Falling Behind in NC

Falling Behind in NC, NC Budget and Tax Center

Thanks in large part to the rebound in the personal income tax, North Carolina is finally experiencing a slight uptick in revenues as the tepid economy slowly improves. Yet, at the first sign of revenues recovering, state lawmakers are pursuing tax policies that will pull back investments prematurely. North Carolina is already in a hole, and the tax plans being debated would make it very difficult for the state to dig itself out, make progress on unmet needs, and move forward.

These tax plans cut taxes for the wealthy and profitable businesses at the expense of everyone else. Proponents claim that these deep and lopsided cuts will create jobs and benefit everyone, but research simply does not support this conclusion. Read More

Falling Behind in NC, NC Budget and Tax Center

The North Carolina House approved a budget last week that would chart the wrong path for North Carolina, according to a new brief released by the N.C. Budget & Tax Center. Similar to their colleagues in the Senate, the House leadership was intent on including tax cuts for the wealthy and profitable corporations in their budget at the expense of everyone else. The result is a budget that falls far short of meeting the needs of children, working families and communities across major budget areas.

In the House tax and budget plan, these tax cuts will cost $528.6 million in lost revenue over the next two years, with the cost ballooning to $651.1 million annually once the plan is fully implemented in the 2018 fiscal year. These figures represent the net tax changes of the House tax plan plus the repeal of the estate tax. Even worse, 95 percent of taxpayers, on average, would see their taxes go up in addition to cuts in vital public services under the House’s formula for “prosperity.” Read More

Falling Behind in NC, NC Budget and Tax Center

Late last evening, the House leadership released their full $20.6 billion budget proposal (with money report) for the next fiscal biennium. This proposal includes a placeholder for their long-awaited tax reform plan, which anticipates deep reductions in tax rates and significant revenue losses, putting North Carolina on an unfortunate path to mediocrity.  Along with the effort to repeal the estate tax, the House tax plan represents a major tax shift and would strip the state of more than $525 million that could be used to fund vital public services, help get North Carolinians back to work, and build a strong economy.

North Carolina cannot afford to pay for tax cuts for the top at the expense of teacher layoffs, growing waiting waits for critical public services, and higher tuition rates. As the chart below illustrates, state spending under the House proposal would continue to remain well below pre-recession levels even though spending over the base budget would slightly increase thanks to the slight uptick in revenue. See this chart to see how the House proposal compares to the Senate and Governor’s proposals. Read More

Falling Behind in NC, NC Budget and Tax Center

Governor McCrory’s budget proposal, while representing a small step toward overall reinvestment, fails to fully support crucial public investments and North Carolina’s most vulnerable residents, according to a new report from the Budget & Tax Center. The Center also released a companion factsheet that highlights the report’s analysis of five important issues that remain part of the untold story on the proposal. The five points are summarized below. Read More

Falling Behind in NC, NC Budget and Tax Center

It is true that the Governor’s budget proposal reinvests in some programs and services to achieve an overall increase in General Fund appropriations.  This reinvestment was made possible by improvements in the availability of revenue under current law, the reliance on tuition increases and fees, as well as reductions in other areas of the budget. However, state investments in most areas of the budget are failing to keep up —let alone make progress back to pre-recession levels of spending.

There are two primary vantage points for analyzing the Governor’s budget proposal and making comparisons over time.  One method is to measure his proposal against the current law budget, which reflects the actual dollars that were appropriated last year per the final FY2012-13 budget.  The other method measures his recommendations against the continuation—or base—budget, which reflects the dollars needed in the next year to maintain current service levels.  The latter comparison provides a better sense of what is necessary to maintain residents’ current experience of public service because it accounts for the changing costs required to deliver the same level of services approved by the previous General Assembly. The chart below contrasts the Governor’s budget proposal to each of these vantage points. Read More