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NC Budget and Tax Center

In a bizarre turn of events, the House Committee on Appropriations met today to review and vote on a new spending plan for the upcoming fiscal year. The bill passed in what appears to be along partisan lines, and it heads to the House floor tomorrow. For the most part, the new spending plan leaves in place the second year (FY2015) of the two-year budget that lawmakers already approved last year. The changes are mainly geared toward moving lottery dollars into the General Fund, boosting pay for teachers and state employees, and adjusting the education budget.

See the NC Budget and Tax Center’s statement on the budget here.

The day started with Governor McCrory and Speaker Tillis holding a joint press conference at 1pm to make an education announcement. It was revealed that House leadership planned to unveil a new spending plan that doesn’t rely on raising additional lottery dollars generated from increased advertising.  What wasn’t mentioned at the press conference is that the new plan relies on more lottery dollars to finance pay raises, those dollars just aren’t generated from relaxing the advertising rules. Those dollars just happen to be the result of revised lottery projections under current rules. In other words, the budget is still relying on a source of funding that is unstable and regressive. Read More

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House Speaker Thom Tillis partnered with Gov. Pat McCrory today to announce their efforts to work together toward a teacher pay plan they characterized as responsible and affordable—but key details of the House’s new mini-budget proposal, unveiled today, remain unclear.

“We’ve been preparing plans from not inside the beltline but outside the beltline – by listening to the experts who are closest to the action, who are every day inside the classroom,” said McCrory, who was flanked by Speaker Tillis, State Board of Education Chair Bill Cobey, State Superintendent June Atkinson as well as lawmakers, school superintendents, teachers and other education advocates from around the state.

McCrory called on local superintendents and teachers to support his proposed teacher pay plan, which would work toward implementing career pathways that reward teachers for performance as well as experience and avoid cutting teacher assistants, unlike the Senate proposal which would slash TAs in the second and third grades.

Tillis followed McCrory by stepping up to the podium to announce his revised “mini-budget” that would be unveiled later in the afternoon in the House appropriations committee.

Calling it a consensus bill that people on Main Street would support, Tillis said his revised legislation would give teachers a raise but take the lottery funds off the table to do that. He would also preserve funds for teacher assistants. Read More

NC Budget and Tax Center

In an unexpected move on Monday, Governor McCrory directed state agencies to prepare for budget cuts in case lawmakers fail to iron out a budget deal before the fiscal year ends in six days. Art Pope, the Budget Director at the Office of State Budget and Management, laid out the budget guidelines in a two-page memo that orders agencies to plan for the worst-case- scenario between the Senate and House budgets. Here is a summary of the directive:

  • Agencies must take the highest cut (for the entire agency rather than on a line-item basis) that is presented in either the Senate or House budget.
  • The rule above doesn’t apply to spending associated with Teacher Assistants (TAs), which is cut in half under the Senate budget. This would mean that spending for TAs would remain at the levels in the FY2015 budget that is already on the books (see note below on the biennial budget process). This is in contrast to the Governor’s own budget, which cuts funding for TAs by nearly $20 million.
  • Filled positions that are eliminated in either the Senate or House budgets should be treated as such. Similarly, vacant positions that are eliminated in either of the proposals shall not be filled.
  • No pay raises are authorized. Nor are any expansion items in either of the proposals.

The Governor, Senate, and House already put forward their respective budgets. Now, those differences are being ironed out in what’s known as the conference process where the Senate and House leadership come together to strike a final budget deal. Because the conference process is dominated by legislators, the Governor is more or less shut out of the process—especially now because of the veto-proof majorities in both chambers. The budget memo represents a way for the Governor to pressure the legislative leadership to iron out their differences in a timely fashion. It also serves to demonstrate the worst-case scenario’s deleterious impact on the average North Carolinian.

Even if lawmakers throw their hands up in the air and leave Jones Street without striking a final budget deal Read More

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State budget negotiations will spill over into next week as lawmakers remain at odds over Medicaid and the best approach for funding raises for teachers and state workers.

Rep. Verla Insko believes legislative leaders may have a difficult time reaching a consensus after last year’s budget cut taxes “too much, too fast.”:

“One of the proposals this year was to reduce funding for children with intellectual and developmental disabilities,” explained the Orange County legislator. “Why would you take a population that deserves help and needs help and remove [services]?”

“The economics is what we talk about a lot…but the real sad thing is we don’t think about the impact on human beings.  These are our children and our community, and we are undermining their ability to have a productive life.”

Rep. Insko appears this weekend on N.C. Policy Watch’s News & Views to discuss the budget, school vouchers, and support for the university system.

For a preview of her radio interview with Chris Fitzsimon, click below:

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Click here for more on how the Senate and House budget proposals would impact programs for young children and working parents.

NC Budget and Tax Center

AF-Jobs

As long as North Carolina’s overall job creation remains anemic and rural regions continue to lag behind the rest of the state, it will be critical to adequately invest in proven economic development strategies like increasing small business lending, supporting development in economically-distressed communities, and strengthening the nexus between cutting edge research and innovative industrial development in key sectors. These are many of the types of investments that made North Carolina a leader in innovative economic development over the past 30 years.

Although significantly less supportive of these efforts than in past years, the House budget proposal for FY 2014-2015 does a better job of funding the state’s most effective economic development investments than does the Senate proposal, which relies on largely unproven strategies like fracking.

Both proposals are ultimately constrained by the continued commitment to tax cuts that primarily benefit the wealthy and profitable corporations that are also unlikely to deliver on the job creation promises that their proponents have made.

In the years since 2011, the General Assembly has largely dismantled much of the state’s most innovative economic development efforts. It eliminated the nationally-acclaimed rural development entity—the N.C. Rural Economic Development Center, dramatically scaled back investments in the biotech sector, abolished the state’s regional economic development planning partnerships, and eliminated state support for 13 nonprofits performing community-based economic development in the state’s most distressed communities. Both budgets continue this long-term trend of dismantling North Carolina’s system—the House just restores some of the lost investments.

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