NC Budget and Tax Center

What’s at stake in today’s Supreme Court hearing on immigration – family integrity and a lot of worker income

The US Supreme Court hears oral argument today in the case of Texas v. United States, a challenge to the Obama Administration’s executive order to protect the parents of U.S. citizens and legal residents from deportation, commonly known as DAPA.

If upheld, DAPA will allow several million of immigrant parents nationwide to step out of the shadows, which enables them to fully participate in their local economies, and could raise the wages of North Carolina workers — immigrant and US-born alike. As we reported last year, DAPA alone could increase North Carolina workers’ income by over $150 million per year and lift over 5,000 children out of poverty.

Read more

NC Budget and Tax Center

Under-employment and low wages still plague North Carolina

Last month’s employment figures show that North Carolina’s economy is still not producing enough jobs for everyone that wants to work, just as we continue to search for ways to produce appreciable wage growth. With the legislative session just around the corner, the economic data from March provide a reminder that tax cuts, slashing government spending, and gutting unemployment insurance have not delivered the goods.

With success like that, who needs failure?

This time last year, when unemployment in North Carolina was running below the national rate, many elected leaders thought it showed that cutting taxes and slashing unemployment benefits was working. Today, North Carolina’s unemployment rate is higher than the nation, and we have not made any meaningful progress in closing the wage gap between our state and the nation. What’s bizarre (if not entirely unpredictable) is to hear the same lines of argument trotted out when our state has fallen dramatically behind the national pace for reducing unemployment.

Here are some of the specific figures on how unemployment and wages in North Carolina compare to national average:

North Carolina is far behind national reductions in unemployment: Unemployment has come down in both the country and North Carolina over the last year, but the reduction here in the Tarheel state has been much less impressive. Nationwide, Almost 600,000 fewer people were looking for work in March compared to the same time in 2016, a drop of almost 7%. North Carolina shaved only 7,017 people from the rolls of the unemployed over the same time period, or a 2.6% reduction. In other words, North Carolina unemployment declined at less than half of the national rate over the last year. The lackluster performance in North Carolina left more than 265,000 North Carolinians looking for work in March, which is still higher than before the Great Recession.

North Carolina pay remains below the national average. North Carolina workers took home an average of $2.37 less an hour than workers nationwide. While North Carolina has historically had below-average pay, the gap has widened considerably in the last several years. In March of 2007, an hours pay in North Carolina was $1.26 lower than the national average. If we want to bring weekly earnings in North Carolina up to the national average, it would require an almost 11% across the board raise.

NC Budget and Tax Center

New report shows where NC economic policy is out of whack

A report out today highlights a lot of areas where North Carolina’s economic policy is badly wanting. Drawing on a trove of economic analysis, the report identifies common-sense policies that can grow an economy that works for everyone.Greatest-Hits-Social-Final_FPA-All (002)

Let’s just say that North Carolina has plenty of room for improvement. As legislators gear up for the 2016 session, here are a few ways we could move toward a more inclusive and competitive economic footing:

The report identifies a number of other areas where North Carolina’s recent policy choices are out of step with common sense and solid evidence, but these are some of the most glaring examples.

The good news is that we can do better. North Carolina is not doomed to witness the death of the middle-class, or to see poverty become an inter-generational destiny, or to watch helplessly as working North Carolinians miss out of the fruits of economic growth. We can build an economy that works for everyone, it just takes the political will to make it happen.

NC Budget and Tax Center

Governor McCrory provides glimpse into his budget proposal that he will unveil in late April

At a press conference earlier today, Governor Pat McCrory provided a narrow and preliminary look into his budget proposal for the 2017 fiscal year that begins in July 2016. His remarks focused solely on the investments that he would make in the health and services (HHS) section of the budget. The Governor stated a desire to boost investments targeting vulnerable communities such as at-risk children, adults who suffer from mental health and substance abuse disorders, and older adults with Alzheimer’s.

Governor McCrory did not mention any additional rounds of tax cuts that primarily benefit the wealthy and profitable corporations—a genuine concern given his willingness to sign into law such tax breaks in the last few budgets. He also did not mention any details for other investments that the state budget funds such as education, community economic development, and the justice system.

Without knowing all of the details of his likely $22+ billion budget and tax plan, it is unclear how he pays for the investments in his new proposal. He could pay for them with money expected to be left on the table this year, new revenues that are coming in due to a slowly improving economy here and across the nation, and/or by relying on a mix of new revenues and tax cuts. Several fiscal scenarios exist.  As such, a complete analysis of today’s news must wait until the Governor releases the full proposal later this month.

Below are topline summaries of the Governor’s health and human services budget for the upcoming fiscal year. Read more

NC Budget and Tax Center

Providing meaningful teacher pay raise clashes with appetite for tax cuts

Gov. McCrory and state leaders have signaled intentions to include a pay raise for North Carolina teachers in their respective proposed budgets for the upcoming fiscal year that begins July 1, 2016. The specifics of what a pay raise will entail remains unclear. However, what is clear is that providing educators a meaningful raise conflicts with tax policy decisions in recent years.  The priority placed on cutting income taxes for the wealthy and profitable corporations mean that movement to the national average for North Carolina’s teachers will be next to impossible and that progress on teacher pay could come at the cost of other classroom investments critical to students’ success.

The Governor’s proposed teacher pay raise will cost around $250 million but would not get average teacher pay to the national average and would fall short of even leading the southeast region. In addition, because of other priorities highlighted by the Governor – additional funding for broadband connection for schools and more funding to support students with disabilities, among other initiatives – a sustainable way to fund all of these critical investments in classrooms is unlikely. Accordingly, the Governor providing a way to pay for these proposals is critical to ensuring that they can be sustained. And that means revisiting the planned phase-in of reductions to the personal and corporate income tax rates in future years.

Tax cuts enacted since 2013 that largely benefit the well off and profitable corporations will reduce annual revenue by more than $2 billion once all tax changes are fully phased in. These are dollars that otherwise would be available to get average teacher pay for North Carolina teachers to the national average, boost investments in the state’s education pipeline (e.g. eliminate Pre-K waitlists, funding for classroom textbooks, etc.) and other public services. The constrained revenue picture as a result of costly tax cuts in recent years makes such opportunities merely wishful desires. And despite recent news of expected better-than-projected revenue for this current fiscal year, this does not mean we have adequate revenue to meet the needs and priorities of a growing state.

State leaders have expressed a desire to pursue more tax cuts that will further reduce available revenue and that will further make providing teachers a meaningful pay raise impossible – unless significant funding cuts are made to other areas of the state budget. The reality is that tax policy decisions in recent years and a desire to continue this tax-cut approach makes providing North Carolina teachers a meaningful pay raise fiscally unsustainable and unlikely to happen.