NC Budget and Tax Center

Three important ways in which President Trump’s proposed budget shifts costs to North Carolina

On the heels of a federal tax plan that provides tax breaks to the wealthy, foreign investors and profitable corporations, President Trump has released a budget that will make it more difficult for people to get back to work and strengthen their quality of life and ensure thriving communities.

It is unlikely that North Carolina will be able to absorb these federal cuts and, in so doing, ensure that North Carolinians aren’t hurt by them.

North Carolina has scheduled another $900 million in tax cuts to begin on Jan. 1, 2019, and already has identified the need to prioritize class-size reductions, pre-Kindergarten for 4-year-olds, and ensure seniors have health care and food, among others.  Additional needs generated by the failure of the President and Congress to truly connect people to opportunity will not be met with resources under the current tax code.

Here are just three ways in which the President’s budget will push costs to the states: Read more

Education, NC Budget and Tax Center

Class-size reduction funding will remain uncertain with scheduled tax cuts

The NC General Assembly moved forward a proposal this week to address their unfunded mandate to reduce class sizes in Kindergarten through 3rd grade.

Its problems aren’t just its inclusion of various non-educational items irrelevant to the class-size debate, but also its failure to acknowledge that an adequate tax code will be required in order to fund the class-size reductions beyond Fiscal Year 2019-20.

Rather than putting a stop to the scheduled tax cuts that will go into effect on Jan. 1, 2019, the NC General Assembly’s plan is to allocate unappropriated balances at year-end in the next year and hope for available revenue in years past 2019.

That is another risky bet for North Carolina’s children and communities.

The sure thing would have been to stop the January 2019 tax cuts, which in a full fiscal year would mean an estimated $900 million to pay to reduce class sizes and make other investments in children’s educational success, such as funding NC Pre-K and addressing the school nurse shortage.

As it stands, reductions of just $400 million are planned for in the final budget passed this summer.

This means that it is unlikely that the revenue necessary to fund the class-size mandate will materialize without cuts to other investments in children and families.

A true commitment to our children’s educational success would put their well-being ahead of tax cuts.

NC Budget and Tax Center, Poverty and Policy Matters

December 2017 local labor market release: A closer look at the Sandhills

Amid rosy data showing that 98 counties had unemployment levels lower in 2017 than in 2016 there is plenty of evidence that many North Carolinians are still hurting. Over the broader period since the start of the Great Recession, 57 counties still have fewer employed workers than at that time, and 27 counties have unemployment levels at least one percentage point above the state average. The pain felt in these communities, that are in many ways worse off now than they were before the Great Recession, prove that the tax cut only approach has failed much of North Carolina. We must focus on an economic strategy that supports a recovery for the unemployed and their families throughout all the state’s communities.

A closer look at the metropolitan and micropolitan places in the Sandhills, a region that includes Cumberland, Harnett, Hoke, Lee, Montgomery, Moore, Richmond, and Scotland counties, reveals some troubling spots. While micro areas like Sanford (4.9%), Dunn (5%) and Pinehurst-Southern Pines (4.5%) have relatively low unemployment rates, peer places like Laurinburg (8%), Lumberton (6.4%) and Rockingham (6.1%) fare much poorer. The metropolitan area Fayetteville, which serves as an economic engine for the Sandhills region, is hamstrung by an unemployment rate at 5.5%, higher than the state average at 4.4% in December 2017. For many bedroom communities such as Hoke, Scotland, Harnett and Lee, Fayetteville’s lack of a full recovery from the Great Recession could pose a drag to their economies as jobless workers hold back on spending and face challenges in paying bills, staying in their homes.

“Beaver Creek” Photo Credit: Gerry Dincher

Other highlights from this month’s labor market data include:

• Labor force shrinkage: Nearly 60 percent of all North Carolina counties have experienced a decrease in their labor force from 2016 and pre-recession levels. Duplin and Alleghany counties have seen their labor force diminish at the state’s highest rates year over year, – dropping 5.2% and 5.3% respectively. While there are several possible reasons for this decline, it is plausible that citizens are dropping out the search for work or out-migrating to other counties.

• East of I-95 metropolitan areas continue to lag behind the rest of the state. While improving, 6 out of the 7 metropolitan statistical areas east of Interstate 95 still featured unemployment rates higher than the state average for the entirety of 2017. For 12 consecutive months, Fayetteville, Goldsboro, Greenville, Jacksonville, New Bern and Rocky Mount experienced joblessness rates higher than other metropolitan areas throughout the state.

NC Budget and Tax Center

Rates of deep poverty are rising in NC and and across the nation

Just over seven percent of North Carolina households live in deep poverty, according to the 2015 American Community Survey. Deep poverty is defined as households living with incomes at or below 50 percent of the Federal Poverty Level, or less than $12,300 per year for a family of four. This amounts to a little more than $8 per person per day to survive on. Watauga County and Scotland County experience the highest rates of deep poverty in North Carolina, where nearly a fifth of households live in deep poverty. However, these numbers are likely an inadequate representation of the actual need because income is substantially underreported in the survey.

Since 1996 and the Personal Responsibility and Work Opportunity Reconciliation Act, also known as “welfare reform,” the nation has seen a rise in the number of families living in deep poverty. This trend can largely be attributed to the disappearance of cash-based benefits to families with low incomes such as Aid to Families with Dependent Children and the state Earned Income Tax Credit. As a result, a stable source of cash flow has become virtually nonexistent for those living in deep poverty, and many households live off less than $2 per person per day. Children are typically hit the hardest by poverty. In North Carolina 1 in 5 children live in households with incomes below the Federal Poverty Line. Children of color are more than twice as likely to live in poverty than white children.

Families living in deep poverty survive off of support from the Supplemental Nutrition Assistance Program (SNAP) and the informal economy. While cash assistance programs, such as Temporary Aid to Needy Families (TANF) are available, they are not adequate to meet the need of those living in extreme poverty and many families to do not apply because they do not think they will meet the program’s eligibility guidelines. In 2015, only seven percent of North Carolina families in poverty received TANF, falling far below the national average of 23 percent.

NC Budget and Tax Center

What should be in tonight’s State of the Union speech

A lot of media outlets are speculating on what President Trump will likely talk about in his State of the Union address tonight as he lays out his agenda for the coming year.

Here are some of the things that President Trump should be emphasizing in his remarks, given the ongoing challenges our country faces in creating good, quality jobs for everyone, building inclusive and thriving communities everywhere, and ensuring that everyone — no matter where they live or who they are — can secure a better future for themselves and their family.

There may be a long way for our country to go to achieve these goals, but we know what works — and what doesn’t — to build a more perfect union.

Invest in our communities and our people. We already have the tools to build an economic recovery that is inclusive and addresses inequalities in North Carolina, leading to a stronger economy for the whole state and a higher quality of life for us all. Our leaders need to prioritize investing in our communities and our people, rather than giving handouts to the wealthy and profitable corporations. That means committing to ensure that every person can put food on the table and a roof over their head. That every child can have the early childhood experiences that get them ready for Kindergarten and educational experiences that lay the foundation and enthusiasm for lifelong learning. That every community has the infrastructure and tools to create opportunities.

Create good jobs that pay a living wage for all Americans. This should be a top priority for any president, but it is especially important when job growth is stalling and income gaps continue to grow. The latest numbers show that job growth fell in North Carolina and the United States last year, and we’re still not even back to where we were before the Great Recession. In fact, this is the slowest recovery in a generation. It gets even worse when you realize that most of the positive job growth in North Carolina was concentrated in the metro areas – many of our rural counties experienced a loss of jobs last year. Not to mention that the unemployment rate for Black workers is still 2.3 times higher than that for white workers in North Carolina. We need to do more to address the structural barriers to employment for workers of color, such as geographic distance to jobs, discrimination in hiring, and the lack of affordable job training in growing industries.

It’s been 10 years since the Great Recession, and the barriers to prosperity remain for many of North Carolinians. We’ve seen that much of the income growth was concentrated at the top in North Carolina last year – while the bottom 30 percent of North Carolinians have actually seen their wages fall on average. We also continue to see a wage disparity for women, especially women of color. While women overall receive 86 cents for every dollar their male counterparts make, Black women make only 64 cents and Latina women receive only 48 cents on the dollar.

Build inclusive, thriving communities.  Where someone is born shouldn’t determine what is possible in their lifetimes. Yet, for too many Americans, economic mobility is limited by existing barriers. Rather than build more barriers (and walls), it is time for American leadership to recognize the ways that our past has created many barriers for people of color and recognize that the path forward is not to erect more, but to tear down the ones that persist.