NC Budget and Tax Center

Some simple NC tax code changes that could improve children’s lives

North Carolina is underinvesting in the programs and services during early childhood that have proven to prepare children for Kindergarten and to read by third grade, protect them from abuse and prevention, and ensure their healthy development.  The Week of the Young Child represents an opportunity for North Carolina leaders to assess all that they are doing to improve the outcomes and well-being of the state’s youngest residents.

Better investments aren’t the only way that North Carolina policymakers can support early childhood: tax policy is a tool that can help working families and children in particular. North Carolina has an opportunity do far more in this space, particularly in light of the strong evidence that shows the value of tax credits for working families can generate greater returns for more families and communities.

The Earned Income Tax Credit and the Child Tax Credit have been demonstrated to support children’s healthy development and the affordability of their early care and education even as they both promote work and reduce poverty as well.  To improve upon the benefits of these federal policies, North Carolina can enact a state EITC and make the current state Child Tax Credit refundable and targeted to middle and low income taxpayers who struggle the most to provide for their families on low incomes.

The Child and Dependent Care Credit is yet another tax policy that supports children’s healthy development by making child care more affordable.  The recommended biennial budget recently proposed by Governor Cooper includes such a tax credit that partially offsets employment-related expenses for child and dependent care. Childcare costs represent the largest component of the household budget and impact the ability of individuals to work and provides for their families.

The inclusion of the tax credit in the Governor’s budget is as a positive step forward to address an upside-down tax system and ensure that the state’s tax code works for all North Carolinians. It’s one that should serve as the foundation for action by the North Carolina General Assembly to enact tax policies that support young children’s healthy development and the economic security of their families. Making these tax policies refundable and available to the state’s poorest children and families will generate the greatest return. As research has shown, an additional $3,000 in the household during early childhood has a significant effect on children’s educational attainment and lifetime earnings.

An investment in young children is a concrete investment in North Carolina’s future.

News

New Elon Poll results: Trump’s support declining in N.C.

The new Elon University Poll is out today – and it shows declining support for President Donald Trump in North Carolina.

The live-caller, dual frame (landline and cell phone) survey of 506 likely voters was conducted from April 18-21. Survey results in this news release present responses from registered voters who were classified as likely voters in the Nov. 8 election and has a margin of error of +/- 4.36 percentage points.

“Though President Trump enjoyed considerable support among North Carolinians on Election Day, he has lost ground among the crucial independent voters responsible for his success over Hillary Clinton,” said Jason Husser, director of the Elon University Poll, in a press statement.

Trump was elected in November with about 50 percent of the vote in North Carolina. The new poll shows his job approval down to 41.6 percent, with 50.5 percent disapproving. Recent national polls have the president’s job approval at around 42 percent – very low when compared to this period in the presidencies of the last few of his predecessors.

Results on Trump’s use of Twitter, whether it is time to move on from repeal of the Affordable Care Act and the building of a border wall with Mexico were also not good news for the president.

Read the full report on the poll here.

Environment

If you like paying higher water bills, you’ll love House Bill 351

A map of states that have fair value legislation: California, New Jersey, Pennsylvania, Indiana, Illinois and Missouri

If HB 351 becomes law, North Carolina would be the seventh state to enact “fair value legislation” for its public water systems. (Map: Global Water Intel)

I n the crush of the crossover deadline, House Bill 351 has received scant attention — just one more snowflake in the avalanche of legislation. But if it becomes law, customers of city-owned water systems could pay higher rates for lesser service.

The bill was a late addition to yesterday’s House Energy and Public Utilities Committee; it had originally been scheduled to be discussed in committee today. Instead it is scheduled for a full House vote today during its 2 p.m. session.

Essentially, the bill would change the price for which a municipality can sell its water system to a private company. Currently, cities and towns that want to sell — often because they can no longer afford the expensive upkeep on their ancient infrastructure — set a price at their rate base minus the depreciated value of the system. Just like a fixer-upper home, the 80-year-old underground mains and wheezing water treatment plants reduce the asking price.

But under “fair value legislation,” as it’s known, an “independent valuation expert” establishes the price. This is often at the full value of the system, as if it were unfettered by looming maintenance costs. That’s a win for the city, but a loss for the customers.

“If a town or city is struggling to keep up with repairs, it’s more likely to sell,” said Katie Hicks, associate director of Clean Water for North Carolina. “We know that small and rural systems are struggling to keep up. This is a mechanism to make a profit on the backs of the ratepayers.”

Although the deal is a more expensive venture for a private, investor-owned water company, fear not, shareholders: The cost could be passed along to water customers, as part of the company’s rate case before the state Utilities Commission.

And as a bonus, these “independent valuation experts” can receive up to a 5 percent commission on the sale price. So again, to use the real estate comparison, the higher the sale price, the higher the commission.

Privatizing a common good, like water, has already resulted in higher prices for North Carolina customers who are on those systems. One major private utility, Aqua North Carolina operates 750 water systems in the state and 59 wastewater treatment plants, for a total of 282,000 customers.

Many of these customers are unhappy with Aqua, which is notorious for its poor  service, high prices and brown water. (Whenever the company comes before the utilities commission asking for a rate hike, dozens of customers invariably testify to their horror stories, even bringing in jars of tea-colored tap water as evidence.)

Read more

Commentary, News

New poll: Voters of all stripes agree that NC electoral maps are rigged

Good government advocates will descend on the Legislative Building this morning to demand that lawmakers make good on their commitment to consider legislation in 2017 that would establish a fair and nonpartisan redistricting process. And, judging by a new poll released this morning, the honorables would do well to pay attention. This is from the good folks ta Democracy North carolina:

FOR IMMEDIATE RELEASE: Wednesday, April 26, 2017

Trump Supporters, Black Voters Agree: District Maps are Rigged
New Poll Supports Voters’ Call for Redistricting Reform

RALEIGH, N.C. — What’s one thing that Donald Trump supporters and African Americans in North Carolina agree on? By large majorities, according to a new poll, they think the way state legislators draw their political districts is unfair and too influenced by partisan politics.

The poll, commissioned by the nonpartisan group Democracy North Carolina, reveals unusually broad support across the political spectrum for redistricting reform.

Overall, four out of five North Carolina voters (80%) say it’s not fair for politicians to draw their own districts. That includes 85% of Democrats, 74% of Republicans, 80% of independents – as well as 70% of Trump supporters and 80% of African Americans.

The poll also shows that voters want elected leaders who will change the system.

A majority of Democrats (58%) and Republicans (56%) agreed they’d be more likely to vote for candidates who support an impartial method for drawing voting districts. Support for reform is even more important among the crucial sector of unaffiliated voters; 68% say they would be more likely to vote for a candidate who favors an impartial redistricting system.

“People recognize that politicians are choosing their voters, instead of the other way around,” said Democracy NC spokesperson Jen Jones. “By using computers, politicians can draw lines that separate voters by race and party, create safe districts, and shield themselves from the will of the people. It’s not fair, and voters across party lines want the process to change.”

Full poll results here.

Democracy NC is a member of the NC Coalition for Lobbying and Governmental Reform, which spans the liberal-conservative spectrum, from the NC Justice Center to the John Locke Foundation. The coalition is holding a press conference at 10:30 today in front of the General Assembly that features the diverse voices of ordinary citizens who support redistricting reform.

The citizens are presenting thousands of petitions to NC House Speaker Tim Moore later today. They are also using the poll’s findings to show legislators the breadth of support for reform.

The poll says a solid majority of all voters, regardless of age, race, gender or party affiliation think the current process of legislators drawing districts is wrong and too partisan. Opposition is strongest among women, and the importance of choosing a candidate who favors reform increases with the voters’ age. About equal shares of white and black (81% v. 80%) voters think the current system is unfair, but black voters are more likely than whites (94% v. 59%) to be very concerned about the influence of partisan favoritism on how maps are drawn.

The poll was conducted April 4-5 by Public Policy Polling and has a +/- error margin of 4%.

Democracy North Carolina is a statewide nonpartisan organization that uses research, organizing, and training to increase civic participation, reduce the influence of big money in politics, and remove systemic barriers to voting and serving in elected office.

 

Commentary

Flurry of House charter school bills would facilitate segregation of North Carolina’s schools

The field of education policy can be quite divided on a number of topics. But in recent years, researchers are increasingly reaching consensus on the harmful impacts of segregated schools. For example, Stanford’s Sean Reardon has found that within-district segregation is the biggest predictor of racial achievement gaps, with one-fifth of the average metropolitan area’s racial achievement gap explained by racial segregation. In Montgomery County, Maryland, students randomly assigned to integrated schools made larger achievement gains than students in less diverse schools. Closer to home, the elimination of Charlotte-Mecklenburg’s school busing program increased the black-white achievement gap. These results are consistent with my own forthcoming research on school segregation in North Carolina, which has found a statistically significant negative relationship between student achievement and the level of segregation in a district.

Research is more divided on charter schools’ impact on segregation. However, studies examining North Carolina charter schools have concluded that charter schools are exacerbating segregation. Looking at trends from 1999 to 2012, these researchers found that charter schools in North Carolina are “increasingly serving the interests of relatively able white students in racially imbalanced schools.”

Despite this body of research, the House has advanced a number of charter school bills this week that will facilitate the further segregation of North Carolina’s schools.

HB 514, which gained the approval of the House Education committee on Monday, would allow the Charlotte suburbs of Mint Hill and Matthews to operate their own charter school. Residents of Mint Hill and Matthews would be granted enrollment preference to any charter school operated by the municipalities. Mint Hill is 73 percent white. Matthews is 78 percent white. Meanwhile Charlotte Mecklenburg Schools serves a student population that is only 29 percent white. It is unclear how North Carolina’s public school system would benefit by carving out a separate, majority-white school exclusively for these communities.

Equally disturbing, HB 800, which passed the House Tuesday afternoon, provides charter school enrollment priority to children of “charter partners” – corporations that have contributed at least $50,000 to a charter school. Under the bill, the charter school could reserve up to half of its seats for children whose parents work for a company that has donated land or buildings, or contributed to capital improvements. It is unlikely that the demographics of the children of the corporate donor class mirror that of the children of North Carolina’s public schools.

Rep. John R. Bradford III, HB 800’s sponsor, described his bill as, “a vehicle where a company can create an employee benefit” similar to providing employees with free meals.  Bradford’s position is a radical abandonment of the view of public schools as a public good, creating an engaged and informed citizenry for the benefits of society writ large. Rather than preparing all students for active participation in society, HB 800 would move North Carolina towards a system where corporations could create publicly-funded schools serving commercial interests. Rather than creating equal opportunity for all children to benefit from our public education system, HB 800 would reserve certain opportunities strictly for the children of corporate employees.

Another House bill also bears monitoring, as it too could easily become a vehicle to further school segregation. HB 704 would create a study committee to examine whether to break up large school districts. Of course, North Carolina’s historical consolidation of school districts was driven by the motivation to keep systems integrated. It is unclear why house members might now want to break up large school districts. It is important to note, however, that HB 704 is sponsored by Reps. Brawley and Bradford, who are the primary sponsors on HB 514 and HB 800, respectively.