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In case you missed it, be sure to check out today’s second installment in our new special report: “Altered State: How 5 years of conservative rule have redefined North Carolina.” “Public investment falls, tax responsibility shifts” is written by Alexandra Sirota of the North Carolina Budget and Tax Center and it documents the amazing shift that has occurred in how North Carolina funds government — a shift that has been engineered by the state’s conservative political leadership. Here’s the opening:

“Public investments are essential building blocks of long-term economic growth and shared prosperity. Decades ago, North Carolina diverged from its Southern neighbors by investing in good roads, quality public schools and universities and early childhood programs.

Since the official recovery began in 2009 — when rebuilding from the Great Recession would have been possible — state lawmakers have turned away from that tradition, choosing to sharply limit public spending in favor of tax cuts. Overall, state support for services in the 2016 fiscal year will be nearly a full percentage point below historic investment levels as a share of the economy.

"State spending as part of the economy — measured by state personal income — has consistently fallen in the past few years."— "A Summary of the Fiscal Year 2015–2017 Budget," BTC Reports, October 2014 (Source: N.C. Budget & Tax Center)

“State spending as part of the economy — measured by state personal income — has consistently fallen in the past few years.”— “A Summary of the Fiscal Year 2015–2017 Budget,” BTC Reports, October 2014 (Source: N.C. Budget & Tax Center)

In fact, state spending as a share of the economy — measured by state personal income — has fallen every year since 2009. The new budget continues this trend, and caps off the only period in more than four decades in which state spending declined as a part of the economy for more than five straight years.

The tax code has been radically transformed since 2010 in a way that makes adequate funding 0f core public services more difficult.

Click here to read the entire essay. And be sure to check back at the Altered State website tomorrow morning and each day through December 21. We’ll be rolling out new stories over the next two and a half weeks on everything from taxes to public education to environmental protection.

Commentary

Among numerous other dramatic and heretofore unpublicized changes, the Senate unveiled another version of its plan to shift sales tax revenues away from urban counties toward poorer rural counties this morning. And while parties can legitimately debate the wisdom of various sales tax apportionment methods, the underlying premise of the legislation — that adequate tax revenues are essential for communities to fund education and other public structures that are central to economic health and development — runs directly counter to everything else the conservative legislative majority preaches.

On virtually every other day, government is the enemy and the beast that needs to be starved. Somehow, however, when it comes to sales tax revenue, all of a sudden government is essential for community health.If you doubt this, listen to Senator Harry Brown preach about the inability of counties like his (Onslow) to offer teacher salary supplements and build new schools.

Earth to Senator Brown: There are lots of ways to get after the problem of inadequately funded public structures and services…like, for instance, not wrecking the state income tax.

The bottom line: It would be nice if these guys would get their story straight.  While their rhetoric this morning on the importance of public investments is welcome, the hypocrisy it evidences with respect to just about everything else they do and say is stunning.

Commentary

There’s a new “must read” today from economist Patrick McHugh at the Budget and Tax Center. Here’s the summary:

North Carolina currently faces an important choice between two different paths for creating jobs and strengthening the economy, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. One would make the state a research and commercial hub rivaling Silicon Valley and the Boston’s Route 128 corridor and the other would emphasize low taxes and lax regulation.

Governor McCrory often emphasizes the innovation-driven strategy, calling for North Carolina to become the third “vertex of innovation” through proposals that would build on decades of public investment in education as well as partnerships between research institutions and the private sector. However, the state also continues to reduce taxes, particularly for the wealthiest North Carolinians, and ask less of large, profitable multinational corporations when it comes to paying for public services. North Carolina now faces the decision about whether to compete on price or on quality.

“The low-tax strategy is about competing on price – making the state a cheap place to do business in the short run by reducing companies’ taxes,” said Patrick McHugh, policy analyst with the Budget & Tax Center and author of the report. “The innovation-driven strategy is about enabling North Carolina workers and companies to produce quality goods that cannot be found everywhere. Cutting taxes has already scaled back precisely the kinds of investment that are needed to compete with the Bostons and Silicon Valleys of the world.”

These innovation centers have both outdone North Carolina and our neighbors to the south in the aftermath of the recession. Massachusetts had 4.1 percent more jobs in February of 2015 than it did at the end of 2007, and even California, which was slammed particularly hard by the collapse of the housing market, has managed to get employment back to 3.4 percent above the pre-recession level. Read More

NC Budget and Tax Center, Poverty and Income Data 2013

North Carolina is enduring a painfully slow economic recovery. There are too few jobs open for all of the people looking for work, and the majority of the new jobs available pay wages so low that families can’t make ends meet. The ongoing economic hardship is evidenced in new data released last week by the Census Bureau. Statewide, the poverty rate held steady at 17.9 percent in 2013, with more than 1.7 million North Carolinians living on incomes below the federal poverty level. That’s about $24,000 annually for a family of four—certainly not enough to pay all the bills, much less get ahead.

However, just looking at statewide averages can mask the concentrations of hardship in particular geographic communities. A large and growing body of research shows that where one lives can determine if one has access to the educational and employment networks that can pave a pathway to the middle class. Because place is deeply connected to the opportunity structure, it important to analyze county-level (as well as neighborhood-level) variances in poverty.

Of the 40 counties in North Carolina for which 2013 data is available, 15 are urban and 25 are rural (based on population size).* Nine of the ten counties with the highest poverty rates were rural counties, which continue to face job loss and struggle with the consequences of the exodus of manufacturing jobs. The highest county-level poverty rate was in Robeson County, where nearly 1 in 3 residents lived in poverty. In fact, Robeson County consistently ranks as the poorest county in the state and as one of the poorest in the nation. Read More

Uncategorized

jobseconomyDon’t get us wrong; it’s almost always great whenever a new employer is creating jobs in North Carolina. And the phenomenon of politicians claiming credit for job creation is nothing new; everyone likes good news and wants to be around when it’s delivered.

That said, today’s press release from the office of Governor Pat McCrory announcing the expansion of a plastics manufacturer in Henderson County borders on the ridiculous. This is from the release:

“Governor Pat McCrory and N.C. Commerce Secretary Sharon Decker announced today that Elkamet Inc. is expanding its North Carolina manufacturing operations in Henderson County.  The company plans to create 20 new jobs and invest more than $2.5 million over the next three years in East Flat Rock…. Read More