2017 Fiscal Year State Budget, NC Budget and Tax Center

Follow the Money: How the joint budget is funded

Last night, the House and Senate held a press conference, and they subsequently released their joint budget agreement, which will be voted on over the next week or so in both chambers.

The final budget holds to the rigid formula of population plus inflation, spending only $22.3 billion to operate core public services, as well as meet the needs of a growing state population undergoing significant demographic shifts and the persistent challenges in ensuring that every community has access to opportunity. This spending level is a mere 2.8 percent above spending for the current fiscal years and does not reflect the actual needs of North Carolina. Opportunity exists to invest in North Carolina to meet those challenges and pursue every opportunity for greater success and well-being; however, policymakers have instead chosen to reduce the state’s collective commitment bringing state spending to 4.14 percent relative to the size of the economy, well below the historic average of 6 percent.

Lawmakers are relying on a largely disproven theory that cutting public spending and reducing taxes for the wealthy and profitable corporations will deliver improved economic outcomes for all North Carolinians. Some point to the state’s apparent recovery, which mimics the overall national recovery, but lawmakers have failed to address the fact that wages aren’t recovering for everyday North Carolinians, there aren’t jobs for everyone who wants to work in the majority of North Carolina counties, and there is persistently high poverty in urban and rural communities alike.

Our leaders’ loyalty to severe budget constraint and lopsided tax cuts, which primarily benefit profitable corporations and the wealthy, are making it impossible for them to meet the needs of communities and families across the state. And as research and prior experience shows, this tax-cut, disinvestment approach will not deliver the economic gains they promise. It diminishes the ability of the state to pursue the investments that do deliver returns to the broader economy: preparing every child for kindergarten, increasing post-secondary attainment of the workforce, and targeting investments in main streets and small business development in struggling areas, for example.

While most of the public budget debate this week will be on the spending side (see our initial take here), examining how the North Carolina General Assembly plans to pay for their proposal is just as important. They pay for their 2017 budget proposal in the following way: Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Statement from Budget & Tax Center Director Alexandra Sirota on final state budget

All of the state budget proposals this year have fallen short of what it will take to get North Carolina back on track. The final budget agreement appears to be no exception based on the press conference releasing topline details this evening. Rather than respond to what families, communities and the economy need to thrive, policymakers have followed a rigid formula divorced from our day to day realities.

The final budget agreement continues to plow ahead on the path to a reduced income tax and an expanded sales tax that will continue to benefit the wealthiest North Carolinians and profitable corporations at the expense of our communities and working families.

The reality is that North Carolinians know the path to a better future is built through shared commitment to good schools, protection of air and water quality, support for main street development and other building blocks of a strong economy and healthy community. It’s time for lawmakers to see that as well.

NC Budget and Tax Center

Statement from Alexandra Sirota on tentative approval of HB3 in Senate

House Bill 3 represents a deep confusion about the role of Constitutions in our lives. Constitutions are overall frameworks for governing, not the place for public policy choices to bind future generations. That’s why we elect leaders: to debate and decide what makes sense to do today to make our communities work better and our economy work for everyone. 

This latest move to amend our Constitution with a low and arbitrary income tax cap and limits on accessing the state’s savings in emergencies reflects the current gerrymandered General Assembly’s fear that their ideas are time-limited in their value. By placing these changes into our Constitution, they are not seeking to bring greater democracy to the budget process, but instead to lock in their choices and limit the choices of North Carolinians tomorrow, 10 years, and 100 years from now.  

This unnecessary step is one taken out of fear, not responsibility for the common good. The results will be costly for us all and our state.

NC Budget and Tax Center

HB3’s Rainy Day Fund provisions aren’t going to save NC from fiscal challenges

Among the various changes to the state Constitution proposed in House Bill 3 are a series of Rainy Day Fund provisions that reflect unnecessary and counterproductive limits to the ability of lawmakers to use these savings to protect North Carolina communities and families from the brunt of a natural disaster or an economic downturn.

The Rainy Day Fund is the state’s savings account that is built up in good times so that, in downturns or disasters, policymakers can meet unanticipated needs or smooth unanticipated drops in revenue.  Through aggressive action in the past few years, the state Rainy Day Fund has reached a balance of $1.1 billion, as lawmakers have stashed away approximately $150 million each year on average since 2011 despite persistent unmet needs across the state.

Under budget proposals for the upcoming fiscal year, the Rainy Day Fund balance would grow to at least $1.4 billion, or around 7 percent of the state’s General Fund appropriations.

The proposed changes to the management of the Rainy Day Fund represent another example of enshrining in the state Constitution something that can already happen while forcing the negative effects on North Carolina communities and future generations. Read more

NC Budget and Tax Center

Anti-immigrant bill would give Attorney General unchecked power to yank school construction, transportation funding

The Senate Appropriations committee gave its blessing to a bill that would give the Attorney General nearly unchecked power to withhold state funding for local school construction projects and road construction and repair.

If HB 100 passes as written, a single state official would have the power to cut off funding for your child’s education or to fix potholes on your street. For a body that so often waxes eloquent about government overreach and the brilliance of our constitutional system of checks and balances, this one is head-shake worthy.

Empowers every crank with a phone

HB 100 allows anyone to anonymously allege that a local government in North Carolina is not abiding by state laws on immigration enforcement. There’s no requirement that the tip come from someone who knows anything about state law or swears to the truth of what they are reporting. The tipster need not live in the locality being reported on or even be a resident of North Carolina. Even if the complaint is completely baseless, the Attorney General would still be compelled to investigate, consuming time and resources that could otherwise be used to actually protect and serve North Carolinians. Local governments would also be forced to divert resources to respond to frivolous and, potentially, malicious anonymous accusations. That’s a lot of power to give to someone with a grudge and a smartphone.

Attorney General would become the Immigration Czar and State Budget Director

The bill also lodges remarkable power in the Attorney General to personally determine whether a local government will lose its state funding. The investigation and finding of non-compliance is performed entirely by the Attorney General’s office, with no defined standards, procedures, or checks to limit his or her authority.  There is no process for a hearing, and no clear path for local authorities to present their case or arguments.  The only appeal available is where required “by the United States and North Carolina Constitutions,” which exists anyway.  No process is outlined for where such an appeal would be lodged, or what process would be followed.  Other than where constitutional issues are at stake, the Attorney General’s word would be law and nobody from the Governor to the courts could do anything about it. Read more