2017 Fiscal Year State Budget, News

Budget expert: Senate underfunds higher education needs as state continues to grow (video)

If you missed it over the weekend, be sure to check out our interview with Budget & Tax Center analyst Cedric Johnson as he outlines the shortcomings of the state Senate’s budget plan. Johnson sat down with NC Policy Watch’s Chris Fitzsimon to discuss where the funding comes up short as the state House works to finalize its version of the state budget.

Below Johnson discusses how the Senate underfunds the UNC system in its spending plan.  The full podcast of the interview is available here.

Click below for more from our radio interview with Cedric Johnson.

2017 Fiscal Year State Budget, Legislature, News

NC Senate leaders tout tax cuts, education spending in budget proposal

Senate leaders gave a broad outline of their proposed 2017-2018 budget Tuesday afternoon, saying it shares a lot of the same priorities as Gov. Roy Cooper’s proposal – but has different priorities.

The $22.9 billion Senate plan is an increase of about 3.75 percent over the state’s projected spending for this fiscal year, which ends in June. But it’s about $600 million less than Cooper’s spending plan.

“We have not forgotten the mess we found in 2011, the result of years of spending growth at unsustainable levels,” said Senate President Pro Tempore Phil Berger (R-Rockingham) in a Tuesday press conference. “We feel strongly that when government collects more than it needs, some of that money should be returned to the taxpayers.”

The Senate’s “Billion Dollar Middle Class Tax Cut,” passed last month, was a priority, Berger said.

Under that plan, Senate Bill 325, the state’s income tax rate would drop from 5.499 percent to 5.35 percent in the 2018 tax year. The standard deduction, or amount on which no income tax is owed – would increase from $8,750 to $10,000 for single filers and from $17,500 to $20,000 for those filing jointly.

The tax changes will result in $324 million less revenue in the coming fiscal year, around $710 million less in 2018-2019 and $775 million less by the 2019-2020 fiscal year.

Critics charge that the Republican majority in the General Assembly have slowed or reduced spending in key areas while building up a $580.5 million surplus. Reducing state revenues as dramatically as the Senate proposes is unnecessary when the state has pressing needs, Democratic lawmakers have argued.

But Berger and other Senate GOP leaders said Tuesday they believe citizens will use their money more wisely than government.

Senators also touted education spending outlined in the plan, pointing to increases in areas of bipartisan agreement.

Among them:

  • A pay raise for teachers of 3.7 percent.
  • A raise for most other state employees of $750 or 1.5 percent, whichever is larger. It was not yet clear Tuesday whether retirees will also see a cost of living increase.
  • $150 million in disaster relief funding for victims of Hurricane Matthew
  • Provisions for the “raise the age” initiative, which would send minors under 18 to juvenile courts when charged with a crime rather than trying them as adults. Berger called the change a priority and said the Senate would like to see it in place by 2020.

The full budget bill won’t be filed until late Tuesday night. On Wednesday multiple committee hearings will be held with the two required floor votes expected Thursday and Friday. The bill will then go to the House, where members say they would prefer more modest tax cuts.

2017 Fiscal Year State Budget, Back to School Series, NC Budget and Tax Center

Back to school – Ensuring a high quality education for all students

This is the first of a Back to School blog series (see Part 2, Part 3, Part 4 and Part 5) that highlight various issues to be aware of as the 2016-17 school year kicks off.

It’s back to school time, and more than 1.5 million students are preparing to embark upon a new school year. Currently the 10th largest public school system in the nation, North Carolina has experienced steady growth in the number of students entering school doors in local communities across the state – enrolling more than 100,000 additional students over the past decade. This makes it more important than ever to increase investment in schools to ensure the growing number of students in North Carolina receive a high quality education.

The makeup of students in public schools has changed over time. Last school year, no single race or ethnic group represented a majority of North Carolina’s student enrollment—a reflection of the changing demographic trend in the state’s broader population. Furthermore, one of every two students in public schools qualified for free or reduced school meals, which indicates that a significant number of students reside in low- and moderate-income households and face persistent economic challenges.

One way to ensure that our schools have the resources to provide a quality education to all students, regardless of their socio-economic background, is through the state budget, which serves as an important source of education funding for our schools. For the upcoming school year, the state budget under which schools will operate is a mixed bag of incremental progress in some areas and persistent lagging support in other areas. For the 2016-17 school year, state funding per student remains 8.1 percent below 2008 pre-recession level, with more than 81,000 additional students enrolling in public schools during this time. Consequently, our schools are challenged with educating more and more students with fewer resources.

Back to School - State Budget

 

Lawmakers limited their ability to boost investment in public schools by passing costly tax cuts in recent years that largely benefit the wealthy and profitable corporations. The state’s ability to invest in public education will continue to be limited in the years ahead as the cost of the tax cuts grow larger. For the current fiscal year, these tax breaks reduce available revenue by $1.4 billion, dollars that otherwise would have been available to lawmakers to boost investments that promote student achievement. Once all tax changes are fully in place, this annual cost grows to more than $2 billion. Read more

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.

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.