using economic measure that is out of touch with reality

Pat McCrory 2

Governor McCrory is at it again, peddling the myth that his team made North Carolina’s economy the best in the country. On Thursday, the administration trumpeted the glad tidings that North Carolina’s gross domestic product (GPD) grew faster than any other state since he took office.

If that sounds out of touch, it is. Wages in North Carolina are below average, unemployment is higher than the national rate, and whole communities are still struggling to recover from the Great Recession.

Sadly, North Carolina’s economic performance over the last few years has been mediocre, not meteoric.

So how did the Governor get it so wrong?

First, GDP just captures how much stuff the economy is producing, but it completely misrepresents how most working North Carolinians are doing. For example, GDP goes up when gas prices rise; even if that actually means that most workers put more of their paychecks into the gas tank. Similarly, the markup that is applied to consumer electronics counts toward GDP, even if most of the product was manufactured overseas. Because of problems like these, most economists recognize that GDP doesn’t actually measure prosperity.

At a deeper level, using GDP shows that the Governor is out of touch with the central economic challenge we face today: a lack of wage growth. It used to be that GDP was a decent measure of prosperity; when the economy produced more, working people earned more. But that hasn’t been the case in almost thirty years. As we have reported several times, North Carolina workers keep churning out more goods and services without seeing their income increase accordingly.

If the Governor wants to build an economy that truly works for everyone, GDP is just a distraction.

Click here to read the Governor’s press release.

(To learn more about why GDP is a poor measure of prosperity, see the following video from renown economist Joseph Stiglitz)

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NC Budget and Tax Center

Many communities still struggling, according to latest employment data

LABOR-JOBS market graphic2cState leaders should not lose sight of the fact that many communities across the state are still struggling to erase the damage left by the Great Recession. While parts of the state have long-since surpassed their pre-recession economic peaks, more than half of the counties in the state still have fewer jobs than they did before the financial collapse, now more than eight years ago.

Signs that many communities have not recovered include:

  • Almost three-quarters of our counties have a higher unemployment rate than before the Great Recession. With statewide progress in reducing unemployment stalled, many local communities are getting stuck with a worse employment picture than they had before the recession.
  • More than half of our counties have not gotten back to pre-recession levels of employment. Even after years of economic recovery, 55 of North Carolina’s 100 counties have fewer jobs today than existed before the Great Recession. With many of the new job opportunities clustering in a few parts of the state, many communities are still struggling to get back to where they were almost a decade ago.
  • Lack of recovery is not a purely rural problem. Several cities, including Fayetteville, New Bern, and Rocky Mount still have not recovered to pre-recession levels of employment

(For a summary of each county’s current economic data, see our Labor Market Watch page, and to see how each county’s current economic figures compare to pre-recession levels, see our Recession Watch page.)

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2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s modest public safety budget

Safe communities and efficient courts contribute to a quality of life in local communities that is attractive for raising a family and operating a business. Revisions to the Governor’s modest budget for Justice and Public Safety largely consist of funding for pay increases for state employees, in which the majority of these dollars represent one-time bonus payments, with modest investments in other areas of the budget.

Here are key items in the Justice & Public Safety budget.

Judicial Branch

  • Funding provided for discretionary one-time bonuses, maximum $3,000, to selected state employees ($9.9 million).
  • Funding provided for permanent experience-based pay raises for clerks and magistrates, and market-based salary adjustment for assistant district attorneys ($7.4 million).
  • Transfers dollars from Department of Health and Human Services for specialty courts that serve special populations such as individuals with mental health and substance abuse issues ($2.5 million).

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2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s higher ed budgets that fail to ensure affordable higher education

Here are key highlights from Gov. McCrory’s proposed higher education budgets.

Community College System

Consists of 58 community colleges across the state serving all of North Carolina’s 100 counties.

The community college budget follows a larger trend of failing to boost public investment in the state’s education pipeline, with the exception of some additional funding for one-time bonuses, equipment upgrades, and a locally-driven initiative to promote post-secondary success. After years of steady increases in tuition, the proposed budget does not reverse this trend, failing to make post-secondary training and education at community colleges more affordable.

  • Funding provided for discretionary one-time bonuses, maximum $3,000, to selected state employees at NC community colleges ($29.4 million).
  • Savings recognized due to decline in enrollment ($26.2 million).
  • Funding provided for locally-determined support services to help ensure students earn a credential or degree ($16.6 million).
  • One-time funding provided to upgrade and maintain instructional equipment at NC community colleges ($7.5 million).

UNC System

Consists of 16 four-year public universities across the state serving more than 220,000 students, as well as the NC School of Science and Mathematics. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor McCrory’s modest budget for Natural and Economic Resources

Governor McCrory’s proposed budget for Natural and Economic Resources (NER) devotes additional funds for some critical needs. If the legislature acts on his recommendations, it would mean more support for apprenticeship programs, main street revitalization in rural North Carolina, removing underground gas storage tanks, and handful of other laudable goals.

That said, Governor McCrory’s budget is trapped into modest aspirations. Having gone along with several rounds of expensive tax cuts, and being preoccupied this year with increasing teacher pay, there’s not much left over for anything else. Some good ideas are included in the Governor’s NER budget, but it isn’t a visionary plan for North Carolina’s economic, cultural, and natural future.

Selected line items from Governor McCrory’s proposed NER are listed below:

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