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BTC -Smart investmentsAcross the nation, the post-recession recovery has been slow and North Carolina is no exception. This is due in large part to historically low public investment. State leaders have turned to austerity and tax cuts to promote growth; unfortunately, these plans have backfired. We cannot leave our future up to the invisible hand of the market; the same invisible hand responsible for the financial crises. Public policy must intentionally promote and protect economic growth and stability.

The House gets it. Although modest, the budget proposed by the House of Representatives invests in North Carolina at rates higher than any other state bill since 2009. The bill increases funding towards K-12 education, rural communities, the court system, health, housing, and other critical public services.

It is now time for the Senate to follow suit. Unfortunately, the Senate’s spending targets lead analysts to expect a bill that will exclude many of the provisions that would give North Carolinians the breath of fresh air that they so desperately need. In anticipation, the North Carolina Justice Center’s Budget & Tax Center held a press conference, Monday, calling on the Senate to build on the reinvestment the House budget. Read More

Commentary

Be sure to check out the Sunday edition of Raleigh’s News & Observer for an excellent column by NC Budget and Tax Center economist Patrick McHugh: “Hold the applause for NC’s sputtering economic recovery.” As Patrick notes:

“The worst of the Great Recession is in the rearview mirror, but the recovery has left far too many people, families and communities worse off. When you take a sober look at North Carolina’s economic reality, the breathless self-congratulations ring a bit hollow. An alarming pattern has emerged: Economic growth is not producing broad prosperity, which is trouble for everyone….

We’ve also replaced a lot of middle-class careers with low-paying, dead-end jobs. Thousands of jobs have been lost in industries that were the bedrock of middle-class North Carolina for generations, particularly manufacturing and construction. These were jobs where hard work brought livable wages and opportunities for advancement, jobs that could support a family, and jobs that offered a piece of the American Dream.

At the same time, we’ve seen an explosion in low-wage service jobs with few opportunities to move up. The average wage in industries that have grown since 2007 – like hotels and restaurants – is almost $10,000 less than in industries that have declined. When growth doesn’t create good-paying jobs, the lack of prosperity reverberates through the entire economy as people stop going out to eat, buying houses, getting new cars and scale back in a host of other ways….

Leaders in Raleigh need to be constantly reminded that we cannot accept growth without broad prosperity. Too many people are out of work, too many paychecks are coming up short and too many communities are being left out of the recovery.

We have neglected the investments needed to provide our children a 21st century education and our working men and women skills training; to build a transportation system that can move at the speed of business; to help small businesses withstand the competitive pressure of the modern market. This lack of investment has blunted the recovery and left the deepest problems with North Carolina’s economy unaddressed.

Instead of taking pride in finally escaping the recession, we should be focused on building a future that North Carolina can really be proud of.”

Read the entire op-ed by clicking here.

Commentary

If you’re an unemployed or underemployed North Carolinian trying to get by in a community that’s never recovered from the Great Recession, take heart: things are actually just ducky according to conservative think tanks — no matter what your eyes and bank account tell you.

For “confirmation” check out this morning’s Locke Foundation missive from the group’s former director: “Job Growth Sizzled Last Year.” The column is just the latest in an ceaseless series of articles designed to spin the situation in North Carolina and convince people that two obvious things are not true: a) The state economy continues to struggle to generate good jobs to replace the ones lost in the Great Recession and b) the North Carolina recovery that has occurred is mostly just a reflection of national trends.

Happily, some analysts and experts aren’t just trying to cover up for the destructive and counter-productive policies of the McCrory administration and the General Assembly (which, together, have about as much to do with the limited good news that has taken place in the state as they do with the price of tea in China).

Patrick McHugh of the Budget and Tax Center, for instance, explained what’s really going on in the North Carolina economy Monday in this new report: “Growth Without Prosperity.” This is from the release that accompanied the report:

“The worst of the Great Recession is behind us, but the damage lingers, weighing down communities and families across North Carolina. We are now seven years removed from the financial crisis of 2008, but in North Carolina wages are down, job creation is lagging, and many communities are still stuck in recession. Read More

Commentary

Budget and Tax Center economist Patrick McHugh is out with a powerful new report entitled “Growth Without Prosperity: Seven years After the Great Recession Started, Recovery Still Eludes North Carolina.” This is from the release that accompanied the report:

The worst of the Great Recession is behind us, but the damage lingers, weighing down communities and families across North Carolina. We are now seven years removed from the financial crisis of 2008, but in North Carolina wages are down, job creation is lagging, and many communities are still stuck in recession.

Given all of the positive headlines lately, it’s easy to get the impression that the recovery is in full swing. Last year was the best since the financial crisis, with North Carolina and the nation finally getting back to the number of jobs that existed before the recession. The unemployment rate has also been dropping since the bottom of the Great Recession in 2009. However, these positive trends do not tell the whole story, particularly in North Carolina.

There are still not enough jobs for everyone who wants to work in North Carolina, but that’s far from the only problem. Simply put, North Carolina’s economy is not working for everyone:

Growth without prosperity: Economic output has rebounded nicely since the worst days of the recession, but it is not translating into larger paychecks for many North Carolinians. Adjusting for inflation, gross state product—which measures the value of all goods and services sold—is up 18.5% compared to 2007, but wages are actually down slightly. Read More

Uncategorized

SmokeIn an allusion to the signal that’s seen in the Vatican when the leaders of the Catholic Church elect a new Pope, at least one news media report this morning is talking about “white smoke” being visible on Jones Street. The story accompanying the headline, of course, is that leaders of the North Carolina General Assembly signaled over the weekend that they have agreement on the framework of a state budget deal. Assuming it really comes to fruition, the agreement comes a full month into the 2015 fiscal year.

A closer look at those puffs of smoke, however, reveals them to bear a notably blue tinge — that is, the kind one typically see with an engine that’s leaking oil and about to blow. As Alexandra Sirota details in the post immediately below and Chris Fitzsimon highlights in this morning’s “Monday Numbers,” one important impetus for the agreement would appear to be the latest calculations of the General Assembly’s Fiscal Research Division staff that the income tax cuts enacted last year are harming state budget revenues even more than had been officially forecast – i.e. more along the lines of what the Budget and Tax Center has been predicting all along.

So, keep in mind a couple of things this week as lawmakers and the Governor are falling all over themselves to issue statements of  self-congratulations:

1) Notwithstanding their rosy claims, the engine driving state government — the tax system — remains cracked and badly in need of an overhaul.

2) The current proposed solution — rolling up the window and ignoring the smoke — will provide only a temporary solution at best.