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North Carolinians are being dealt a bad hand. The deep revenue losses resulting from the 2013 tax plan is creating a reality in which there are too few dollars available to meet the needs of children, families, and communities. Budget writers are facing a self-imposed budget crisis and finding it difficult to agree on just how large the cut to public schools and public health should be to meet its priorities and balance the budget. To be clear, budget writers agree that those core budget areas should be cut compared to the enacted 2015 fiscal year budget but have yet to agree on the size of the cut.

That’s the main reason why North Carolina is more than two weeks into the new fiscal year without a revised state budget.

For weeks budget negotiators in the House and Senate have been shuffling the deck, making proposed cuts in core areas of the budget and moving that money around in order to finance much-needed pay raises. This budget shuffle is further proof the state is facing a revenue problem. Read More

If you’re trying to get up to speed on this week’s colorful and cantankerous state budget negotiations, here are three quick takeaways:

Budget conferees are expected to meet again today, though an exact time has not been announced. The NC House goes into session at 11:00 a.m., the Senate at 2:00 p.m.

With another day of negotiations on tap, the Wilmington Star News says it’s time for state representatives and senators to end their posturing and find some common ground. The editorial board writes that the current budget logjam has only served to create more uncertainty for educators and North Carolina’s public schools. Here an excerpt from Thursday’s editorial:

Budget cutsIt was encouraging news when, on Tuesday, Senate President Pro Tem Phil Berger, R-Rockingham, announced that the House and Senate had agreed not to tie a teacher pay increase to tenure. The stipulation had been inserted by the Senate, which until Tuesday stood firm by its decision. While the two sides still had much to discuss – not the least of which was the Senate’s insistence on cutting funding for teacher assistants – they had cleared one roadblock.

That kumbaya moment didn’t last long.

Senate leaders walked out on the budget talks Wednesday morning, an indication that this will be a very long “short session.” House members of the conference committee wanted to hear from superintendents about the education budget; Senate leaders countered that it would be against the rules and walked out in a huff.

They returned, but news media covering the talks reported that the mood was much less harmonious.

By law, the General Assembly is supposed to have a budget in place by July 1, the start of the 2014-15 fiscal year. It is not unusual for negotiations to drag the process out a few weeks, but typically by this point there is a light at the end of the tunnel.

Based on the current stalemate, things don’t look promising for a spending plan anytime soon.

Gov. Pat McCrory and the state House have stood together on one side, while the Senate’s budget contained significant differences in how to handle education and Medicaid, among other things. The conference committee reached an agreement on Medicaid last week, though it still falls short. Nevertheless, it was progress.

Likewise, it seemed Tuesday that the Honorables were moving toward a budget agreement. Then it was back to square one.

The House is right to object to severe cuts in funding for teacher assistants. Regardless of a study senators tout that said teacher assistants have no measurable improvement on student achievement, teachers know they are an invaluable resource, particularly in classrooms where a large percentage of children need help catching up academically. As more pressure is put on teachers and students to Pass That Test, teacher assistants give their education partners the one thing no pay raise can: time – time to spend working in small groups or individually with students.

Yet, if the House and Senate can’t sit down long enough to discuss the issue, school systems won’t even be sure what money they will and won’t have to spend next year. Let us hope that calmer heads and a spirit of compromise for the good of the people prevail. Uncertainty is no way to run state government.

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If you work hard and play by the rules, you deserve a chance to get ahead. This is why the Earned Income Tax Credit was invented: to help families with low-paying jobs make ends meet.

Unfortunately, North Carolina is the first state in 30 years to eliminate its Earned Income Tax Credit. This move abandoned a bunch of our neighbors, people with stories like Kara’s:

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There is no more stark illustration of why tax policy matters. With NC job growth coming primarily in low-wage industries, we’re going to need the Earned Income Tax Credit — and other measures that work for working people — more than ever.

 

State budget writers are currently grappling with the task of ironing out a final budget in the face of last year’s huge tax cuts that are hampering our ability to invest in the building blocks of a strong economy. As we entered into the new fiscal year without a revised budget, the News and Observer Editorial Board called upon lawmakers to reconsider their revenue-losing, lopsided tax plan. Here’s more from their editorial that ran over the weekend:

As North Carolina lawmakers struggle to agree on the second year of the state budget, it’s becoming clear that last year’s decision to cut taxes came too early and went too far. The state compressed its three-level personal income tax rates of 6, 7 and 7.75 percent to a flat 5.8 percent and reduced the corporate tax rate from 6.5 to 6 percent.

Had the Republican-led General Assembly held off on these cuts, North Carolina would be enjoying a budget surplus now. There would be money to increase teacher pay without cutting education elsewhere. There would be money to invest in the University of North Carolina and in the state’s neglected roads, bridges and water systems. And there would be money for modest, well-targeted tax cuts.

Instead, the legislature’s Republican leaders and Republican Gov. Pat McCrory cut taxes in a way that is creating an artificial crisis. The state doesn’t have enough money to meet the needs of its growing population and can’t find a sustainable way to lift the public schools teachers’ pay that has sunk to 48th in the nation. In North Carolina, the rich are getting richer as the stock market hits all-time highs and corporations are profiting from a rising economy, but the state has forgone the tax boom that should have come with that recovery.

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Lawmakers should take another look at taxes and find a way to generate revenues that will meet the state’s needs and support its ambitions.

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