Archives

NC Budget and Tax Center

North Carolina legislators are in the months-long process of developing the two-year state budget that covers July 1, 2013 through June 30, 2015. In light of the state’s murky economic outlook, it is important for legislators to consider the major drivers that will impact General Fund availability. There are many pressure points in the state but the biggest 5 include the following:

  1. Schoolchildren. As the single largest appropriations-supported category in the state budget, the needs of K-12 public schools are the most significant driver of the state budget. The K-12 budget has suffered through massive cuts over the last several years, and state investment in public education as a share of North Carolina’s economy is lower than before the Great Recession. This comes at a time of increasing demand: from school year 2008 to 2012, the student population grew by nearly 20,000, or 1.5 percent. The growing number of children enrolled in public schools only places additional budget pressure on an already stressed educational system. Read More
Uncategorized

In Kansas, tax reform isn’t exactly playing out the way some lawmakers had hoped.  The state that Grover Norquist once called “the starter gun for tax competition” has passed a series of income tax cuts over the past year with the stated goal of eventually eliminating income taxes altogether in the near future.  This “race to zero” is well underway in several states with conservative governors and legislatures.  Here’s a quick look at how that’s working out so far for Kansas:

A $2.5B budget shortfall

The Kansas Legislative Research Department is projecting a $2.5 billion revenue hole through 2018 because the legislature has yet to figure out an effective way to replace lost revenues as a result of the income tax cuts.

A threatened credit rating

Last month, a state court ruled that the Kansas legislature was breaking the law by underfunding public schools as a result of the income tax cuts, which prompted Moody’s Investors Service to warn of a negative credit risk for the state.

Less funding for public services

Concerns over the state’s credit rating aren’t the only thing that should give Kansans pause.  By starving public schools and other services critical to economic success, the state is jeopardizing future growth. Read More

NC Budget and Tax Center

In recent weeks, lawmakers in North Carolina have proposed a number of tax reform plans that would abolish the corporate and personal income taxes and shift the state’s revenue base to a consumption tax.  As the newest issue of Prosperity Watch describes, taking this approach would immediately eliminate 60 percent of the state’s annual revenue. How would the state fill in this $12 billion dollar hole? See here for more details.

Uncategorized

More than 85 local elected officials have written to House Speaker Thom Tillis, Senate President Phil Berger, and key legislators urging them to consider raising new revenues during the short session to restore funding for schools, infrastructure and other public investments.

In their letter, the group of mayors, city councilors, and county commissioners,implore North Carolina budget writers to consider reinstating temporarily the penny sales tax, rather than resorting to more cuts:

“We’re worried that these budget cuts will only get worse in the coming year. The decisions you make this spring and summer will have lasting impacts on our ability to remain competitive with surrounding states and the global economy,” the letter said.

Over the last three years, local officials state that they have used limited resources as efficiently and creatively as possible, but that they can only stretch a dollar so far.

The letter comes on the heels of a proposal by the Together NC coalition to raise over $1 billion in revenue by temporarily extending the penny sales tax, adding a new income tax bracket on households earning over $1 million annually, and expanding the state’s Earned Income Tax Credit.

You can read a copy of the full letter  and see a list of the signer here.