NC Budget and Tax Center

NC Budget and Tax Center

We have our work cut out for us in 2016. Over the last few days we released a series of charts that capture the key economic stories of the past year. To see the full series of charts, visit the Justice Center’s Facebook page. Given the short and long-term economic challenges we face, public policy choices will determine whether we build an economy that works for everyone.

Your Resolve to Act in 2016 can bring prosperity to more North Carolina homes.  By staying up to date on economic trends, sharing information with your networks and communicating directly with your elected officials, you make sure that the choices are clear in the policy debates that this year will hold.

Resolve to act in 2016 because our economy isn’t creating enough jobs. If we counted all of the people who have left the labor market over the last several years because there are not enough jobs to go around, unemployment in North Carolina is likely still north of 10%. Even those who have been able to find work represent a smaller share of North Carolinians with a job than before the recession started. Unfortunately, economic reality has not yet produced a change of course in Raleigh. Many elected leaders continue to believe that tax cuts will solve our economic ills, in spite of the fact that state’s like California and Massachusetts that focus more on investing than cutting have seen stronger recoveries than North Carolina or our neighbors to the south. Read More

NC Budget and Tax Center, Uncategorized

The 2015 year brought plenty of budget missteps on Jones Street—from another round of tax cuts to state investments that are mired at historic lows. Here’s a look at the top 10 missteps that state policymakers should address in 2016.

  1. State lawmakers once again chose to cut taxes that primarily benefit the wealthy and profitable corporations over meaningful levels of reinvestment. The tax plan will reduce revenue by $1 billion annually when fully implemented, cutting off pathways to greater economic success like early childhood development, public schools, and community economic development while also failing to boost the economy or create jobs.
  2. State lawmakers failed to restore the state Earned Income Tax Credit (EITC), which benefited nearly 1 million families and their 1.2 million children. Yet, they chose to expand the sales tax to new services like maintenance, repair, and installation, effectively further shifting the tax load onto middle- and low-income taxpayers.
  3. The 2015 tax changes make our tax system more upside-down by asking even more from people who are already struggling to pay the bills. Under full implementation of the tax package, the lowest income working families will end up paying a tax increase of $7, on average, whereas millionaires are the big winners again with a tax cut of more than $1,800 on average.
  4. This budget doesn’t address falling wages, just as the last two budgets failed to do. In 2013 an hour’s work in NC earned around $2.50 less than the national average; now that gap has grown to almost $3.00. Allowing the state’s lowest-income families to keep more of what they earn through an EITC is a key way to build a stronger economy, along with a higher minimum wage and collective bargaining rights, but legislators failed to restore the tax credit and raise the minimum wage.
  5. State investment is at historic lows. State lawmakers passed a budget that keeps state spending as part of the economy below the 45-year average. That would be fine if needs have shrunk but they’ve grown. State budgets typically allow spending to grow as the population grows and the economy changes, especially after an economic downturn when revenues plummet and services are frozen or cut.
  6. State investments break an unwelcome modern record as they remain diminished. Lawmakers passed a budget that caps off the only period since 1971 in which state spending declined as a part of the economy for seven and eight straight years while the economy itself grew. Continuing on a tax-cut path means there simply won’t be enough revenue left over to repair critical investments or to position our state to compete.
  7. Eight years later, state investment remains below pre-recession levels despite more children to educate, more older adults to care for, and more citizens to serve and protect. Such long-term disinvestments have translated into significant unmet needs for our state’s growing population—a shortage of K-12 textbooks, school nurses, and community services for older adults.
  8. This budget continues to hold us back from ensuring educational success for every child. For the current school year, lawmakers invested more per student compared to the 2015 fiscal year budget but well below 2008 pre-recession levels—nearly $500 less per student. This will cause real harm to the classroom and educational outcomes. The number of students in North Carolina schools has continued to increase since 2008, yet the amount of funding per student— and, therefore, the resources available to educate each student—has not been state lawmakers’ priority over tax cuts.
    • For example, textbook spending is below half its 2010 peak level, leaving some schools with outdated textbooks or with no textbooks at all.
  9. Continuing down a tax-cut path is deepening cracks in NC’s opportunity structure—and it has left several vital areas of public programs and services inadequate.
    • For example, lawmakers kept year-over-year spending flat for the pre-kindergarten program that serves at-risk 4-year olds. They failed to restore the more than 6,400 slots lost since 2009 or give opportunity to the 7,200 children stuck on the waiting list.
    • For example, tuition at community colleges rose for the seventh consecutive year to $76 per credit hour from $72—an 81 percent increase since 2009—increasing the likelihood of a college education being out of the reach of many.
  10. This tax-cut path—and the revenue losses that come with it—also mean that some investments are completely missing from the budget.
    • For example, there is no cost-of-living adjustment for retired public employees like former state troopers and teachers despite their shrinking purchasing power due to changes in the economy.
    • For example, there is no Medicaid expansion, which means lawmakers denied affordable health care to about 500,000 North Carolinians.
    • For example, there is no support to ensure that all rural communities have reliable high-speed internet access that is increasingly essential to participating in the global economy—which leaves struggling rural communities further behind urban areas.

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NC Budget and Tax Center

The holiday season is a time to reflect on our personal journey over the past year and spend time with family and friends. For many, it is also a time of compassion and willingness to help less-fortunate neighbors make ends meet and secure basic needs.Coming up short image

In Governor McCrory’s Thanksgiving video message, he spends a brief moment encouraging North Carolinians to think of and help people who are struggling to get by. It is rare for the Governor to lift up the plight of families in need. But, a small act of kindness is never wasted and his call for supporting our neighbors is welcome.

The big question remains, however: what have lawmakers done this past year to address poverty?  The scourge of poverty that exists in every Tar Heel community demands sustained and systemic attention. Very few lawmakers give people struggling with economic hardship the attention that they deserve—not in policy agendas, not at the policy tables, and not in public speeches.

These end-of-the-year-only messages that pop up about helping people in need remind me of that one uncle—and we all have one—who talks a big game at family holiday gatherings but lacks follow through when it matters most. Read More

NC Budget and Tax Center

On December 16th,  the Federal Open Market Committee of the Federal Reserve Bank will meet to consider whether to raise interest rates.  This decision to raise interest rates has real implications for the well-being of North Carolina’s working families.  Yet often the policy decisions of the Fed are not accessible to working families or the organizations that work with them.

As Robert Reich shares in this explainer, the Fed’s monetary policy has very real implications for jobs and wages.  And in fact, many data points right now point to ongoing challenges in the labor market that make a move to raise interest rates counterproductive to efforts to improve working families well-being.

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In a recent piece by the Economic Policy Institute, analysis of the oft-ignored role of the Federal Reserve Bank and monetary policy to the well-being of working families makes clearer just how important this upcoming decision is and the mandate of full employment overall for the health of our economy.

It is one that should be front and center as North Carolina contends with employment levels still below pre-recession levels and falling wages.

 

NC Budget and Tax Center

If you are like me, one of the great activities of December is scouring the year-end lists for the great reads, music and tech developments of the past year.  So here is one more list to add to the pile that features Budget & Tax Center publications that are must reads from 2015.  Happy Reading!

  1. North Carolina’s Greatest Challenge: Widespread Struggles Remain a Grave Threat to Economic Growth and Us All provides a comprehensive analysis of poverty and income data for North Carolina and demonstrates how we ignore the economic challenges of some in our state at our own peril.
  2. Smart Choices in an Era of Migration examines how the growing immigrant population in North Carolina has contributed to the economic vitality of the state and highlights common-sense steps that can help immigrants to become fully integrated into the North Carolina community.
  3. Diminished Expectations and the Resulting Drag on NC’s Economy: A Summary of the 2015-17 Budget analyzes the final budget to demonstrate how sharply constrained the state’s ability to make public investments in widespread prosperity and a growing economy due to tax cuts.  For where we hoped that the budget would take us, here is our pre-session outline of what our state needs to move forward for bonus reading.
  4. Growth without Prosperity: Seven Years After the Great Recession Started, Recovery Still Eludes North Carolina assesses various metrics on economic well-being to tell the story that the recovery is still uneven and failing to deliver economic security to all in the state. For more recent updates to the data, visit our Prosperity Watch platform for weekly nuggets on data trends.
  5. This year’s State of Working North Carolina report, The Future of Work and Ensuring Job Quality in North Carolina, refocuses the discussion of how automation is changing the nature of work to analyze and propose ways to ensure that job creation efforts deliver economic well-being and reflect the characteristics of economy-boosting jobs.

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