2018 Fiscal Year State Budget, NC Budget and Tax Center

Final budget fails to strengthen the foundation of North Carolina’s public schools

The final budget that lawmakers have proposed fails to strengthen the foundation of North Carolina’s public schools. While the public schools area of the budget seems to have a lot going on – one could argue that a lot of special pet projects made it into the final budget – the reality is that little is achieved in ensuring that every student receives a high quality education, regardless of where they live in the state. Consequently, educators will embark upon the upcoming school year with the familiar challenge of doing more with fewer and inadequate resources.

Here are some highlights of the public schools budget that reflects the austerity budget approach state leaders continue to pursue despite an improving economy. Read more

2018 Fiscal Year State Budget, NC Budget and Tax Center

Lawmakers’ approach to paying for final budget means long-term fiscal challenges for North Carolina

The negotiated conference budget expects the state’s tax system to raise $22.3 billion in base General Fund revenue. This available base revenue is greatly constrained by previously approved tax cuts in recent years, and additional tax cuts in this final budget further reduce available revenue. In addition to base revenue, lawmakers rely on revenue collections coming in above what officials anticipated ($580.6 million); money they anticipate agencies will return to the state (known as reversions, estimated at $271 million); non-tax revenues ($849 million); and unappropriated dollars from the most recent fiscal year ($208.6 million). In total, $23.6 billion in revenue is available to lawmakers for public investments for fiscal year 2018 (FY18).

The second year of the budget uses $499.2 million of available revenue for FY18 to fund public investments for fiscal year 2019 (FY19). This reliance on prior year’s revenue raises concern, as the state’s tax system already falls short of raising adequate revenue to meet the growing needs in the state. This reality of an inadequately structured tax system and the use of prior fiscal year revenue, reflects the long-term challenges the state will face in ensuring that adequate revenue is available to meet the basic responsibilities of a growing state.

Year-over-year annual General Fund appropriations increase by $621 million in the final budget. However, around $1.1 billion in additional revenue will be needed in going from the first to the second year of the two-year budget to account for enrollment growth in public education, to pay for rising costs in the delivery of Medicaid services, to meet retirement and health plan obligations for public employees, and to fund the teacher pay plan. This suggests that existing obligations will either not be fully funded or cuts to public services are on the horizon, or a combination of both, in order to fund these ongoing obligations.

How do lawmakers pay for the final budget?

The final budget includes a required transfer of $100.9 million of General Fund dollars to the state’s Savings Reserve fund, per the special session disaster relief bill passed by state lawmakers in December 2016 to aid communities harmed by Hurricane Matthew. Furthermore, lawmakers stash an additional $263 million in available revenue into the Savings Reserve fund and another $125 million is set aside in the state’s Repair and Renovations fund.

More tax cuts in the final budget builds onto tax cuts in recent years that have reduced available General Fund revenue. Tax cuts in the final budget largely begin in the second year of the budget and will reduce annual revenue by $521 million for FY19. The full cost of the tax cuts – reflected by the loss of annual available revenue – is not reflected in the final budget because the tax cuts will only be in place for the second half of FY19. Accordingly, the cost of the tax cuts will be higher than the $521 million price tag included in the budget, meaning a further reduction in available revenue for public investments in the years beyond the two-year budget.

Cedric D. Johnson is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

2018 Fiscal Year State Budget, NC Budget and Tax Center

Statement: This budget deal is not worthy of North Carolinians

Statement on the budget deal from Alexandra F. Sirota, Director of the Budget & Tax Center, a project of the NC Justice Center:

The final budget that state lawmakers will vote on in the coming days reflects missed opportunities for North Carolina.  By pursuing more tax cuts even as states like Kansas have reversed course and abandoned their own failed tax-cut experiment, leaders of the NC General Assembly have chosen to stay the course and continue to do less for more North Carolinians.

The final state budget includes many of the worst ideas and budget decisions from the House and Senate proposed budgets — including cutting legal assistance for low-income residents, failure to provide needed additional funding for K-12 classroom teachers, and using increasingly uncertain federal dollars to meet ongoing state priorities.

North Carolina’s leaders should put forward a budget that truly reflects the priorities of our growing state, including healthy and safe communities, quality educational opportunities and skills training, thriving communities, and broadly shared economic prosperity. They should make a sustained commitment to rebuilding Eastern North Carolina after Hurricane Matthew instead of offering just a fraction of what is needed. Instead, lawmakers have chosen to give even more benefits to the wealthy and profitable corporations. As state leaders continue to dig their heels in on their failed tax cut experiment, it is time for leaders across the state to emerge and demonstrate the harm of another budget that is not worthy of North Carolinians.

2018 Fiscal Year State Budget

If we care about our children, why do we lunch shame?

Have you ever watched an 11-year-old, short a dollar, pleading with the cafeteria worker to “please let me pay you back” in order to avoid the embarrassment of handing back over his hot meal?

I have. And it’s heartbreaking.

This school year, a Buncombe County elementary school made headlines when a student was threatened with being excluded from the school’s field day as punishment for unpaid lunch debt. While this particular incident gained national attention, “lunch shaming” – the practice of punishing or embarrassing students who do not have enough money for lunch – is prevalent in schools across the state and nation.

In far too many schools, it is common practice to shame children for failing to come up with the $2 or so that a hot meal at lunch costs. In many cases, their meals are thrown away and children are forced to eat an alternative (often a cold sandwich). In some of the more extreme cases, students are forced to work off their debts. Using shame by distinguishing them from their peers who are able to pay is not acceptable. And in many situations, children avoid the embarrassment altogether by skipping meals.

This year, the NC Senate’s budget proposed eliminating categorical eligibility in SNAP (formally known as food stamps), which threatened free and reduced lunches for up to 51,000 children. State legislators have not only failed to address the issue of childhood hunger, they have actively taken steps to make it worse.

Our leaders are also missing the larger picture, to the detriment of our communities and children. If we, as a state, value the health and well-being of our children, we should be focusing on how to ensure that no child, anywhere, is ever hungry.

Thankfully, there are policies that can help us to achieve this goal. One way is to make sure that food and nutrition services in schools are not based on receipts alone but are funded fully. House Bill 891 sought to make school breakfast and lunch available, free of cost, to any child who wanted it. Other states such as New Mexico have passed legislation to prevent lunch shaming and to prioritize feeding children.

At the federal level a policy that allows for universal provision of breakfast called community eligibility is available to North Carolina school districts.  More than 700 schools in North Carolina participated and even more are eligible for the program.

It’s time that we take the fight against childhood hunger seriously.

In North Carolina, 1 in 6 households with children are food insecure, making school lunches a critical source of nutrition for many students. Denying children of a nutritious meal, for whatever reason, is not in line with our state’s values.

2018 Fiscal Year State Budget, NC Budget and Tax Center, Trump Administration

Report: North Carolina’s state budget needs to plan for at least $13 billion more over the next 10 years to address federal funding cuts

As the N.C. House and Senate continue their Conference Committee to talk about the state budget, federal funding cuts loom overhead. President Trump’s proposed 2018 budget would cut non-defense programs by an estimated $2.5 trillion nationally over the next decade – the largest dollar cuts to programs for low-and moderate-income people proposed by any president’s budget in the modern era.

Given the massive cuts to federal funding proposed by the President, North Carolina would have to come up with at least $13 billion in additional revenue over the next 10 years to maintain existing vital programs, according to a new report from the NC Budget & Tax Center.

The report finds the proposed federal budget would shift significant costs to North Carolina by cutting federal funding for health care, food assistance, and many other areas. The report points out:

  • Under the proposed budget all low and moderate-income programs would see increasing cuts in spending over the next ten years, reaching a 33 percent cut in 2027.
  • The President’s budget would require North Carolina to pay $562 million annually (25 percent) of SNAP (formerly known as food stamp) benefits by 2023. For NC, this means $3.9 billion over the next 10 years.
  • NC would need to come up with at least $6 billion over the next 10 years to maintain Medicaid.
  • In 2018 alone, North Carolina would need to make up $306 million to replace the loss of discretionary grant funding proposed by Trump’s budget. This includes cuts to Social Services Block Grant, the Low Income Home Energy Assistance Program, and the Community Development Block Grants.

Considering both the U.S. federal budget outlook and the need to continue to support thriving communities here in North Carolina and across America, the report concludes with a timely recommendation:

“An important first step will be for North Carolinians and policymakers to oppose further cuts in state revenue in order to adequately plan and prepare for a challenging fiscal environment.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.