NC Budget and Tax Center

A whole lot of numbers converging on one truth

The flood of numbers associated with the state’s tax collections has created growing confusion.  However, what should not get lost in this confusion is that those numbers all converge on one truth: the tax plan passed in 2013 costs more than was originally projected and is likely to hamper our state’s ability to reinvest as the economy recovers. Yesterday’s announcement by state officials that the consensus revenue forecast expects revenue to be $271 million short of projections for the current fiscal year confirms the challenges ahead.

So here is a break down on the numbers.

The total cost of the tax plan is approaching $1 billion for the current fiscal year that runs from July 1, 2014 to June 30, 2015. This number measures the difference between the amount of tax revenue the state would have collected under the old tax structure and what the state is collecting under the new tax plan. The new tax plan was originally estimated to reduce tax revenue by $512.8 million for the current fiscal year, but that estimate is proving to be far lower than what we’re seeing today. BTC’s original estimates suggested that the total cost of the tax plan could reach $1 billion by the end of the current fiscal year. Read more

Commentary

As committees heat up, General Assembly website goes dark

One hopes and presumes it’s a coincidence, but it sure is strange that the longtime General Assembly website (www.ncleg.net) disappeared this morning just as legislative committees started to meet. For some weird reason, the General Assembly is now back at it’s old and rather archaic address www.ncga.state.nc.us. In addition, some of the links on the main site (to the audio for various committee rooms) no longer work.

What’s up guys? Someone trying to make the case for Gov. McCrory’s plan to have a cabinet level I.T. Secretary?

(WRAL says the folks on Jones Street accidentally allowed the old domain to expire and are frantically working on it. Good grief!)

ncleg-domain issues

Uncategorized

A new year and more tax cuts for the wealthy and profitable corporations

Despite the growing revenue challenge North Carolina faces, a new round of tax cuts went into effect with the start of the new year. While the growing revenue shortfall warrants immediate attention during the upcoming General Assembly legislative session that begins next week, inaction up to this point has already  dug a deeper hole as of January 1, 2015.

New personal income and corporate income tax rates are now in effect for 2015. The now-flat personal income tax rate dropped to 5.75 from 5.8 percent (the top marginal rate was 7.75 percent in 2013) and the corporate income tax rate dropped to 5 percent from 6 percent (it was 6.9 percent in 2013). These tax cuts will further reduce revenue for public investments and will largely benefit the wealthy and profitable corporation at the expense of low- and middle-income taxpayers.

The cost of the tax plan continues to grow higher than what state officials originally estimated. As of the end of the November, revenue collections are coming in $190 million below expectations. This loss is built on top of the already revised and anticipated revenue loss of $704 million due to the tax plan. Combined, this result in a nearly $900 million revenue loss for the state – much higher than the original $512 million cost estimate.

By the end of the fiscal year, BTC estimates a total revenue loss of around $1.1 billion Read more

NC Budget and Tax Center

Damage of tax cuts in states including NC calls major tenets of trickle-down economics into question

In 2015, many conservative state lawmakers across the country are retreating from the long-held belief that cutting taxes will generate more revenue and spur economic growth. Kansas, Wisconsin, and, yes, North Carolina along with Arthur Laffer, in their efforts to put into practice the flawed theories of trickle-down economics, have created more problems than improvements, according to a recent Politico piece.

Rather than serve as a beacon of competitiveness in the South, North Carolina instead has become a cautionary tale for other states across the country that are considering tax cuts.

The evidence is mounting that tax-cutting experiments aren’t delivering on the promises made by trickle-down economic theory.

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NC Budget and Tax Center

Self-imposed revenue crisis playing out in state’s court system and beyond

The Charlotte Observer reports of the strain on the state’s court system in the wake of state budget cuts in recent years. The state’s court system is expected to run out of funding for juror pay by April of next year, the Charlotte Observer highlights.

The ability of the state’s court system to operate effectively has been increasingly challenged amid cuts in state funding over the years. While other states have adopted technology and incorporated electronic filing systems, North Carolina continues to use a paper-based system, which slows down the judicial process. The time taken to complete civil and criminal cases has increased in recent years, the Charlotte Observer article notes, resulting in a judicial system that is inefficient, more costly, and less customer-friendly.

State lawmakers quoted in the article note their unawareness of the pending funding shortage for juror pay and state that the General Assembly is being asked for money that it doesn’t have. This is increasingly clear as stories throughout the state have highlighted yet another announcement that the state’s revenue collections are below projections.  Official estimates now put the revenue shortfall for the current fiscal year at $190 million.

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