NC Budget and Tax Center

NC Budget and Tax Center

State legislative leaders said tax plan changes were supposed to help most North Carolinians, while groups like the Budget & Tax Center cast skepticism at those claims, predicting that the average North Carolinians would see their share of the tax load increase as the richest in the state enjoyed tax breaks.

So what happened in your household? Did you see your state income taxes go up or down this year? How did it affect your family finances? Was the change worth the broader impact on your community and public services?

We want to hear from North Carolinians filing their taxes or preparing taxes for others. With the new Policy Watch feature Your Soapbox — The Tax Shift, we’re hoping to lift up the stories of those who have been most affected by the tax changes and what that means for their quality of life, their communities and public services. We are already hearing personal stories from people and their families who stand to be affected by the tax shift. One North Carolinian writes:

I am paying almost as much to the state in income taxes as I do to the federal government. For what? All I hear about is the state cutting services like unemployment, etc., for people like myself in the lower end of the economic scale. What I am getting for my tax dollar, exactly, except more grief?

Others are already seeing massive increases in their North Carolina income taxes. One family saw a whopping 564% increase between 2013 and 2014; instead of owing $251, this year they owe $1,415.00.

My (Stroke Victim) And my wife’s (Asthmatic) medical expenses for 2014 averaged $952.92. Medical expenses were not allowed as a deduction on the 2014 NC SIT [state income tax].

The NC Legislature also eliminated the Personal Exemption of $2,500 per person. Our income from Pensions, Social Security, and small investments increased 1.034% from 2013 to 2014. We have been significantly impacted by the 2014 SIT changes and definitely were not considered by Governor McCrory at the signing of the Bill when he stated “Everyone will benefit some from this bill.”

This is just the beginning of what will be likely be a widespread impact of the tax plan, one that will be felt by North Carolinians from across the state and from all walks of life.

Share your story using the submission form here. If you have photos, videos or other media you would like to include, please email them to Julia Hawes at julia@ncjustice.org.

NC Budget and Tax Center

When putting together a budget, the debate typically entails where funding has expanded, what new initiatives have been introduced, and how much funding has been cut. However as North Carolinians are learning, when the baseline for comparison changes, spending that was once guaranteed may go away and new initiatives may only serve to undercut other important public investments that drive the state forward.

The base budget, or continuation budget, has traditionally been the starting point estimate of what North Carolina’s policymakers needed to invest to maintain current service levels. As we have written about before, recent changes to what is included in the base budget— removing enrollment growth, for example —has meant a shifting foundation upon which assessments are based. Rather than increasing transparency, this change masks just how little improvement there is in the Governor’s budget proposal.

Better information about what is in and what is now out of the base budget is needed so that the public can better understand whether so-called expansions are truly that or are just keeping up, and whether new initiatives are financed sustainably or through cuts to core programming. The Department of Public Instruction submitted a request that included a greater amount of investments than were ultimately funded as did the courts.  As an example, DPI requested $69.9 million in added investment to their base budget but got a cut of $56.3 million in their base budget. Specific details for all areas of the budget are needed to understand what is in and out of the base funding.BTC - Base Budget

In a preliminary look at the Governor’s budget, it is telling that the continuation budget (or base budget) for FY 15-16 falls $235 million below the current fiscal year budget spending. Moreover, as my colleague noted in a post yesterday, the proposed appropriation level by the Governor covers nearly exactly the enrollment growth costs forK-12 education, universities and Medicaid. In previous budgets, these enrollment growth costs would have been part of the base budget. Expansion items, such as further pay raises or increased foster care payments, are the result of shuffling the deck—moving dollars around without meaningfully reinvesting overall.

Pre-recession levels can also be used as a point of comparison in this budget debate to demonstrate the lack of reinvestment. Looking in this way, the Governors recommended appropriations remains $1.4 billion lower than the spending level at FY 07-08 despite a growing population and the state surpassing the fifth year of the economic recovery.

Changes to the base budget make clear that very little progress can be made by state policymakers as long as revenues come in under projections as a result of the costly tax plan since revenue growth is not keeping up with growth in enrollment and other program costs.

 

NC Budget and Tax Center

Students in high-poverty schools across North Carolina are showing up to class each day with food in their stomach and ready to learn thanks to an initiative known as Community Eligibility.  As part of the nationwide Community Eligibility Program (CEP), schools within 54 school systems across the state are providing breakfast and lunch to all students free of charge. Some districts have adopted CEP in all of their schools.

North Carolina is the fifth hungriest state in the country, so providing healthy school meals at no cost to students and families is especially important for children – particularly those in our most distressed communities. As North Carolina continue to face the challenges of persistent poverty and ensuring that all students are afforded a high-quality education, access to nutritious school meals serves as a positive step forward.

The initial rollout of CEP in North Carolina has been promising. Nearly half of all public schools eligible to participate in CEP adopted the initiative for the current school year, representing more than 310,000 students (Click here to see a list of CEP-eligible, participating schools). This is wonderful news! Only two states in the south – Tennessee and Georgia – have more students attending schools that are participating in CEP. Read More

NC Budget and Tax Center

Last week, Governor McCrory unveiled his two-year budget proposal for July 2015 through June 2017. He has since touted how his plan reinvests in the public services and programs that are essential for economic opportunity and quality of life. However, a close look at his 2016 fiscal year (FY2016) spending plan reveals that he fails to reinvest in a meaningful way in the critical public structures that benefit us all. Genuine progress will continue to be hampered until state lawmakers build a tax system that can adequately match the needs of a growing economy.

Governor McCrory’s proposed budget for FY2016 increases year-to-year spending by nearly $439.8 million, or 2 percent. This is in sharp contrast to past recoveries when state investments were far quicker to return to, and advance beyond, pre-recession levels. Enrollment growth in public schools, the UNC system, and the Medicaid/Health Choice programs is estimated to exceed the year-to-year increase in spending in the governor’s proposal, totaling nearly $442.6 million in FY2016. That means every new dollar increase, on net, is dedicated to funding enrollment growth (see chart below).

It also means that non-enrollment expansion items in the proposal are made possible by cutting or allowing spending to expire for other vital programs that are already stripped bare from previous underinvestment. That’s like rearranging the deck chairs on a sinking ship. Read More

NC Budget and Tax Center

This morning, Governor McCrory released his two-year plan to invest in education, health care, public safety and other priorities that are essential for economic opportunity and quality of life. He spoke of a “new paradigm” for state budgeting. A new paradigm indeed, one that abandons many of the practices that served North Carolina well in the past—like ensuring funding to maintain current service levels year-over-year or reinvesting in the recovery rather than locking in low levels of revenues by keeping the 2013 tax plan on the books.

A preliminary review of his budget plan shows that too many vital public services are at diminished levels, threatening their effectiveness, reach, and efficiency. No amount of “budget spin” will cover up how the budget baseline has been eroded from years of cuts or how the current tax system cannot sufficiently keep up with growing needs.

Below is a quick summary of how the Governor’s budget compares to pre-recession levels and also how the Governor chose to pay for his budget. Read More