2017 Fiscal Year State Budget, NC Budget and Tax Center

Remarks by Rep. Paul Luebke on the House budget

The full transcript of the remarks by Rep. Paul Luebke today during the House debate on the budget. (Watch his remarks beginning at the 16:30 mark.)

My concern looking at this bill is that it’s not placed in the proper context. And the context is the needs of the state and decisions that have been made in the last few years – particularly since 2013 – about taxes.

We all know you cannot have appropriations – you cannot have a budget – without taxes. And a lot of the times we have a tax that looks, for example, like the standard deduction this year in the tax bill. It is the “cost” – that is to say the reduction to availability – is $25 million. But the ballooning effect is there, and two years from now it reduces availability by $133 million. We are taking off the table a lot of revenue to meet the needs of the state. You might ask, “What are these needs? Haven’t we done everything in this budget that we could possibly do?” And the answer is, “No.”

While the budget does right by overall teachers, it doesn’t do anything for those teachers who are beginning. No one can really claim that $35,000 is an adequate income for a teacher. In fact, I have data that shows that if a teacher has a family at $35,000 that she or he is eligible for the Earned Income Tax Credit. That is to say that because of the low-income and family size there is, under that program – a program we all know, I think, was started by President Reagan and expanded by President Clinton – a teacher at $35,000 is eligible for the tax credit because the income isn’t sufficient.

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NC Budget and Tax Center

Affordable higher education should be a priority for North Carolina

As state support for higher education has eroded, North Carolina students and families have shouldered more and more of the cost of a post-secondary education. A new report by the Center on Budget and Policy Priorities highlights how years of reduced investment by North Carolina in higher education has helped drive up tuition at public colleges, jeopardizing the ability of many students and families to afford an education that is key to their long-term financial success and essential to a growing economy.

State support for higher education remains well below the 2007-08 school year — 20.1 percent when adjusted for inflation, the report notes. Amid an improving national and state economy, state lawmakers have chosen tax cuts over restoring and boosting investment in higher education. These tax cuts have significantly reduced revenue that otherwise would be available to make a college education more affordable. Revenue loss will top more than $2 billion each year once all tax changes passed since 2013 are fully in place.

State and local dollars make up a significant portion of public colleges and universities budget. As such, large cuts in state funding for public universities in recent years have resulted in a steady increase in tuition. North Carolina is among the top of states for the percent increase in tuition at public four year colleges since 2008. Average tuition at four-year public colleges in North Carolina is up by $2,051, or nearly 42 percent, since the 2007-08 school year, among the highest increases in the nation. Meanwhile, federal and state financial aid for the average student has not kept up with the rising costs of earning a college degree, the report found. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Missed Opportunities: Investments that are MIA in the preliminary House budget

Deep tax cuts, the pursuit of additional costly tax cuts, and an arbitrary spending limit are preventing House leadership from proposing a bold, visionary state budget for the upcoming 2017 fiscal year, as I explained yesterday.

Once accounting for these three limitations, there are few public dollars available for anything else after the House budget writers set money aside for basic—but again uneven—salary increases and bonuses for teachers and state employees. The 2013 and 2015 tax cuts alone are draining more than $1 billion in revenue annually, squeezing out much-needed reinvestment in the programs and services that help children, families, and communities thrive.

Without those tax cuts, much more could have been possible for North Carolina.  There has been plenty of coverage of what is in the House budget over the last few days; however, what’s not in their budget has gotten little coverage. Below is a short list of investments that are missing in action but still greatly needed to build a stronger, more inclusive economy for us all. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Follow the money: The House’s budget doubles down on tax cuts and leaves nearly $127.4 million on the table

The $22.225 billion budget proposal that the state House of Representatives released for the upcoming 2017 fiscal year reflects the limited aspirations for North Carolina that the House and Senate leadership have agreed on. Legislative leadership used a flawed formula to set a low budget target — even lower than the Governor’s $22.33 billion proposal — that has no basis in economic realities or community needs and leaves $127.4 million on the table unspent.

Overall, the House proposal represents a 2.26 percent — or $490.3 million — increase over the current 2016 fiscal year budget. This proposal reflects leadership’s loyalty to severe budget constraint and lopsided tax cuts, which primarily benefit profitable corporations and the wealthy. Lawmakers are allowing these tax cuts to phase in — which will cost more than $2 billion once fully implemented — regardless of the need to replace the worst cuts from the economic downturn and address long waiting lists. In fact, the proposal implements further costly tax changes that limit the ability to meet pressing needs (see details below).

The low target helps explain why House leadership is pressed to leave $127.4 million on the table unspent, even after putting money into the savings reserves accounts and despite unmet needs in communities across the state. That is funding that could address the NC pre-k waiting list and hire the additional school nurses needed to improve student health and meet national standards.

In fact, the House budget would keep state support for services below pre-recession levels, when adjusted for inflation. That would be fine if public needs had shrunk. But they have grown. The budget also caps off the only period as far back as 1971 in which state spending would decline as a share of the economy for eight years in a row while the economy itself grows. As such, many unmet needs will persist in programs that support vulnerable communities, despite a slight increase in investments and a modest compensation package for teachers and state employees. Read more

NC Budget and Tax Center

Statement on House Budget from Alexandra Sirota, Budget and Tax Center

When it comes to building prosperity in North Carolina, the House has sets its sights even lower than the Governor’s already limited budget.

The House decision to use an arbitrary, flawed formula to determine spending won’t meet the needs of communities and families across the state.

The phase-in over the next three years of another poorly targeted tax cut represents yet another gimmick.  The increase in the standard deduction is not an effective way for policymakers to address the upside down tax code. More than half of taxpayers who make more than $95,000 a year get a tax cut under such a proposal.  North Carolina would be better off with a state Earned Income Tax Cut that helps people who work hard for low pay. An EITC wouldn’t cut taxes for people making over $95,000 a year, and it would help those who work and earn under $35,000.  And since the budget proposed doesn’t account for the full cost of this tax change, it is impossible to know what will need to be cut or where taxes will need to be raised to make up for the lost revenue to communities and the state.

In pursuing more tax cuts over investment, the House is undercutting the foundations of a strong economy. The House budget will not meet the needs of North Carolina, such as improving classroom experiences for every child, revitalizing the main streets of every community and promoting the health and well-being of families and seniors. It is time for policymakers to get serious about the unmet needs in North Carolina and pursue public investment over tax cuts that benefit the rich at the expense of everyone else.