2018 Fiscal Year State Budget, NC Budget and Tax Center

State lawmakers take positive step in Hurricane Matthew recovery

Today, the NC General Assembly passed The Disaster Recovery Act of 2017 (SB 338). The bill allocates $100 million to help Eastern North Carolina recover and rebuild from the devastating effects of Hurricane Matthew. Causing massive flooding and damage in 50 counties in the Eastern part of the state, the storm displaced thousands of families and impacted hundreds of thousands of homes and business. Ultimately, there was an estimated $2.8 billion in damages and another $2 billion cost in lost economic activity.

This is the second round of disaster recovery funding the state has pursued. In a December special session, the General Assembly passed the Disaster Recovery Act of 2016, allocating $200.9 million. Since then, Governor Cooper, as well as North Carolina’s Congressional delegation, worked hard to secure a federal commitment to fulfill the state’s unmet need. In May, the Trump Administration announced that they would only allocate $6.1 million of the $930 million North Carolina had requested.

The Disaster Recovery Act of 2017 is a key step in attempting to close the gap left wide open by the federal government. In this round of funding, $20 million will be allocated to addressing housing needs, including the repair of homes for low-income homeowners and renters. Another $20 million will go to the Department of Agriculture for dam, soil, and water systems repairs, and $30 million will go to infrastructure projects managed by local governments and non-profits. $2.7 million will help the Community College System deal with enrollment declines resulting from the storm, and, finally, $22.3 million will be allocated as a match for federal disaster grants.

Although this round of funding is not enough to address the unmet need or the total costs of damages incurred in Eastern North Carolina, it is an important step. If we are to help Eastern NC not only recover, but to become resilient, state lawmakers will have to continue to make these types of investments in the years to come.

Brian Kennedy II is a Public Policy Fellow with the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

House Finance Committee considering bill to amend state constitution tonight

UPDATE:  House Finance was cancelled last night.  Stay tuned.

In another last-minute consideration of a major policy change, the House will take up a bill (Senate Bill 75) this evening (15 minutes after session ends) that would amend the state Constitution to permanently cap income tax rates at 5.5 percent. Lawmakers have already proven that they can cut income taxes without changing the state Constitution — they have been doing it since 2013.

Having the maximum rate for income taxes set in the state Constitution limits the tools future policymakers will have to meet the needs of a growing state; to make up the funding difference from the likely federal cost shift that is proposed on Medicaid, food assistance and other key services; or to address unexpected natural disasters or major economic disruptions.

This constitutional amendment locks in the tax giveaways for millionaires since 2013 and will likely just shift the tax load even more onto middle- and working-class families.

Here is more information about the proposed change to the Constitution.

Audio of the House Finance Committee meeting may be available here.

NC Budget and Tax Center, News

Prosperity Watch: Looking at LGBTQ equality in NC

June is Pride month and the N.C. Justice Center’s Budget and Tax Center is looking at LGBTQ in North Carolina – and just how far off it seems to be.

This week’s Prosperity Watch highlights the Movement Advancement Project’s startlingly low score for LGBTQ equality in the state.

From the Prosperity Watch piece:

North Carolinians are vulnerable to being fired or denied a job just because of their sexual orientation or gender identity. There are no state laws protecting the LGBTQ community from housing, public accommodation, or credit and lending discrimination either.

The cumulative effect of this legal discrimination is pretty severe, especially since it’s layered with racial and gender discrimination. A recent Williams Institute report found that LGBT adults are more likely than non-LGBT adults to live under or close to the poverty line. Poverty rates are particularly high for lesbian and bisexual women (both single and in same-sex couples), LGBT people of color, and transgender adults. LGBT people, women, and people of color make up a disproportionate number of the minimum wage workforce, earning $7.25 an hour in a state where you need at least twice that much to afford housing. And the 25 percent of LGBT adults who are raising families also suffer from the lack of a state paid family leave law, so they can’t take time off to care for a sick child or spouse, or to bond with a new child.

 

Read the full state’s full MAP equality profile here.

NC Budget and Tax Center, Trump Administration

Would the U.S. Senate healthcare bill affect NC’s budget in a negative way? Definitely, here’s why…

The Senate GOP has released its proposed healthcare bill, and analysis shows that it would cut federal Medicaid spending even more over the next ten years than the House passed health plan. How much more? $467.4 billion. This cost shift to the states would cause greater state budget shortfalls: Instead of North Carolina losing at least $6 billion over the next 10 years in federal funding for Medicaid, it is estimated that the state would now lose and have to make up at least twice as much ($13 billion) over the same period for Medicaid.

To put that in perspective, North Carolina has only had to contribute $3.1 billion a year for Medicaid in state appropriations, on average, each of the past seven years.

How does this happen? Through a framework proposed by the GOP in Congress called Medicaid Per-Capita Caps. The Urban Institute explains that the American Health Care Act (AHCA) changes the way Medicaid is funded by capping federal Medicaid payments per enrollee, beginning in 2020. Under the House version of the AHCA, these caps would grow at the rate of the medical Consumer Price Index (m-CPI) for most Medicaid enrollees, adding 1 percent to the rate for the elderly and disabled.

The Senate bill, however, lowers the growth rate to the Consumer Price Index for All Urban Consumers (CPI-U) beginning in 2025. Over the next decade, it’s projected to grow at 2.4 percent, compared to the m-CPI rate of 3.7 percent used in the House version. This means a shortfall between federal Medicaid payments and projected costs that will grow over time, and states will have to make the difference up by raising taxes, cutting enrollment, reducing benefits, or reducing provider reimbursement.

President Trump has admitted that he used the word “mean” to describe the House GOP’s health plan. Given the fact that the Congressional Budget Office (CBO) is set to release its estimate for the Senate GOP health care plan very soon, and that it will show that millions of Americans will lose health coverage and billions in Medicaid costs will be shifted to the states, there is one question left to be answered:

Will North Carolina’s own U.S. senators, Richard Burr and Thom Tillis, do the right thing and reject the current proposal that would cut health coverage for millions of vulnerable Americans and shift billions in costs to North Carolina?

In Case You Missed It

Most of the debate regarding North Carolina’s state budget took place last week. And interestingly enough there was one topic that legislators did not address: the federal funding cuts that loom overhead. This is concerning given the massive cuts to federal funding proposed by the President and GOP in Congress. Based on those federal cuts, we know that 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 – one of those being Medicaid.

Before the Senate released its proposed health care bill last week we reported that the GOP’s health plan secrecy and Medicaid per-capita caps should raise alarms in NC. We stated If the Senate produces a new health plan bill and keeps Medicaid per-capita caps in its framework, North Carolina’s state budget and its people will suffer in the long-term.”

Luis A. Toledo 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

How to make a program irrelevant: The N.C. Office for Historically Underutilized Businesses

If you want a program which “advocate(s) actions which increase opportunities for historically underutilized businesses and promotes diversity and inclusion in state government procurement and contracting” to not do its job, you do it quietly.

The Historically Underutilized Business (HUB) Office was established by Executive Order 150 in an effort to remedy past and ongoing discrimination in the procurement and contracting markets in North Carolina. After being codified in 2001, the initiative aimed to 1) increase the amount of goods and services acquired by state agencies from HUB firms, 2) make progress towards eliminating barriers that reduce participation of HUB firms, 3) encourage purchasing officers and relevant personnel to identify and utilize HUB vendors and contractors, 4) educate HUB firms on doing business with the State of North Carolina and 5) provide resources for HUB firms.

Since its inception, the program has experienced very modest success but has been plagued with persistent inequity. A study commissioned by NCDOT in 2014 found ample evidence that race and gender remain barriers to the full and fair opportunity to participate in NCDOT’s contracts. NCDOT’s study employed a ratio measure to determine how HUB enterprises were utilized relative to white-male owned enterprises, where ratios below 80 percent indicate a disparity. For every 100 contracts awarded to white-male owned businesses, white women got 79.87 contracts, Black-owned businesses received 49.94 contracts, and Hispanic-owned businesses got 18.25 contracts. Read more