NC Budget and Tax Center

Report: Constitutional restrictions on revenue hurt state economies. So why is NC proposing one?

A new report from the Center on Budget and Policy Priorities (CBPP) shows how constitutional revenue limits, like the one proposed in North Carolina by the Senate, can impede state economies. From the report:

“A strong state economy requires high-quality public services like schools, public colleges and universities, and well-maintained infrastructure, among other services. Businesses need well-educated and qualified workers. They need convenient and well-functioning roads, bridges, and ports. And they’re more likely to locate in places with a good quality of life that includes publicly financed amenities like parks and libraries.

“Nevertheless, some states are considering building into their state constitutions restrictions on the growth of state revenue that makes such public investments possible. These restrictions can hurt a state’s ability to provide necessary services to its residents and businesses, putting at risk long-term growth and broadly shared prosperity.”

You can read the full report here.

NC Budget and Tax Center

Some simple NC tax code changes that could improve children’s lives

North Carolina is underinvesting in the programs and services during early childhood that have proven to prepare children for Kindergarten and to read by third grade, protect them from abuse and prevention, and ensure their healthy development.  The Week of the Young Child represents an opportunity for North Carolina leaders to assess all that they are doing to improve the outcomes and well-being of the state’s youngest residents.

Better investments aren’t the only way that North Carolina policymakers can support early childhood: tax policy is a tool that can help working families and children in particular. North Carolina has an opportunity do far more in this space, particularly in light of the strong evidence that shows the value of tax credits for working families can generate greater returns for more families and communities.

The Earned Income Tax Credit and the Child Tax Credit have been demonstrated to support children’s healthy development and the affordability of their early care and education even as they both promote work and reduce poverty as well.  To improve upon the benefits of these federal policies, North Carolina can enact a state EITC and make the current state Child Tax Credit refundable and targeted to middle and low income taxpayers who struggle the most to provide for their families on low incomes.

The Child and Dependent Care Credit is yet another tax policy that supports children’s healthy development by making child care more affordable.  The recommended biennial budget recently proposed by Governor Cooper includes such a tax credit that partially offsets employment-related expenses for child and dependent care. Childcare costs represent the largest component of the household budget and impact the ability of individuals to work and provides for their families.

The inclusion of the tax credit in the Governor’s budget is as a positive step forward to address an upside-down tax system and ensure that the state’s tax code works for all North Carolinians. It’s one that should serve as the foundation for action by the North Carolina General Assembly to enact tax policies that support young children’s healthy development and the economic security of their families. Making these tax policies refundable and available to the state’s poorest children and families will generate the greatest return. As research has shown, an additional $3,000 in the household during early childhood has a significant effect on children’s educational attainment and lifetime earnings.

An investment in young children is a concrete investment in North Carolina’s future.

NC Budget and Tax Center

Boosting investment in early childhood development, a no-brainer for NC

Early childhood development programs are not typically viewed as economic development initiatives, but they should be. Extensive research in this area finds that well-focused investments in early childhood development yield positive long-term public and private benefits. Furthermore, the return on early childhood development investments to the public far exceeds the return on most other economic development projects.

North Carolina has not done enough to ensure that access to quality early childhood development programs reach more children. The state dedicates just 1.1 percent of its General Fund budget to early childhood education.

Digging deeper, nearly 5,500 fewer Pre-K slots are available today than there were in 2009. This eroding state support contributes to the more than 7,200 children that were on the Pre-K waiting list last year. With an estimated 67,000 children eligible to participate in the Pre-K program, less than half are being served due to inadequate state funding. These are unfortunate realities for North Carolina despite studies showing that high-quality preschool can increase a child’s performance in the early school grades, boost high school graduation rates, improve chances of landing a job later in life and reduce criminal behavior, among other benefits. Read more

Commentary, NC Budget and Tax Center

Nothing has changed (Part 2): Reported amendment to GOP health care bill guts protections for people with pre-existing conditions

Last week, we reported reviving the GOP health care bill would mean more uninsured, costlier coverage in North Carolina. On Friday unfortunately, Republicans in Congress reportedly reached agreement on an amendment that would eliminate key Affordable Care Act (ACA) protections for people with pre-existing health conditions. Under the amendment, states could end some of these protections at will, and end others provided that they created or participated in a federal high-risk pool. Overall, it is clear the American Health Care Act (AHCA) is not fixable. Most Americans already know that almost every piece of the bill would cause people to lose coverage, make coverage less affordable or less comprehensive, or cut taxes for high-income people.

Below are key points related to this amendment, according to the Center on Budget and Policy Priorities.

The amendment takes us back in time

The reported Meadows-MacArthur amendment to the American Health Care Act (AHCA) would allow states to request waivers of key pre-existing conditions protections. This would effectively restore pre-ACA law with respect to these protections, making an already severely flawed bill even worse. The amendment would allow:

  • Insurers to once again discriminate against people based on their medical history.
  • Women would again be charged more than men for coverage. While proponents claim that the deal preserves the ACA’s ban on gender discrimination, eliminating Essential Health Benefit requirements means that women would have to pay more for plans that included maternity coverage.
  • Plans would likely be able to impose annual and lifetime limits on coverage — including for people who get health coverage through their jobs.

Before the ACA, 105 million people with private health insurance — the large majority of whom had employer plans — had policies that imposed lifetime limits on coverage. Waivers of Essential Health Benefit requirements could mean returning to a time when millions of people with health coverage were one major illness away from medical bankruptcy.

AHCA’s Underlying Flaws Remain

The reported amendment makes no changes to the underlying bill. Under the AHCA:

  • 24 million more people would be uninsured by 2026 — meaning 1 of every 10 non-elderly Americans who have health insurance coverage under current law would lose it under the AHCA. This would eliminate all of the coverage gains made under the ACA.
  • Medicaid would be cut by $839 billion over ten years. The bill would effectively end Medicaid expansion and radically restructure the entire Medicaid program by converting it to a per capita cap or block grant. Under the House bill, 14 million fewer people will be enrolled in Medicaid by 2026.
  • People who currently purchase coverage through the ACA marketplaces would see large increases in their premiums and deductibles, and other out-of-pocket costs. Total out-of-pocket costs (premiums, deductibles, copays, and coinsurance) would increase by an average of $3,600 for current HealthCare.gov marketplace consumers, with larger increases for older and lower-income consumers and consumers in high-cost states.
  • High-income people would receive billions of dollars in tax cuts, averaging over $50,000 per year for people with incomes exceeding $1 million.
NC Budget and Tax Center, Trump Administration

Three ways Trump’s “America First” budget puts hungry Americans last

When it comes to hunger, North Carolina stands out. Each night, almost 630,000 North Carolina households do not have enough to eat. With 15.9 percent of households being food insecure, North Carolina has the highest rate of hunger on the East Coast, and the 8th highest in the nation. Even amongst North Carolinians, hunger does not impact everyone equally. We know that children, households led by women, and seniors are far more likely to face issues of hunger.

While our state still has a long way to go in eliminating food insecurity, we have made strides in recent years. From 2013 to 2015, the state’s food insecurity rate dropped from 17.3 to 15.9 percent, largely in part to critical federal programs that help put food on the table for North Carolina’s most vulnerable. But with Trump’s proposed budget, these very programs are at risk for cuts and even elimination.

Here are three ways Trump’s budget threatens to increase hunger in North Carolina:

1. Cuts to the Special Supplemental Nutrition Program for Women, Infants, and Children

Trump’s budget cuts the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC, by $200 million per year (from $6.4 billion to $6.2 billion). WIC provides healthy foods, formula and baby food, and health care support for pregnant and breastfeeding women, their infants, and children under the age of five. While this cut won’t kick off current participants, it will inhibit WIC’s ability to provide additional programming and services and could prevent WIC from serving new mothers and children in the future.

Last year, WIC served over 240,000 North Carolinian women and children each month and provided more than $123 million worth of food. In North Carolina, WIC has contributed to a drop in newborn Medicaid costs, increasing the likelihood of children receiving regular and preventative health services; lowered infant mortality rates; and is responsible for improved education performance for children.

2. Elimination of the Community Services Block Grant

The proposed budget completely eliminates the Community Services Block Grant (CSBG), a $718 million program, which supports local organizations working to alleviate poverty, hunger, and joblessness across the nation. In North Carolina, CSBG funds 35 Community Action Agencies that service 97 of NCs 100 counties, funneling nearly $21.5 million into high need rural, urban, and suburban communities. While CSBG funding supports a wide array of activities, one critical service is its role in providing emergency food assistance. These funds are used to organize and operate food banks, support North Carolina’s Meals on Wheels program, fund nutrition and food preparation counseling services, and even support community and urban gardens.

Nearly 40 percent of the 120,000 North Carolinians who are supported through CSBG funds are children, 20 percent are seniors, and more than 10 percent are individuals with disabilities.

3. Elimination of 21st Century Community Learning Centers

The budget seeks to eliminate 21st Century Community Learning Centers (21st CCLC), a $1.2 billion program that provides before-, after-, weekend-, and summer school academic enrichment. In North Carolina, this would mean a loss of $22.3 million to 68 school districts, local governments, and non-profits that currently operate these academic enrichment programs. Although increasing nutrition and access to food for children is not an explicit goal, these learning centers play a critical role in eliminating the food gap many children in North Carolina face. Last year, nearly 750,000 children in North Carolina received free or reduced-priced meals. Before and after school and during the summer, many of these children and their families are at risk of being food insecure. Meals provided at after school and summer enrichment programs are an extremely important and efficient tool at addressing childhood hunger.

The Trump Administration argues that 21st CCLC “lacks strong evidence of meeting its objective, such as improving student achievement.”. That’s not true. A 2014 evaluation of North Carolina’s 21st CCLC program proved that students who participated in the program saw larger and faster improvements on standardize testing scores than students who did not participate.

If we really want to make America great, we have to ensure that no American goes to bed hungry. Investing in these important and proven programs is critical for the health of our children, our economy, and our nation.