2018 Fiscal Year State Budget, NC Budget and Tax Center

NC General Assembly’s joint budget falls $188.7 million short of Governor’s proposal for promoting the health of North Carolinians

The N.C. House and Senate have released their joint budget deal and the numbers don’t lie: NC’s Department of Health and Human Services will receive $93.7 million less next year than what the Governor proposed back in March. Over the next two years, the gap is $188.7 million.

This significant gap in funding for a department tasked with providing essential services to improve the health, safety and well-being of all North Carolinians is unfortunate, especially considering our state already lags behind on health compared to other states. For example:

  • NC Ranks 32nd in the nation for overall health (it was 31st in 2015. The state ranks 30th for senior health and 30th for the health of women and children).
  • NC ranks 33rd in the nation for child well-being (placing NC among the poorest performing states in outcomes for children and youth).
  • NC ranks 48th in the nation in the overall effect of state policies and practices on promoting independence for people with intellectual and developmental disabilities.

Here are several ways in which this final budget will make it more difficult to improve our performance on many of these key health indicators.

First, the Division of Medical Assistance will receive $44.6 million less next year than what the governor proposed. This division uses the resources and partnerships of Medicaid to improve health care for all North Carolinians. In light of the current efforts underway at the federal level to further shift costs to the states, the failure to adequately ensure that Medicaid is positioned to deliver health care to our most vulnerable is troubling. Unfortunately, it is no surprise legislative leaders opposed the Governor’s proposal to expand Medicaid to cover 624,000 additional individuals and secure NC’s share of federal resources to inject over $4.4 billion in direct spending into the state.

Second, despite the bipartisan support for addressing the challenges of mental health and substance abuse in our state, the Division of Mental Health, Disabilities, and Substance Abuse will receive $18.4 million less next year than what the governor proposed. This division provides quality services to promote treatment and recovery for individuals with mental illness and substance use disorders. It is unfathomable that, given the current opioid crisis in our state, our legislators are still unwilling to making significant investments to address mental health and substance abuse issues. The fact that NC has four cities listed in the top 25 worst cities in the U.S for opioid abuse is not something to be proud of. Neither is the fact that prescription opioid poisoning deaths have increased statewide by over 256 percent, going from 234 in 2000 to 854 in 2015.

Third, the Division of Child Development and Early Education will receive $18 million less next year than what the governor proposed. This division implements quality standards for child care and increases access to families and their children across North Carolina. With its budget, the General Assembly will exclude approximately 1,714 at-risk 4-year-olds across the state from high quality pre-kindergarten classes. Furthermore, the legislature also limits the value of the Smart Start by funding only a third of what was requested, even though this program provides support and flexibility at the local level to all 100 counties in an effort to improve early childhood educational outcomes and better prepare children for school.

Overall, based on the General Assembly’s joint budget, it is clear that the health of North Carolinians is not a priority for our lawmakers. Given the poor state of health in our state, this mindset must change. A thriving, strong, and competitive North Carolina can only be achieved with a healthy population.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

2018 Fiscal Year State Budget, NC Budget and Tax Center

Final budget a mixed bag of give, take, and disregard for courts and public safety

The final budget released by state leaders this week includes a mixed bag of give, take, and neglect in regards to public investments that promote safe and healthy communities. At the same time that public investments are made for particular initiatives of interest, lawmakers cut state funding and totally neglect boosting public investments in other areas of the Justice & Public Safety (JPS) budget.  For fiscal year 2018, the JPS section of the final budget is a modest 1.6 percent year-over-year increase in state spending when excluding additional state funding to provide pay raises to state employees.

Here are notable takeaways from the JPS section of the proposed final budget.

  1. Provides around $58 million in additional state funding for pay raises to state employees. The majority of the pay increase funding consists of a $1,000 salary increase for eligible state employees.
  2. Provides $250,000 for a limited pilot project with the City of Wilmington to address the needs of opioid and heroin overdose victims. This is the same level of funding included in the House and Senate respective proposed budgets. Whereas lawmakers acknowledge the seriousness of the opioid abuse issue in the state, a modest amount of state funding is included in the budget to prevent and combat this issue.
  3. Provides no additional state funding to enhance access to mental illness services for offenders. This missing investment in the final budget aligns with the House and Senate proposed budgets, which also excluded such funding. The Governor’s recommended budget provided $5.8 million for fiscal year 2018 to enhance services for mentally ill offenders.
  4. Includes $519,600 in one-time state funding for planning in regards to implementation of Juvenile Justice Reinvestment Act (JRA). The JRA was passed in 2011 and made major changes to sentencing and corrections in North Carolina in an effort to reduce state spending on corrections and to reinvest the savings in community programs that decrease crime and strengthen neighborhoods. The Governor’s budget included a total of $4 million in state funding for various support initiatives that continue the implementation of JRA.
  5. Provides $13.2 million in one-time state funding to support the “Raise the Age” initiative. The funding would be used to construct a new youth development center in Rockingham County in response to “Raise the Age” and is included in the Capital section of final budget. The respective House and Senate proposed budgets provided no state funding to support the “Raise the Age” initiative. Thus, the inclusion this funding is one positive outcome in the final budget.
  6. No additional state funding provided for indigent individuals to have access to private counsel representation. This missing investment in the final budget aligns with the House and Senate proposed budgets, which also excluded such funding. The Governor’s recommended budget included $2.9 million in state funding for fiscal year 2018 to increase compensation paid to private counsel representing indigent people who are unable to afford access to legal counsel.
  7. Includes a $10 million state funding cut to the Department of Justice budget and generates another $4.1 million in savings from eliminating 79 positions within the Department of Public Safety.

For more news and analysis during the budget debate, follow the Budget & Tax Center on Twitter @ncbudgetandtax.

Cedric Johnson is a Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

2018 Fiscal Year State Budget, NC Budget and Tax Center

Failed tax-cut experiment will continue under final budget agreement, pushes fiscal reckoning down the line

The final budget agreement from leaders of the House and Senate puts North Carolina on precarious fiscal footing in the second-half of the second fiscal year of the two-year budget and beyond.  The tax changes that leaders agreed to—which were less a compromise and more of a decision to combine the tax cuts in both chambers’ proposals—make the cost of these tax cuts bigger than what either chamber proposed.

The cumulative cost of major tax changes since 2013 will be at least $3.5 billion annually.

Because of the way that the budget phases in the tax changes, budget writers only report on half of the fiscal year impact of the tax changes that include rate reductions for personal and corporate income, an increase in the standard deduction, conversion of the child tax credit to a deduction and sales tax changes.  The reality is the full cost of the tax changes proposed will mean the state has $1 billion less than they would have had under current tax law.

That means that in the creation of the next two-year budget, beginning in Fiscal Year 2019-20, legislators will have to cut current service levels that are already broadly recognized as falling far short of need, or raise revenue to meet the demands of a growing state population.  Given federal uncertainty, even the investments they suggest will be made will be put in jeopardy by their tax choices and decision to hide the full impact of the tax changes.

Compared to pre-2013 tax law, the new changes to the tax code, coupled with other changes since 2013, will deliver an annual average tax cut to the top 1 percent of taxpayers of $22,000 while the bottom 20 percent of taxpayers will receive an average annual tax cut of just $16 each year.  Of those in the bottom 20 percent of taxpayers, only 39 percent will receive a tax cut. Read more

Environment, Legislature

More bad environmental news in the budget: Clean Water Management Trust Fund takes an 18% hit

From which glass would you rather drink? The chronically underfunded Clean Water Management Trust Fund, charged with financing projects that protect water quality, received 18 percent less in state appropriations than last year. (Photo: Creative Commons)

At first glance the budget line item for the Clean Water Management Trust Fund looks generous by this legislature’s standards: $18 million. But the legislature’s largesse was not so large. The appropriation is down 18 percent from 2016, when lawmakers appropriated $22.4 million to the trust fund.  Gov. Roy Cooper included $25 million in his budget for the fund.

Either amount is minuscule compared to the fund’s $40 million appropriation in 2000, and the $100 million it was supposed to receive annually from 2004-05 through 2011-12. However, the fund never got the full amount. In fact, appropriations continued to decrease, at one point dipping as low as $6 million.

According to a coalition of conservation groups Land for Tomorrow, 135 local governments, conservation organizations, and state agencies requested nearly $68 million from the trust fund in 2017. These groups would provide almost $165 million in matching funds, more than doubling the state’s investment.

Established by lawmakers in 1996, the fund is charged with financing projects that enhance and protect water quality. These projects aren’t sexy: stormwater controls, riparian buffer restorations, stream bank stabilizations. But without them, drinking and surface waters would become more polluted, with all the attendant environmental, financial and public health costs.

Governed by a board of directors, the trust fund was under the NC Department of Environmental Quality until 2015. That’s when then-Gov. Pat McCrory exiled it and the Natural Heritage Trust Fund to the Department of Natural and Cultural Resources. Environmental advocates saw that shift as a way to minimize the importance of both projects.

The House is scheduled to hold its first vote on the budget today when it convenes at noon. The Senate is in recess until 4, but is expected to then vote again on the budget.

 

2018 Fiscal Year State Budget, NC Budget and Tax Center

North Carolina’s leaders are abandoning the victims of Hurricane Matthew

Alamance Community Park, in Robeson County, near Lumberton, NC, remained inundated with flood waters on Oct. 16, 2016. Floodwater from Hurricane Matthew came to the bottom edge of the park signs when the storm first hit. USDA Photo by Lance Cheung.

Alamac Community Park, in Robeson County, near Lumberton, NC, remained inundated with flood waters on Oct. 16, 2016. Floodwater from Hurricane Matthew came to the bottom edge of the park signs when the storm first hit. USDA Photo by Lance Cheung.

If you have been following North Carolina’s response to the damage caused by Hurricane Matthew, then you know it has been a slow and, at times, disappointing process.

If not, here’s a refresher:

On Oct. 8, 2016, Hurricane Matthew made landfall on North Carolina. The resulting flooding impacted 50 counties in the Eastern part of the state, damaging more than 800,000 homes and over 300,000 businesses, displacing 3,744 residents, and causing closures in 34 school systems. In all, the storm caused $2.8 billion in damages and another $2 billion in lost economic activity.

In December 2016, three months after disaster struck, the General Assembly passed the Disaster Recovery Act of 2016 allocating $200.9 million in state dollars for initial relief efforts. The general understanding was that the state would wait for disaster funding from the federal government, re-evaluate the “unmet need,” and step in to fill any remaining gaps. Assuming the federal government would act as they have done in previous disasters and support the state with a significant relief package, Governor Cooper’s budget allocated only $115 million in state funding disaster relief.

On May 10, 2017, nearly six months later, North Carolina finally heard back from the federal government. The Trump administration announced they would provide only $6.1 million of the nearly $930 million in federal funds that the state needed and requested.

The message was crystal clear: North Carolina would have to take care of itself. Yet, despite being fully aware of the $930 million in unmet need in Eastern North Carolina, legislators in both the Senate and House responded by allocating only $150 million in each chamber’s budget.

Now that you’re caught up, you’re probably wondering, “Who will pick up the slack and fund relief in Eastern NC?”

The answer? Not your legislators. Read more