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Governor McCrory signed a final budget into law for the current 2015 fiscal year, which runs from July 2014 through June 2015, this morning. The $21.1 billion budget includes new spending initiatives – largely pay raises for teachers and state employees – but fails to include additional revenue to sustain this spending in the long-term. Contrary to fueling North Carolina’s economic comeback, as Governor McCrory claims, the final budget continues to fund core public services at diminished levels, well below pre-recession levels, and compromises the ability of the state to get ahead and prepare for the future.  Moreover, it puts North Carolina on a fiscally irresponsible path that will continue to create budget challenges in the years ahead, largely as a result of the tax plan that was little debated and discussed in the final budget.

North Carolina faces a revenue challenge, and actions taken within the final budget make this reality clear. The final budget signed by the Governor spends every available dollar and uses dollars from last year’s budget as a result of the Governor requiring agencies to cut their respective budgets. No funding is available to build up the state’s Savings Reserve fund, which is meant to position the state to weather a future economic downturn. Furthermore, the budget relies on one-time funding sources that, once depleted, cannot be replenished with such low revenue and shifts funding for core public investments such as K-12 education to lottery receipts and early childhood programming to federal block grants.

Such budget decisions are driven largely by the tax plan the governor signed into law last year, which significantly reduces revenue available for public investments. Revised analysis by the General Assembly’s Fiscal Research Division estimates that the income tax rate cuts in the plan will cost at least $200 million more annually than initially expected – more than $1 billion less in annual revenue once the plan is fully implemented. The Governor and state policymakers failed to account for this reality in the final budget, which means that, absent new revenue, more budget cuts to core public services are likely to occur in future years as the tax plan continues to be implemented. Another round of tax cuts is set to occur in January 2015.

Under the final budget signed by the Governor, state spending remains 6.6 percent below pre-recession levels (see chart below). Read More

Gov. McCrory’s proposed budget for fiscal year 2015 and respective budgets by the House and Senate include significant cost savings from closing and downsizing various correctional facilities. Savings from these changes total around $14.2 million in both the House and Senate budgets and $14.9 million in the Governor’s budget.

Savings generated from these changes could have been used to promote safer communities across the state.  However, lawmakers went down a different path. For instance, Gov. McCrory advocated for state funding for drug treatment courts to be included in the state’s current fiscal year budget. These courts cost a fraction of the nearly $28,000 it cost to keep individuals in prison. However, the final budget passed last year by state policymakers did not include funding for drug treatment courts.

All three budget proposals for fiscal year 2015 – which begin July 1, 2014 – fail to include funding for drug treatment courts. The House and Senate budgets, however, go further and cut funding for programs that promote fair and equitable access to the justice system and safe communities across the state.

Funding cuts to Justice and Public Safety in the House and Senate budgets include:

  • Elimination of the Access to Civil Justice Fund, which supports the representation of poor North Carolinians in civil cases.
  • Reduction of administration funding for Indigent Defense Services, which in part oversees the provision of legal representation to indigent defendants and others entitled to counsel under North Carolina law.
  • Reduction of administration funding for Administration of the Courts

Due to tax changes enacted last year, state policymakers are constrained in major ways. This is effectively a self-imposed budget challenge. Nevertheless, as demonstrated with choices made within the Justice and Public Safety area of the budget, where there’s a will, there’s a way.

Budget writers found revenue by making significant changes to the operations of various correctional facilities as well as by cutting state funding for programs that work to enhance the efficacy of the state’s justice system. These state funding cuts would limit service providers’ ability to assist individuals and families in need to legal representation.

What is clear from all three budgets is that state lawmakers are continuing down a dangerous path of more state funding cuts rather than reinvestment as the state recovers from the Great Recession. One can only hope that as budget writers work to negotiate a final budget for the upcoming 2015 fiscal year, state funding is restored for these programs that were put on the chopping block in the House and Senate budgets.

North Carolina is known for having an appealing quality of life, with communities across the state offering a great place to raise a family and operate a business. Safe and healthy communities play an important role in contributing to this quality of life in what we North Carolinians call home.

Decisions made by state leaders highlight a lagging commitment to enhancing the quality of life within communities across the Tar Heel state. In the current budget, state leaders disregarded Gov. McCrory’s recommendation to provide funding for drug treatment courts, which is a cost-efficient way to provide drug treatment and support to individuals with substance abuse dependencies. State lawmakers did however create “cost savings” by reclassifying certain low-level offenses and allowing them to be punishable by fines instead of jail time – one particular tradeoff is that such defendants will now have convictions on their records despite not having a right to counsel. This could affect their employment prospects and access to other opportunities. Read More

Tired of incessant delays during their flights home caused by the furlough of FAA air controllers, Congress voted last night and this morning to find the money to end the furloughs. About time.

Of course, the controller cuts have been far from the only stupid and counter-productive cuts brought on by that ultimate of inside-the-Beltway ideas/terms: “sequestration.”

Think Progress  has 12 more that you can read by clicking here.

Meanwhile, in a related vein, it seems worth noting that this morning’s editorial cartoon by Dana Summers of Tribune Media Services that appeared in the print edition of Raleigh’s News & Obsever  (you can look at it by clicking here)  is a classic example of what happens when ill-informed people rely on inaccurate and offensive stereotypes as the basis for their “opinions.” Thanks goodness our safety isn’t in the hands of intellectually lazy knuckleheads like Mr. Summers.

Just in from the Budget and Tax Center Center

RALEIGH (March 27, 2013) — Critical federal funding for North Carolina’s schools, health care, clean water, law enforcement, and other key services would be slashed under the federal budget proposed by House Budget Committee Chairman Paul Ryan and passed by the U.S. House of Representatives last week, according to a new report released today by the non-partisan organization Center on Budget and Policy Priorities.

“Chairman Ryan’s budget would place the burden of deficit reduction squarely on the backs of North Carolina’s low-income and middle class families while providing a windfall in tax cuts to corporations and the wealthiest individuals,” said Allan Freyer of the Budget & Tax Center, a project of the North Carolina Justice Center. “Another round of deep funding cuts to our schools, public safety, and health would harm our families, communities and economy.”

Congressman Ryan’s budget would cut the part of the federal budget that supports Read More