2017 Fiscal Year State Budget, NC Budget and Tax Center

Budget falls short of being a visionary plan for North Carolina’s economic future, finds a new report from the NC Budget & Tax Center

North Carolina lawmakers approved their state budget this month, a budget constrained by limited aspirations. The pursuit of a rigid spending formula combined with another round of tax breaks prevented lawmakers from proposing an adequate budget, let alone a bold one, as we explain in our new Budget & Tax Center report.

The new tax breaks in the budget come on top of recent tax breaks, which together are projected to cost more than $2 billion annually once fully implemented. While the budget reinvests in some worthy programs and services, these investments are just a small fraction of what we need to build thriving communities and boost economic opportunity in North Carolina. The reality is that without tax giveaways to the wealthy and powerful, much more could have been possible to improve North Carolinians’ quality of life and to build a stronger, more inclusive economy for all.

Read the report to learn more about what lawmakers prioritized in the 2017 fiscal year budget, areas where investments fall short of what’s needed to help North Carolinians thrive, and what lawmakers’ fiscal decisions mean for the state’s ability to boost quality of life and shared prosperity.

NC Budget and Tax Center

Charlotte increases minimum pay for city workers, anticipates reaching $15/ hour by 2020

Like local governments across North Carolina, the City of Charlotte passed its budget a few weeks ago in time for the start of a new fiscal year last Friday.  Like a growing number of City leaders across the state, the City Council and Mayor approved a budget that sets the minimum pay for a city worker higher than the state and federal minimum wage standard of $7.25.  That is good news for workers and their families and good news for the local economy in Charlotte:  when workers earn what it takes to make ends meet they are able to spend locally on the basics and thus support their families and boost economic activity.

The new minimum pay schedule for City of Charlotte employees starts at $13.58 which is now among the highest in the state for City workers.  It still, however, falls far short of what it takes to make ends meet in that City where rising housing, child care, and transportation costs are squeezing workers in public and private sector jobs.   The Budget & Tax Center produces a Living Income Standard for each of North Carolina’s 100 counties.  For a single worker with one child, the hourly wage it takes to just break even on the basics without public assistance is at a minimum $17.16.  MIT’s Cost of Living Calculator sets that figure at the higher rate of $22.06.

The move to $13.58 is thus an important step and one that should be taken by more cities across the state.  But it must also be the first on a road to ensuring that workers earn what it takes to make ends meet and contribute to a thriving community. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Statement of Final Budget Passage from Alexandra Sirota, Budget and Tax Center Director

A budget is the set of choices our policymakers make to lay a foundation for North Carolina’s future.  Will it stand future tests of economic challenges and opportunities? Will it extend to every corner and household of our state? The answer for this budget is that it will not.

For those who say this is as good as we can get, the reality is we can do better. Our leaders have chosen to limit our sights.

There is no great mystery about what has happened in this year’s budget debate. Policymakers have set a low bar based on a rigid formula and ignored the realities of our growing state and the families who strive to do well. They have continued to allow tax cuts to phase in that benefit the wealthy and profitable corporations, and they even pursued more poorly targeted tax cuts that will fail to effectively address the increase in sales taxes that North Carolinians will pay.

To those satisfied with baby steps, this final budget may be okay. As those who seek leadership that charts a stable path into the future and embraces the challenges of our changing state, we are disappointed.

2017 Fiscal Year State Budget, Commentary

Budget cuts workplace safety inspectors, puts workers at risk

Every worker deserves a safe workplace where their lives and health are protected. Unfortunately, a small provision in the joint budget does just the opposite—it puts workers at risk by weakening the ability of the Department of Labor to enforce the state’s occupational safety laws.

Specifically, the joint budget adopts a House recommendation to eliminate two inspector positions at the North Carolina Department of Labor’s Occupational Safety and Health (OSH) division. This measure could not be more ill-timed—137 workers died on the job in 2014, up from 109 the year before. And already in 2016, the US Department of Labor has reported 30 fatalities so far this year at the workplaces the agency was able to inspect. And the death toll is likely much higher, as the count only includes those workplaces the Labor Department is able to inspect.

Tellingly, the budget notes that NCDOL eliminated these positions specifically because they remained unfilled for two years—which supposedly suggests that they were unnecessary. But this is not a reasonable explanation, given the rising number of workplace fatalities. Rather, it appears much more likely that the Secretary of Labor, Cherie Berry, has proven as lax in enforcing state occupational health and safety laws as she has in enforcing wage theft laws.

Workplace deaths are unacceptable. Both the General Assembly and Secretary Berry need to reverse course and support the hiring of more OSH inspectors, not fewer.

 

Carol Brooke contributed to this report.

2017 Fiscal Year State Budget, NC Budget and Tax Center

More evidence that limiting our Constitution puts NC’s coveted AAA bond rating at risk

The Bond Buyer, an insider investment industry publication, has taken note of North Carolina Senators’ passage of a proposed change to the state’s Constitution that would limit the income tax rate to the low and arbitrary level of 5.5 percent.

In a recent article on the risk to the state’s “gilt-edged credit rating,” the reporter quotes a Moody’s analyst who provided general comments about the challenges with the direction that Senators seek to take North Carolina in. From the article:

“A majority of state budgets rely on a combination of income and sales tax revenues, according to Nick Samuels, vice president and senior public finance credit officer with Moody’s Investors Service. … Whatever the source, state budgets are sensitive to volatility in revenue, depending on how spending plans are structured, said Samuels. He declined to comment directly on North Carolina’s bill because it hasn’t passed. …

“Illinois has a flat income tax rate mandated by the state’s constitution that can be difficult to change, he pointed out.

“Moody’s rates Illinois’s senior debt Baa2 with a negative outlook as the state nears its second fiscal year without an adopted budget due to a political stalemate over spending issues between parties.

“In North Carolina, Moody’s rates the state’s general obligation bonds AAA because of its strong fiscal management and economic growth, which benefits tax collections, the agency said in a report in February. …

“Samuels said state ratings tend to be high because budget leaders have flexible governing strength.”

Read the full article here.