NC Budget and Tax Center

Statement on Governor’s Budget Announcement from Alexandra Sirota, Director of the Budget & Tax Center

If the Governor follows through with the modest additional investments in his budget announcement today, it will represent a pragmatic, yet still constrained, approach to the state’s need for public investments.  With the unanticipated revenues that are available due to a recovering national economy, the Governor is seeking to make smart investments in key areas to promote child well-being and support improved educational outcomes.  But this additional investment represents a small fraction of what is needed to realize his principles of preparing for future growth and helping those who are struggling in today’s economy.

Without the budget proposal fully available for analysis, it is difficult to say whether these new investments highlighted come at the cost of other critical areas. Certainly, it is unclear how the Governor will seek to sustain any new public investments with the already scheduled phase-in of additional cuts to the personal and corporate income tax and the needed servicing of the Connect NC bond.

Even without the full budget proposal, we know that the Governor is limited by the costly income tax cuts implemented since 2013 that primarily benefit wealthy and profitable corporations. These cuts result in at least $1 billion less in revenue each year than what would otherwise have been available to build a solid foundation for a North Carolina economy that works for everyone.

We therefore question whether the state will be able to realize the full benefits of these public investments while policymakers allow tax cuts to continue that primarily benefit the wealthy and profitable corporations.

It also remains to be seen whether the Governor can deliver on even the few small promises made in today’s announcement.  We hope that the General Assembly will choose reinvestment over harmful tax cuts or arbitrary spending formulas and commit to building an economy that works for everyone.

Commentary, News

Labor expert: Some obvious things the General Assembly can do if it cares about workers (Part 2 )

The North Carolina AFL-CIO is releasing a three-part video series prior to the opening of the 2016 legislative session on Monday featuring veteran North Carolina labor lawyer Mike Okun. In the brief videos, Okun explore three topics of great importance to North Carolina workers and offers some simple, common sense recommendations for lawmakers as they return to Raleigh next week.

In the second installment of our 3-part video series featuring General Counsel Mike Okun discussing issues that will be important to working people when state lawmakers return to Raleigh next week, Mike gives his take on North Carolina’s Unemployment Insurance system and one way the General Assembly could begin in 2016 to restore fairness for jobless workers after years of cuts.

“Unemployment benefits help workers stay out of poverty,” says Mike, “yet only 1 in 10 unemployed workers in North Carolina receives any benefits at all – the very lowest percentage in the nation.”

“The [UI] fund is now back to solvency, the temporary tax on employers is ending. Perhaps now is the time to restore some fairness to the system.”

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You can view part one of the series here.

NC Budget and Tax Center, Raising the Bar 2016

Sound fiscal policy choices needed to build a stronger, more inclusive NC economy

This post concludes a series on the state budget featuring the voices of North Carolina experts on what our state needs to progress so that all North Carolinians have a fair shot to get ahead.

State lawmakers will return to Raleigh next week to convene this year’s short legislative session. One primary task for lawmakers is to revisit the state budget for the upcoming fiscal year that begins in July and make needed and desired revisions. More tax changes may also be pursued, which would have implications on what the final state budget looks like and whether spending priorities to meet growing needs can be met.

raise the bar

The desire for more income tax cuts by state leaders would build onto tax changes passed in recent years that have largely benefited the wealthiest in the state and that have significantly reduced revenue available for public investments.

A recently released BTC report highlights the tax swap that has resulted from recent tax changes. Costly income tax cuts have given tax breaks to the wealthiest and profitable corporations. Meanwhile, the sales tax has been expanded to include more goods and services, which particularly harms families and individuals that struggle to make ends meet. Consequently, this tax swap – a greater reliance on sales tax and less on income taxes – has shifted the tax responsibility to low- and middle income taxpayers and away from the well-off. Since 2013, the tax burden on low income taxpayers has increased by $30 on average while it has decreased by around $15,000 on average for millionaires.

The significant revenue loss from the tax cuts cannot be overlooked. The annual revenue loss once all tax changes are fully in place is at least $2 billion. These are dollars that otherwise would be available for the economy-boosting public investments that have been lifted up in the Raise the Bar blog series this week – investments such as reducing persistent Pre-K waiting lists, ensuring that public schools have adequate resources, making higher education more affordable, ensuring healthcare services for the elderly and poor, and helping ensure that economic growth extends to rural and distressed communities across the state.

The results are clear: Even as the tax swap delivers big tax breaks to the wealthy, it reduces resources available for public investments that build a strong economy. North Carolinians should be alarmed by state leaders’ short-sighted focus on tax cuts and their desire to continue North Carolina down this path. Sound fiscal policy choices are needed to build a stronger, more inclusive economy and a brighter future that all Tar Heels want and deserve. It is this vision of building an economy that works for everyone that should guide lawmakers’ decisions during the upcoming legislative session.

Commentary

Charlotte Observer: NC Chamber needs to end its silence on HB2

Another good editorial in this morning’s Charlotte Observer highlights a question that observers of the HB2 crisis have been noting for weeks: Where the hell is the NC Chamber? Many people, of course, think the Chamber has cut a cynical deal to stay silent on the LGBT discrimination aspects of the law in order to win a desired end to employment discrimination lawsuits. Here’s the Observer:

“Everyone has an opinion about North Carolina’s House Bill 2 – even Donald Trump. Everyone, that is, except the state’s largest business group.

The North Carolina Chamber says it has 35,000 members who employ 1.26 million N.C. residents. It is widely regarded as the most influential business advocacy group in the state.

Yet with HB 2 roiling the state and particularly its business community, the Chamber and its CEO, Lew Ebert, have remained silent.

Asked this week what the Chamber thinks about HB 2 and whether it will take a public stand, VP of Communications Kate Catlin offered this statement, in part:

‘We run our businesses based on a factual understanding of the challenges we face. The North Carolina Chamber is conducting an analysis of the recently passed law, HB 2.’

That was precisely the same statement the Chamber issued three weeks ago, shortly after the HB 2 backlash ignited. The Chamber, it seems, has made little progress on its analysis in those three weeks.

The group’s silence raises questions about what’s driving it. Is the Chamber’s apparent acquiescence on the anti-LGBT provisions the price it pays for other elements that it’s more passionate about? HB 2 blocked cities from passing minimum-wage laws, a feature the Chamber surely endorses. And it banned employees from filing a state cause of action if they think they were fired due to their race, age, gender or other protected classes in violation of anti-discrimination laws.

Or does the Chamber remain on the sidelines because it more generally doesn’t want to cross a legislative leadership that enacts deep corporate tax cuts, reduces unemployment benefits and passes other business-friendly measures?

There must be some explanation, because the backlash nationally and within the state’s business community demands that the state’s most influential business group weigh in.

That’s why the Raleigh Chamber called for the legislation to be repealed. It’s why the Charlotte Chamber has expressed concern – though it stopped short of calling for an outright repeal. It’s why businesses such as Bank of America, Wells Fargo, Time Warner Cable, RedHat and dozens of others have expressed their opposition.

Many of those companies are N.C. Chamber members, which suggests a deep split in the membership. Are those companies OK with the Chamber taking a pass? If not, perhaps they should do more to persuade it to speak up or even ultimately leave the organization.

Georgia Gov. Nathan Deal and the Indiana legislature blocked or rolled back similar discriminatory measures. They did so backed by a vocal business community. N.C. legislators face less such pressure because the N.C. Chamber is not exerting it.

Why isn’t it? Either the Chamber agrees with the discriminatory intent of HB 2 or it is holding its tongue to preserve its influence with legislators.

Either one is disappointing, and out of step with what many of its biggest members want.”

News

Trump: North Carolina “paying a big price” for House Bill 2 (video)

GOP Presidential frontrunner Donald Trump is weighing in over the controversial new LGBT-bathroom law.

At a town hall meeting on the “Today Show” Trump dismissed the need for House Bill 2 and said North Carolina should have left it the way it was:

“There have been very few complaints the way it is. People go, they use the bathroom that they feel is appropriate. There has been so little trouble. And the problem with what happened in North Carolina is the strife and the economic punishment that they’re taking,” said Trump.

Trump responded that he would have no problem with Caitlyn Jenner using the bathroom of her choosing  at Trump Tower.

Governor Pat McCrory has said he still supports HB2, which mandates transgender people use the bathroom matching the gender on their birth certificate.

Senate President Phil Berger made it clear Wednesday despite recent economic losses for the state, repeal would not happen in the upcoming session.

Click below to hear Trump discuss HB2: