NC Budget and Tax Center

Governor should not celebrate economic mediocrity

In touting the number of jobs created since he took office, the governor said “that’s something we need to celebrate, and that’s a goal we continue to have.” These comments prefaced the release of McCrory’s key budget proposals, which themselves reflect a Governor who is largely satisfied with the status quo.

Thing is, North Carolina’s economic track record over the last few years is not exactly sterling:

  • Mediocre employment record: Since the beginning of 2013 (the comparison point that the Governor used in his remarks), North Carolina has increased employment by 7%, just ahead of the national average of 6.3%. That’s not terrible, but its not exactly world-beating either. In fact, 15 states outclassed North Carolina in job creation over the last three years. Those states include regional neighbors (South Carolina and Georgia) and states like California, Oregon, and Washington that have pursued decidedly more progressive approaches to growing the economy. As we reported earlier this week, North Carolina continued this record of middling performance over the last year, so we’re not making meaningful progress toward the top of the heap.
  • Not creating enough jobs for everyone that wants to work. North Carolina is still a long way from recovering to the level of employment that existed before the Great Recession. While we have added jobs over the last several years, North Carolina’s population has also swelled, leaving us well below the level of employment that was the norm before the recession. To make up the jobs deficit, North Carolina would need roughly 400,000 more jobs that exist today. Preparing for future growth and ensuring everyone can get connected to work will require far more robust job creation over the next few years.
  • Wages for the median worker continue to fall.  Since 2009 when the national economic expansion officially began, wages for the worker in the middle of the earnings distribution have fallen by 4 percent.  As SEANC has pointed out, state employees pay overall has fallen behind the cost of living by almost 9 percent since 2010.   And while the Governor’s desire to push average teachers pay to $50,000 is good, it could still leave many teachers working a second job to cover the basic costs of living.

This middling economic record becomes particularly alarming given that the Governor is essentially promising more of the same. Three years of economic data say that the Governor’s economic policies have not produced economic leadership.  Let’s hope we get more of a commitment to build an economy that works for everyone from the General Assembly.


NC Budget and Tax Center

Statement on Governor’s Budget Announcement from Alexandra Sirota, Director of the Budget & Tax Center

If the Governor follows through with the modest additional investments in his budget announcement today, it will represent a pragmatic, yet still constrained, approach to the state’s need for public investments.  With the unanticipated revenues that are available due to a recovering national economy, the Governor is seeking to make smart investments in key areas to promote child well-being and support improved educational outcomes.  But this additional investment represents a small fraction of what is needed to realize his principles of preparing for future growth and helping those who are struggling in today’s economy.

Without the budget proposal fully available for analysis, it is difficult to say whether these new investments highlighted come at the cost of other critical areas. Certainly, it is unclear how the Governor will seek to sustain any new public investments with the already scheduled phase-in of additional cuts to the personal and corporate income tax and the needed servicing of the Connect NC bond.

Even without the full budget proposal, we know that the Governor is limited by the costly income tax cuts implemented since 2013 that primarily benefit wealthy and profitable corporations. These cuts result in at least $1 billion less in revenue each year than what would otherwise have been available to build a solid foundation for a North Carolina economy that works for everyone.

We therefore question whether the state will be able to realize the full benefits of these public investments while policymakers allow tax cuts to continue that primarily benefit the wealthy and profitable corporations.

It also remains to be seen whether the Governor can deliver on even the few small promises made in today’s announcement.  We hope that the General Assembly will choose reinvestment over harmful tax cuts or arbitrary spending formulas and commit to building an economy that works for everyone.

NC Budget and Tax Center, Raising the Bar 2016

Sound fiscal policy choices needed to build a stronger, more inclusive NC economy

This post concludes a series on the state budget featuring the voices of North Carolina experts on what our state needs to progress so that all North Carolinians have a fair shot to get ahead.

State lawmakers will return to Raleigh next week to convene this year’s short legislative session. One primary task for lawmakers is to revisit the state budget for the upcoming fiscal year that begins in July and make needed and desired revisions. More tax changes may also be pursued, which would have implications on what the final state budget looks like and whether spending priorities to meet growing needs can be met.

raise the bar

The desire for more income tax cuts by state leaders would build onto tax changes passed in recent years that have largely benefited the wealthiest in the state and that have significantly reduced revenue available for public investments.

A recently released BTC report highlights the tax swap that has resulted from recent tax changes. Costly income tax cuts have given tax breaks to the wealthiest and profitable corporations. Meanwhile, the sales tax has been expanded to include more goods and services, which particularly harms families and individuals that struggle to make ends meet. Consequently, this tax swap – a greater reliance on sales tax and less on income taxes – has shifted the tax responsibility to low- and middle income taxpayers and away from the well-off. Since 2013, the tax burden on low income taxpayers has increased by $30 on average while it has decreased by around $15,000 on average for millionaires.

The significant revenue loss from the tax cuts cannot be overlooked. The annual revenue loss once all tax changes are fully in place is at least $2 billion. These are dollars that otherwise would be available for the economy-boosting public investments that have been lifted up in the Raise the Bar blog series this week – investments such as reducing persistent Pre-K waiting lists, ensuring that public schools have adequate resources, making higher education more affordable, ensuring healthcare services for the elderly and poor, and helping ensure that economic growth extends to rural and distressed communities across the state.

The results are clear: Even as the tax swap delivers big tax breaks to the wealthy, it reduces resources available for public investments that build a strong economy. North Carolinians should be alarmed by state leaders’ short-sighted focus on tax cuts and their desire to continue North Carolina down this path. Sound fiscal policy choices are needed to build a stronger, more inclusive economy and a brighter future that all Tar Heels want and deserve. It is this vision of building an economy that works for everyone that should guide lawmakers’ decisions during the upcoming legislative session.

NC Budget and Tax Center

Funding the NC Housing Trust Fund

This post is part of a series on the state budget featuring the voices of North Carolina experts on what our state needs to progress so that all North Carolinians have a fair shot to get ahead.

By Samuel Gunter, Director of Policy and Advocacy, NC Housing Coalition

More than 500,000 North Carolina households spend at least half of their income on housing,[i] and communities around the state have been taking notice (including Charlotte, Asheville, Raleigh, Wilmington and Durham). A family that spends most of their income on housing[ii] is unable to invest in other basic necessities like preventative health care or education, much less build resources for the future. While each community’s housing needs are unique, lack of affordable housing is a problem in all 100 North Carolina counties[iii] and calls for a statewide solution.

raise the barThe NC Housing Trust Fund was created by the General Assembly in 1987 and is administered by the North Carolina Housing Finance Agency. It is North Carolina’s most flexible resource for the state’s growing and complex affordable housing need. Funds leverage private funding to create a variety of housing solutions — homeownership, rental, supportive housing, new construction, rehabilitation, and emergency repairs. Examples include:

  • Senior communities;
  • Habitat for Humanity homes funded by second mortgages;
  • Urgent repairs of dangerous housing conditions; and
  • Domestic violence shelters.

Read more

NC Budget and Tax Center, Raising the Bar 2016

North Carolina’s older population and the need for state action growing

This post is part of a series on the state budget featuring the voices of North Carolina experts on what our state needs to progress so that all North Carolinians have a fair shot to get ahead.

By Mary Bethel – President, NC Coalition on Aging

raise the barThe Baby Boomers Are Here!  North Carolina is experiencing a significant increase in our older population as the state’s 2.4 million baby boomers (those born between 1946 and 1964) have begun to enter the retirement age.  Today, 1 in 5 – over 2 million people – are age 60 and over and there are 170,000 people age 85+ living in the state.  By 2018, the state as a whole, and 90 of the 100 counties, will have more population 60 and over than age 0-17.

With this growth in the number of older adults comes an increased need for legislative action to help those who need assistance.  Many aging advocacy groups in the state, including the NC Coalition on Aging, a statewide alliance composed of agencies; organizations, groups and supporting individuals concerned with issues impacting older North Carolinians (; are asking the General Assembly to appropriate funding for two priority areas. Read more