2018 Fiscal Year State Budget, NC Budget and Tax Center

More on the choices made (and not made) in the final Senate budget

By now, readers here have likely seen the News & Observers reporting on Amendment 15 to the Senate budget bill from Senator Brent Jackson that was passed in the early hours of the morning and is included in the final budget.  This Amendment uses surgical precision to carve out funding for certain communities—for educational and job training programs and arts initiatives– to fund services to address the opiod epidemic.

The broader context, of course, is that the state has the dollars to make an investment in public health programming, training of police and public safety personnel and the delivery of courts services in the face of rising caseloads and the loss of drug treatment courts and fund education.

Rather than put dollars to use in addressing a public health crisis, the North Carolina Senate proposed to give it away to the wealthy taxpayers and big companies of the state in the form of another round of tax cuts.  The Senate budget includes $324 million in tax cuts for the upcoming fiscal year and stashes another $263 million in the state’s savings reserve.

Our legislative leaders consistently remark on the revenue being collected above what was projected.  Time and again, however, they refuse to put those dollars to use for the public good but choose to benefit very few.

It is worth noting the amendments during the third reading that seemed to prompt the recess and final amendment from Senate leadership.  None of these were debated fully but most, through a procedural motion, were tabled upon introduction.  Just one amendment was voted on.  Taken together, they present strong contrasts. These amendments show the broad public benefit that our collective resources could be put to—from addressing a public health crisis to ensuring that teachers and state employees have a wage that reflects what it takes to make ends meet to funding modern-day infrastructure in rural communities.  Their proposed funding sources are varied but consistently demonstrate that our state has the dollars now and can raise the revenue fairly to support these priorities. Read more

NC Budget and Tax Center, public health

On Mother’s Day: Remember Medicaid works for women – but proposed cuts would have a harsh, disproportionate impact

This weekend we celebrate Mother’s Day. Next week we celebrate National Women’s Health Week. The fact is women play an important role in society every day and one thing we can always do for them is support them in having adequate health care. Currently, more than 40 million women and girls are enrolled in Medicaid. However, proposals in Congress to cap and cut Medicaid would have devastating consequences for the nearly 1.1 million women in North Carolina who rely on the program.

This is worrisome considering that Medicaid allows women to obtain the health care they need throughout their lives. According to a recent report, “women have unique health care needs — and nearly half of all women have an ongoing condition requiring regular monitoring, care, or medication.”

By the numbers: North Carolina Women and Medicaid

1.1 million: number of women in NC enrolled in Medicaid

54%: share of women in NC enrolled in Medicaid

898,200: number of women and girls in NC that live below the poverty line

17%: share of women and girls in NC that live below the poverty line (worse than U.S average of 16%)

54%: share of births in NC financed by Medicaid

The race and ethnicity of NC women in Medicaid

White: 44%

African-American: 35%

Hispanic: 14%

Asian/Pacific Islander: 1%

Other: 5%

Overall, women would bear an outsized share of harmful Medicaid cuts because they not only make up a majority (54 percent) of North Carolina’s Medicaid beneficiaries, but are also the primary users of maternity benefits and specific health care services for women. They are much more likely to use Medicaid’s long-term services.

North Carolina hurts when women and girls cannot access the health care that they need to lead healthy, full lives.

Current health bill proposals have disproportionate impact on women

The House-passed health bill also includes several provisions that are especially harmful to women with private insurance.

For example, it would allow states to opt out of the ACA’s Essential Health Benefits (EHB) standard, effectively allowing insurers to charge women more than men by leaving many women without affordable access — or any access — to maternity coverage.

Additionally, it also would give states the option of allowing insurers to charge far higher premiums to people who are pregnant, have had a c-section, or were treated for injuries resulting from domestic violence.

Learn more: To get a better understanding of Medicaid and its impact in North Carolina you can view various graphs in our NC Medicaid Chartbook or read our series, Medicaid Matters: Protect and Expand NC Health Care.

2018 Fiscal Year State Budget, NC Budget and Tax Center

The Senate budget poses a very real threat to helping people in need

The North Carolina Senate budget passed early this morning has been analyzed for its investments and how far short they fall of the needs in communities.  What has been missed, however, are the changes that would be made under the Senate budget that would put families in our state one catastrophe away from accessing health care or food assistance.

Here are two examples of how the Senate budget violates our commitment to ensuring that every household has the resources and support to get a job, feed their family and live a healthy life.

1. The Senate budget seeks to permanently prevent North Carolina from providing food assistance to low-income families with children through a streamlined application process.  At least 22,000 low-income working North Carolinians would lose access to food assistance that helps stabilize their household and ensure the nutritional health of their children.  These are people who work hard for low wages that don’t cover their family expenses, especially child care and rent. Children in low-income families whose eligibility for free school meals is tied to their receipt of FNS through CAT EL would lose access to breakfast and lunch at school when their families lose FNS.

This isn’t just a costly provision for families and the stability of local economies.  It is a costly provision for the state. Broad-based categorical eligibility (CAT EL) works to reduce state administrative costs and workload for the Division of Social Services. Eliminating broad-based CAT EL would make FNS rules more complicated and administratively burdensome, requiring the state to alter its FNS eligibility rules, modify NC FAST (the state’s new benefits delivery system) and applications, and retrain staff. By reducing efficiency and increasing workload, this would likely increase administrative costs—the only state costs associated with FNS benefits—and potentially raise FNS error rates.

2. The Senate budget makes burdensome and unnecessary administrative changes to Medicaid which threatens access to health care for North Carolinians who need help the most. The Senate budget would put in place an exhaustive, quarterly review of those receiving Medicaid with no requirement to improve the connections that recipients can make to jobs, housing or skills training.  Instead, the process would again increase administrative costs, require extensive reworking of case management systems and produce many false or out-of-date results that could force people out of Medicaid for the wrong reason and require more work from state workers to reinstate participants. Depending on implementation, this may be in violation of federal rules for Medicaid.

The Senate budget missed an opportunity to pursue the kinds of reforms to the delivery of services to those struggling with poverty and low-incomes.  Instead, they propose creating additional bureaucracies that will increase the cost and fail to deliver a sustainable pathway out of poverty for the millions of North Carolinians and their children who need help to make ends meet, protect their health and put food on the table.

2018 Fiscal Year State Budget, NC Budget and Tax Center

Changes to child tax credit in Senate budget hurt middle class taxpayers

The Senate’s budget includes costly tax cuts that proponents claim are targeted towards middle class taxpayers. The tax cuts will cost $324 million for the upcoming fiscal year and will balloon to more than $800 million within five years. Rather than targeting middle class taxpayers, the proposed tax cuts largely benefit the highest income earners in the state and profitable corporations.

The proposed change to the existing Child Tax Credit included in the Senate’s budget makes this reality clear. Eligible taxpayers with dependent children currently get a tax credit of either $100 or $125, depending on the taxpayer’s income level. The Senate’s budget replaces this tax credit with a deduction, which allows the eligible taxpayer to deduct a portion of their taxable income. Under this tax change, middle income taxpayers will fare worse compared to the Child Tax Credit under current law.

Here are examples that highlight how taxpayers fare worse under the proposed tax change based on income levels and tax filing status:

  • Under the existing tax code, single filing taxpayers with adjusted gross income between $30,000 and $40,000 get a $100 tax credit for each child. Under the Senate’s budget, the proposed deduction equates to an $80.25 tax benefit for these taxpayers (under a reduced income tax rate of 5.35% included in the Senate budget).
  • Under the existing tax code, taxpayers filing as Head of Household with an adjusted gross income between $50,000 and $60,000 get a $100 tax credit for each child. Under the Senate’s budget, the proposed deduction equates to an $80.25 tax benefit for these taxpayers (under a reduced income tax rate of 5.35% included in the Senate budget).
  • Under the existing tax code, married taxpayers filing jointly with an adjusted gross income between $60,000 and $80,000 get a $100 tax credit for each child. Under the Senate’s budget, the proposed deduction equates to an $80.25 tax benefit for these taxpayers (under a reduced income tax rate of 5.35% included in the Senate budget).

The examples highlight that this proposed tax change in the Senate budget makes middle class taxpayers with children worse off, not better. As the saying goes, the devil is in the detail. Read more

2018 Fiscal Year State Budget, NC Budget and Tax Center

What NC could do with the $3 billion our lawmakers gave to the wealthy

The North Carolina Senate’s budget contains very few surprises. Their proposal includes more corporate and personal income tax cuts, which follows the trend of the last several years. In fact, NC lawmakers have been so consistent about pursuing costly tax cuts that they’ve lost the state about $3 billion in revenue.

$3 billion is a lot of money, and it could buy a whole lot of things that would help our community more than tax cuts for the wealthy. Things like:

Eliminating child poverty

Half a million children in North Carolina are growing up in poverty. $3 billion would more than cover the $3,000 each child’s family would need to gain financial security.

Raising teacher pay to the national average

North Carolina now ranks 35th in the nation for average teacher pay, with an average salary of $49,837. This is an improvement over the last few years, but we’re still not close enough to our goal of reaching the national average. Doing that would take $1 billion.

Closing the racial poverty gap

Sixteen percent of the state lives below the poverty line, but the rates are much higher in communities of color.  It would take $1.2 billion to move 411,000 people of color in North Carolina out of poverty and close the racial poverty gap.

Providing pre-K for all eligible children

There are currently 40,000 children in North Carolina eligible for pre-k but not receiving services. Placing all of those children in pre-k would cost $191 million each year, and would provide them with long-term education and earnings benefits.
Here's what NC could do with the $3bn our lawmakers gave to the wealthy #wrongchoiceNC Click To Tweet—–

Our lawmakers could be building thriving communities and creating budgets that actually respond to our state’s needs. But since they’ve chosen to lose billions for the sake of tax cuts for the wealthy, now they literally can’t afford to make the right choices anymore.