NC Budget and Tax Center, Trump Administration

CBO: President Trump’s budget policies lack details, drastic budget cuts won’t solve debt issue

The Congressional Budget Office (CBO) has released its first analysis of President Trump’s proposed 2018 budget and it is worth noting that CBO could not provide a comprehensive analysis of the effects of the proposed policies in the President’s budget because many of them do not contain the details necessary to assess those effects.

Throughout its analysis of the President’s 2018 budget, CBO indicated:

“The President’s proposals would affect the economy in a variety of ways; however, because the details on many of the proposed policies are not available at this time, CBO cannot provide an analysis of all their macroeconomic effects or of the budgetary feedback that would result from those effects.”

Unfortunately, this is not surprising as we’ve previously reported that the President’s initial budget omitted 85% of details that previous administrations have included.

CBO’s analysis also shows that even though President Trump has proposed to cut spending by $4.2 trillion over the next ten years the deficit would generally rise each year under the President’s budget, totaling $720 billion in 2027. The cumulative deficit over the 2018–2027 period would total $6.8 trillion. In other words, the President’s drastic budget cuts to critical programs that various communities and families across the country and here in North Carolina depend on to thrive will not solve the federal debt issue.

CBO is not blunt in calling out the President’s incoherent budget a disappointing mix of unrealistic assumptions, gimmicks and punts, but points out in a restrained way that:

The deficits that CBO estimates would occur under the President’s proposals are larger than those estimated by the Administration. Nearly all of that difference arises because the Administration projects higher revenue collections—stemming mainly from a projection of faster economic growth.

Based on CBO’s analysis it is clear the President’s budget is not a real blueprint that would help America. A credible and strategic budget would at least contain details for proposed policies, would improve the debt issue in the long-term, and would be based on credible economic assumptions.

Below are other key points from CBO’s latest report: Read more

NC Budget and Tax Center, public health

Latest data: NC will not come close to 2020 health objectives; legislature’s policy failures implicated

One of North Carolina’s goals is “to be one of the healthiest states in the nation.” However, the reality is that our state is not on track to reach this goal anytime soon.

Every 10 years since 1990, North Carolina has set decennial health objectives with the goal of making North Carolina a healthier state. In 2011, the state identified 13 major health focus areas and established 41 objectives and targets to be meet by the year 2020. According to our state’s health improvement plan, “Healthy NC 2020: A Better State of Health”:

“The case for improving the health of individuals throughout the state is strong…the improvement of population health is an important economic development strategy, because health is a form of human capital and as such is a significant “input” into our economic system.”

Unfortunately it appears our state will fall woefully short of achieving the goals outlined in its health improvement plan. Analysis of the latest state data and overall health rankings finds the following:

  • North Carolina is not on track to achieve major health objectives by 2020.

The state is not likely to meet targets for 32 out of 41 health objectives (78 percent) by 2020. At the current pace it would take the state 48 more years (or until the year 2065) to achieve all of its 2020 targets. As a result, 12 out of the 13 (92 percent) state’s major health focus areas are negatively affected and not likely to be successful in achieving the 2020 objectives related to them.

  • North Carolina is worse off in 18 key health objectives compared to nine years ago. In other words, instead of making progress, certain conditions have gotten worse.

Major health objectives in our state that are worse off today compared to nine years ago include: the unintentional poisoning mortality rate; the percentage of individuals aged 12 years and older reporting illicit drug use; the suicide rate; the rate of mental health-related visits to emergency rooms; the percentage of people spending more than 30 percent of their income on rental housing; the percentage of adults who have had permanent teeth removed due to tooth decay or gum disease; the number of critical violations per restaurant/food stand; and the percentage of adults with diabetes. Read more

2018 Fiscal Year State Budget, NC Budget and Tax Center

New budget a roadmap full of potholes and an unclear destination

A new BTC report highlights how the new two-year budget passed by state lawmakers continues to choose austerity and failed trickle-down economics over broadly shared prosperity. House and Senate leadership garnered the needed votes to override Gov. Cooper’s veto of the budget, resulting in approval of the budget. Under the budget, total state spending for the 2018 fiscal year (FY18) will remain below 2008 pre-recession spending. This marks nine consecutive years that state spending as a share of the state’s economy has declined.

Under the budget, overall spending for FY18 – which will run from July 2017 through June 2018 – is a 3.1 percent increase over the prior fiscal year. Beyond additional state funding provided for state employee pay increases, year-over-year net new spending for FY18 is a modest 1.4 percent above spending for the prior fiscal year. Consequently, nearly all core areas of the state budget remain below or near pre-recession spending levels when adjusted for inflation.

 

 

Tax cuts included in the budget will reduce available annual revenue by a total by $900 million; however, the budget only shows an annual cost of $521 million in the budget. This is because the tax cuts kick in starting January 2019 and thus will only apply to the second half of fiscal year 2019 (which runs from July 2018 through June of 2019). These tax cuts build onto those passed since 2013, which have greatly reduced the level of revenue available for public investments. This self-inflicted revenue challenge has allowed lawmakers to lower their expectations in regards to what is possible for the state and has created a budgetary landscape based on false choices where some public investments are funded at the expense of others. Furthermore, according to a News & Observer article yesterday, North Carolina is looking at serious future revenue shortfalls:

“State expenses are expected to grow faster than revenue starting in 2019, according to a five-year budget forecast.

“The report by nonpartisan legislative staff offers a half-dozen suggestions for dealing with future shortfalls, including not paying for inflationary increases in spending items such as state salaries; using money unspent from previous years; calling off planned income tax cuts; or increasing the sales tax rate from 4.75 percent to 5 percent.

“The budget projections prepared by the legislature’s Fiscal Research Division show shortfalls of $1.2 billion to $1.4 billion in years 2019-2020 to 2021-2022.”

From ensuring a high quality education for all students, to promoting healthy and safe communities, to pursuing economic development initiatives that target rural and distressed communities, the budget falls short of ensuring broadly shared opportunity and prosperity. The new BTC report highlights missed opportunities to make adequate public investments so that all communities across the state can thrive.

Cedric Johnson is a Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

NC Budget and Tax Center

Illinois makes the right choice, expands EITC in new budget deal

The Illinois state legislature just passed a budget that includes an Earned Income Tax Credit (EITC) expansion. From TCWF: “Under the agreement, which ends the state’s two-year budget impasse, the personal income tax rate for all Illinois workers will increase from 3.75 to 4.95 percent. Increasing the state’s EITC will help to mitigate the burden of an income tax hike on low-wage workers who are often hit hardest by flat tax systems.”

EITC momentum is picking up across the nation. Montana and South Carolina have both enacted state EITC laws, while Hawai’i’s passed the state legislature and just awaits for the governor’s signature. Two other states have passed bills to expand access or participation rates.

States across the country are getting the message: working families need the EITC. NC lawmakers should start listening.

Click here for the original statement from TCWF.

 

NC Budget and Tax Center

Do our choices match our values, as a state and as a nation? A July 4 rumination

Our country was born 241 years ago, when our Founding Fathers adopted the Declaration of Independence. The story that we tell ourselves, of our birth and who we are as a country, has been a continuous thread since then – the story of the American Dream. We tell ourselves that, in our country, there is equal opportunity for everyone – no matter where they are born or who they are. We tell ourselves that we have long been a country that is welcoming to everyone. That we are many states united, where the fate of each person is intertwined with the fate of all of us – that we value loyalty, to our neighbors and to our country.

That’s the story we tell ourselves. But then there’s the reality of the choices we make, of how things are – and how things could be if our choices actually reflected our values as a country.

If we made choices as a state and as a country that were in line with the values of the American Dream, every worker would make a living wage and the discrimination that drives differences in wages for women and men, Blacks and whites would be addressed.  Black women wouldn’t have to work hard to make only 68 cents for every dollar that white men make. Read more