2018 Fiscal Year State Budget, NC Budget and Tax Center

Bipartisan group of Kansas legislators stops failed tax-cut experiment

As North Carolina’s General Assembly begins the process of reconciling the budget proposals from the House and Senate, they would be wise to look to the newspapers in Kansas today.

A bipartisan supermajority of both houses rejected Gov. Brownback’s tax cutting agenda and choose a different approach—funding the programs and services that can grow the economy stronger and for all through a $1.2 billion revenue package.

This leadership from the Kansas Legislature came as cuts to schools, health care and infrastructure were mounting, the state’s fiscal stability was questioned by rating agencies, and many tax-cut supporters lost their bid for re-election in the Fall of 2016.

As Nick Johnson with the Center on Budget & Policy Priorities noted in a statement:

“Kansas’ five-year experiment shows us what happens when we try to tax-cut our way to prosperity, but the legislature’s action reminds us that we have other options.”

North Carolina Representatives and Senators, we too have better options.

NC Budget and Tax Center

Lawmakers need to commit to long-term plan to rebuild after Hurricane Matthew

State policymakers in the General Assembly should be taking the lead in planning for the long-term rebuilding effort in Eastern NC that will be needed after $2.8 billion in immediate damage and a calculated unmet need of $930 million.

The federal administration pledged just $6.1 million in additional support to address specific housing needs at the start of our state budget process—or less than 1 percent of the documented unmet need for rebuilding the region.

Even after the news broke of the federal failure to step up for Eastern NC, Senate and House leaders put just $150 million in the effort to rebuild Eastern NC.  Those dollars were allocated just for the first year of the two-year budget.

Clearly the state must make a bigger commitment to rebuilding the region, not just to address damages and unmet needs but to achieve greater resiliency and a stronger economy in the region for the long-term.  This will benefit us all.

But it will require a commitment now to fund rebuilding that will take place over years.  Failing to meet the unmet needs request to the federal government would mean families remain without stable and affordable housing, infrastructure and environmental remediation would not be completed, and small businesses and farms aren’t operating and employing local residents.  Failing to fund these immediate needs makes it more difficult to move toward full employment and resiliency in the long-term.

Some suggest that no more money should be committed until the initial $200 million allocated in December is completely spent.  There are many problems with this argument. Read more

2018 Fiscal Year State Budget, Environment, public health

NCGA welcomes 2017 hurricane season with abysmal disaster relief funding budget

Last week, the NC General Assembly welcomed in 2017’s hurricane season with a woefully inadequate budget proposal for Hurricane Matthew disaster relief funding. At only $150 million slated for hurricane recovery with $930 million of unmet need, the NCGA misses an opportunity to address long-term environmental and community resiliency.

Poultry waste can be seen streaming into floodwaters from flooded poultry facility near Seven Springs, NC

Poultry waste can be seen streaming into floodwaters from flooded poultry facility near Seven Springs, NC

Last October, in the wake of the hurricane, the Neuse River reached an historic peak of 29.74 feet, wreaking havoc on the region’s waterways and displacing thousands of people, destroying homes and entire communities, and exacerbating existing environmental justice issues in the region. The flooding contaminated the Neuse, Cape Fear, and Lumber River watersheds from various industrial polluters – including 14 swine waste lagoons, human waste from wastewater treatment facilities, and coal ash from a dam breach at the H.F. Lee plant near Goldsboro. Upper Neuse Riverkeeper Matthew Starr notes that communities are likely also facing contamination from poultry facilities, but because the Department of Environmental Quality does not require them to be permitted, they have no record of where these facilities are and therefore cannot do the appropriate testing.

Climate change will make problems worse

In a region that is already hurting from decades of environmental injustices – enduring the worst of industrial swine and poultry operations and coal burning power plants – displacement and disruption from this kind of natural disaster only worsens conditions for the families who have historically been industry dumping ground.

Unfortunately, climate change will only make the problem worse. The National Oceanic and Atmospheric Administration (NOAA) predicts that this year’s hurricane season will be a busy one – with an above-average number of storms expected in the Atlantic. Climate change creates conditions for continuous rainfall and flooding, not just major storms, which also pose a threat for frontline communities. Flood plain management in eastern North Carolina will be critical for its ability to weather future natural disasters. The state must move agricultural and municipal wastewater facilities out of the 100-year floodplains to avoid future flooding-induced contamination, and we must rebuild the outdated water and sewer infrastructure to protect the health and safety thousands of families. With last week’s announcement from the Trump Administration that the U.S. will exit the Paris Climate Agreement, it is unlikely that we will see action quick enough to curb the worst effects of a quickly changing climate.

We need leadership

The NCGA must take the long view in rebuilding eastern NC. NC leaders continue to ignore the scale of the problem, continue to leave thousands of children and families behind. How much longer will our elected leaders insist on a Band-Aid to stop a gaping wound?

2018 Fiscal Year State Budget, NC Budget and Tax Center

NC House budget stays the course on the wrong path for North Carolina

The House debate over their budget proposal was another evening to early morning affair at the General Assembly.  Despite being limited by various rules for considerations on the floor, the debate still made clear the stark contrasts in policymakers’ approaches to the state’s current economic position and the well-being of North Carolinians.

Whereas House leaders argued that North Carolina should “stay the course”, the minority of House members expressed concerns regarding unmet needs and the cumulative short and long-term cost of ignoring them.

The budget passed with few substantive changes to make smarter investments or policy decisions.  The amendments presented provided more examples of the ways in which steady tax cuts in recent years have narrowed our vision for what is possible in the state.

For example, a robust debate about access to high-speed broadband in rural communities made clear the economic and educational imperative of this modern-day infrastructure to communities across our state. Even lawmakers who opposed providing funding for this unmet need acknowledged the importance and economic benefits of access to broadband, yet they kicked the can down the road until later when maybe they could afford to make this investment. The funding source proposed for this infrastructure investment may have been less than ideal, but other potential revenue sources exist highlighting the shortsightedness of lawmakers.  A tax break included in the House budget for distribution companies like Amazon—which doesn’t have a cost attached yet—could go some way to funding the build-out of broadband infrastructure in more communities. Furthermore, holding the corporate income tax rate at 4 percent rather than 3 percent could go a long way to fund rural broadband and a more robust rural economic development strategy that addresses housing, small business lending and other fundamental infrastructure needs that promote thriving communities.

An amendment was introduced to increase the cost of living adjustment for retired public employees, but the amendment was tabled and never voted on.  In tabling the amendment, it was noted that while an important priority, the request wasn’t one that could be afforded at this time.

At the other end of the career pipeline was a debate about reducing the state’s future commitment to private school vouchers in order to fund scholarships for high school graduates to have a tuition-free community college education. This effort would make our state more competitive in a 21st Century economy by helping increase degree and credential attainment.  This debate was particularly telling in the clear misunderstanding of the real challenges that many students face in affordably accessing the skills and training that will prepare them not just for careers but also for life as an engaged citizen.  Again, this amendment was not adopted.

Time and again, House leadership noted and acknowledged how various proposed amendments were important and addressed real needs and challenges for our state.  They said they just couldn’t afford to do something about it.

It is all too clear to most of us following at home that they can.  It will, of course, require them to reconsider their major tax cuts in recent years.

2018 Fiscal Year State Budget, NC Budget and Tax Center

House budget falls short for North Carolina’s most vulnerable

The Social Services portion of the budget is an opportunity for legislators to direct their attention to North Carolinians who need support to make ends meet. These are often children, families, and workers who, despite their hard work and due to no fault of their own, still need a helping hand. The proposed House budget fails to fulfill the promise the state has to help meet the basic needs of the state’s most vulnerable individuals. Rather than bold and innovative investments, the budget merely strings along our meager system of social supports.

Here are several key highlights:

  1. The NC Pre-K waitlist is eliminated. The House matches the investment in the Governor’s recommended budget which seeks to eliminate the NC Pre-K waitlist. By providing $36 million over two years, the budget will create an additional 4,700 spots for children from low-income households to access high quality early education. NC Pre-K is proven to increase the educational outcomes of children and is a critical tool in eliminating inter-generational poverty. While an important step, this investment does not address the total number of children from low-income families who are eligible for Pre-K, but not represented on the waiting list. Moreover, the dollars used to pay for these slots are federal TANF dollars which have identified for significant reductions in President Trump’s budget. A real sustainable investment in our children would ensure that high quality Pre-K is accessible to every child in North Carolina and not subject to federal uncertainty.
  2. The budget preserves Categorical Eligibility. The House takes an important stance on food insecurity by choosing to keep categorical eligibility, a critical program which the Senate budget sought to eliminate. Maintaining this program, which costs the state nothing, will provide food assistance to 133,000 North Carolinians, 51,000 of whom are children. In addition to providing critical food assistance, keeping categorical eligibility will ensure that NC Food Nutrition Administrative costs stay down.
  3. The House invests in the foster care system but not in strengthening families. The House budgets invest $2.7 million in order to support the growing caseload of children in foster care, $3 million in foster care placement, and another $1.5 million for youth ages 17-21 that are transitioning out of foster care. Additionally, $18.2 million is allocated to implementing the Child Welfare Improvement Plan, which provides professional development for child welfare professionals, expands in- and out-of-the-home services, and provides post-placement support services. These investments help to ensure that children in the foster care system receive the support that they need. This investment, however, doesn’t take a full view of the challenges. The House fails to make investments that are critical to helping to keep families together in the first place. Investments in child abuse prevention, poverty reduction, and programs that give parents the tools they need remain underfunded.
  4. The budget subjects important state programs to federal uncertainty. The House budget eliminates state funding ($2.7 million) to counties for social services by using federal Social Services Block Grant (SSBG) funding, which is slated for elimination under President Trump’s budget. The SSBG funds programs such as Big Brothers Big Sisters, Child Advocacy Centers, the Child Medical Evaluation Program, Mental Health Service, guardianship for elder adults, and a host of other services. President Trump’s proposed budget eliminates many key sources of federal funding to the state included the Community Services Block Grant and significantly reduces others such as the TANF Block Grant. Under federal uncertainty, it is more important than ever that North Carolina legislators use state dollars to maintain and improve programs and services that are important to North Carolinians.

Brian Kennedy II is a Public Policy Fellow with the Budget & Tax Center, a project of the North Carolina Justice Center.