2018 Fiscal Year State Budget, NC Budget and Tax Center

Governor’s budget for public schools limited by tax cuts in recent years

The Governor’s proposed budget for K-12 public schools reflects the reality of North Carolina’s constrained revenue landscape, which is a result of costly tax cuts in recent years. Beyond state funding provided for teacher pay raises, little progress is made to boost investments in other areas of the public schools budget. Overall, spending for public schools in this proposal is 6.1 percent above spending under the state budget for the current fiscal year. Excluding the additional state funding for pay raises, spending for public schools under the Governor’s budget is 2.7 percent above pre-recession spending.

Here are five notable spending priorities in the Governor’s budget.

  1. The bulk of new spending in the Governor’s public schools budget is for teacher pay raises. The average includes a new salary schedule that provides teachers an average 5 percent pay raise in each year of the biennial budget. The total annual cost of these two pay raises once fully in place is $542 million.
  1. Enrollment growth is funded. Full funding to account for enrollment growth in public schools is no longer a guarantee, as this funding is no longer included in the base budget. The Governor’s budget provides $29.3 million in state funding for enrollment growth. Enrollment growth is not fully funded with General Fund dollars, however. The Governor’s budget includes $2.5 million of revenue from the Civil Penalties and Forfeiture account to help fund enrollment growth in public schools.

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2018 Fiscal Year State Budget, News

N.C. Senate Republicans on Cooper budget: “Spendsanity”

Gov. Roy Cooper released his proposed state budget this morning.

So far, the Republican response has been a bit muted. There’s a lot to digest.

This meme has been circulated by the N.C. Senate Republicans on social media, though – and is being retweeted and re-posted by GOP lawmakers including Senate President Pro Tempore Phil Berger (R-Rockingham).

Not exactly nuanced criticism…but there you are.

Have a look at what the N.C. Budget and Tax Center has to say about the budget here, have a look at what it may mean for education here and get an overview from N.C. Policy Watch’s Lisa Sorg here.

2018 Fiscal Year State Budget, NC Budget and Tax Center

Statement from Budget & Tax Center on Governor Cooper’s budget

Statement from Alexandra Sirota, Director, Budget & Tax Center

Governor Cooper has laid out a vision that serves as a positive step toward a higher quality of life for more North Carolinians and communities while seeking to reclaim our national reputation as a state committed to building opportunities and an economy for all.

Rather than follow arbitrary flawed formulas, the Governor has recognized the range of needs in communities and for families and put together a pragmatic plan to respond as a state.

The Governor emphasized, in particular, the role of public employees and teachers in delivering high quality services across the state, as well as the importance of a fortified education pipeline from birth to career in driving better economic outcomes. He acknowledged that public policy can make sure health care, housing and child care are affordable and accessible. He has set aside savings for future Rainy Days while also making additional modest investments in rebuilding those communities hit hard by natural disasters last year.

Governor Cooper could have made even greater progress toward realizing the goal of a thriving North Carolina if his decisions weren’t constrained by the tax cuts that have primarily benefited the wealthy and profitable corporations since 2013.

To sustain and build upon the Governor’s first steps toward a thriving North Carolina, it will be critical that all of our state leaders commit to ensuring the tax code is able to meet the state’s long-term needs and doesn’t continue to ask more from those living on middle and low incomes.

NC Budget and Tax Center, Trump Administration

Three reasons to be concerned about President Trump’s announcement about the federal budget

Today, President Trump announced directions to federal agencies that suggest his plan for the federal budget will be deep cuts to non-defense discretionary spending to pay for significant increases in the country’s defense budget.

President Trump suggested that he would seek a 10 percent increase in defense spending and find cuts to meet the estimated $54 billion required to do so in programs that protect the health and well-being of Americans, provide quality and affordable education and job training and support the infrastructure of a global economy.

Here are just three reasons to be concerned about this preliminary direction for the federal budget process:

  1. Areas of the budget that will likely be cut to pay for increases in defense spending are portions that help Americans access economic opportunities and support institutions that are vital to a healthy economy and democracy. Many of the poverty reduction programs likely to be hit hard play a critical role in the economic security of working-age adults who lack a bachelor’s degree and help strengthen the broader economy.
  2. The 2011 Budget Control Act put in place spending caps on defense and domestic programs, some of which will come into direct conflict with President Trump’s proposal. Changes to this act have the potential to shift costs elsewhere, increasing cuts in certain budget areas or growing the long-term budget deficit. As has been evidenced by sequestration, or automatic budget cuts to date, access to child care, housing and other programs supported with federal dollars ripples through local communities in ways that limit improvements in developmental and economic outcomes of children and their families.
  3. President Trump’s budget announcement today doesn’t detail the various ways in which competing proposals, like plans for infrastructure development, campaign promises to protect entitlements and efforts to cut taxes for the wealthy, will be reconciled in a final budget.
NC Budget and Tax Center

CBPP Reports: North Carolina and 49 Other States Would Be Harmed Under Current Proposals to Restructure Medicaid

Today, the Center on Budget & Policy Priorities (CBPP) released two reports on the impacts of Congressional Republicans’ recent plans to cap and cut Medicaid and end the expansion of that program to provide health care coverage for those who would otherwise not have it.

The conclusions of both reports indicate that restructuring Medicaid under block-grant or per-capita proposals would lead to damaging effects on states and affect the ability of Americans to access health care.  These findings are of great concern to North Carolina. As proposals to cap and cut Medicaid are considered, it is important to note that 1.9 million North Carolinians were covered by Medicaid in 2016. And the federal government provides $66 for every $100 spent on Medicaid services in the state.

Under a per capita cap or a block grant, the federal government’s contribution to Medicaid would be decoupled from the actual cost of providing health care. Instead, federal support would be capped, and limited either to a set amount per beneficiary (under a per capita cap) or to a fixed amount per state (under a block grant).

Key points from CBPP’s reports include:

  • “House Republican proposals would effectively end the Medicaid expansion now in effect in 31 states and Washington, D.C. by phasing out all of the enhanced federal funding that states now receive for covering the expansion population. This would force expansion states to find at least $32 billion more in state funds in 2019 alone (assuming the reduction took effect in that year) to continue covering this group.  Few, if any, states could absorb such new costs.”
  • “Even comparatively small percentage cuts in federal funding would create large budget shortfalls for states, as federal Medicaid funding constitutes about 15 percent of state budgets, on average.”
  • Proposals would also eliminate Medicaid’s crucial ability to automatically respond to increases in need. For example, proposals would make it difficult to address key health care challenges related to the opioid epidemic and the aging baby-boom generation.