Archives

Commentary

taxcutBThere have been multiple stories in recent days detailing the destructive impact that conservative budget and tax policy is having on essential public structures and services in North Carolina. During a time in which most states are rebounding and expanding public investments, North Carolina continues to muddle along and scrimp by like one of Art Pope’s weathered, low-rent chain stores.

Just yesterday, Chris Fitzsimon reported on the disgraceful situation in the Rockingham County public schools (home to Senate leader Phil Berger) while Cedric Johnson highlighted the self-inflicted budget crisis afflicting our courts system.

Now, this morning, comes an excellent editorial that sums up the absurd situation and the driving force behind it: destructive and unnecessary tax cuts. As this morning’s lead editorial in Raleigh’s News & Observer explains:

“The General Assembly’s Republican leaders appear remarkably calm about what is shaping up to be either a serious budget shortfall or an income tax shock for those who have not had enough state tax withheld.

Tax revenue flowing into the state is running about $190 million below projections following tax cuts that took effect in January. That is worrisome because state spending already is at a spartan level. There’s no slack for filling the budget hole with easy cuts. The state could dip into its rainy day fund (even though it’s not a rainy day), but that simply puts off the budget reckoning for a year.

State Rep. Skip Stam, a Wake County Republican and House speaker pro tem, said the budget shortfall isn’t much given the state’s $21.1 billion budget and the federal government’s spending on North Carolina’s Medicaid and transportation projects. He told Time Warner Cable News, ‘The difference is hardly even a rounding error.’ A rounding error? It seems like more than that to state agencies that are trying to meet the needs of a growing state. Their budgets have been tightened first by the Great Recession and then by Republicans taking control of the General Assembly in 2011.”

The editorial concludes this way:

Read More

NC Budget and Tax Center

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.

Cart for blog

Read More

NC Budget and Tax Center

An insightful interactive map created by the Center on Budget and Policy Priorities shows the extraordinary growth in imprisonment rates nationwide. For North Carolina, the number of individuals under state or federal correctional authority nearly tripled from 1978 to 2013, increasing to 356 from 214 individuals per 100,000 residents over this time period. This growth in the state’s imprisonment rate is accompanied by increased state corrections spending – rising from $538 million in 1978 up to $1.7 billion in 2013 when adjusted for inflation.

Growth in the state’s imprisonment population has been costly for North Carolina and nationally. More and more state dollars for state corrections spending has contributed to fewer dollars available for public schools and other public investments that serve as the foundation of economic growth. In 2011, state lawmakers passed the Justice Reinvestment Act, which aims to manage the state’s prison population growth by creating better outcomes for offenders and, in turn, reduce recidivism. However, the state’s ongoing revenue crisis resulting from costly tax cuts and continued budget cuts limit opportunities for proven, cost-effective initiatives, such as drug treatment courts.

What is clear is that state corrections operations in North Carolina consume a significant amount of resources, and individuals, at the expense of other important public investments.

Commentary

Tillis_McCrory_Berger-400It seems like a long time ago, but it was just the beginning of last year that North Carolina’s newly-elected governor promised state “tax reform” that would be “revenue neutral.” In other words, while the Guv was promising tax cuts, he was also calling for tax modernization that would enhance revenues in other areas — thus assuring that government would have the money it needed to fund core services in a fast-growing state. So, while it was always clear that a McCrory plan would enact regressive changes that favored the well-off, there was at least some hope that the state could at least avoid going backwards in the provision of basic services that undergird the middle class

We all know what happened next. Legislative leaders deep-sixed McCrory’s revenue neutrality idea in a New York minute and, instead, quickly acted to make big tax cuts for the wealthy and profitable corporations a vehicle for slashing core services like education, environmental protection and the courts system.

Now, less than a year since the Tillis-Berger tax package went into effect (with full McCrory approval), the chickens are coming home to roost. As this Public News Service story highlights this morning, 2015 is almost certain to bring North Carolina yet another damaging and wholly unnecessary budget crisis: Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

Despite the fact that almost three-quarters of North Carolina voters support expanding NC Pre-K and Smart Start, state lawmakers continued a pattern of underinvestment in key early childhood education services in the state budget they passed this year. NC Pre-K is a proven program which helps prepare children for later success in life, yet lawmakers failed to keep up with the needs of young children in the budget. They provided a one-time $5 million increase for NC Pre-K, but these are not recurring dollars and most of the money goes to increase teacher salaries. While improving teacher pay is critical, there is little left over to provide additional Pre-K slots. This education program currently is not able to serve thousands of children on a waiting list and thousands more who would otherwise be eligible. This is just one example of the many trade-offs state legislators made due to their choice to prioritize tax cuts primarily for those at the top over needed investments in our children, families and workforce.

Child care subsidies, another effective program which helps lower income families afford quality child care and serves as a work support, also took a hit in this year’s budget. Like NC Pre-K, the child care subsidy program helps make sure young children have access to quality early education, and it also has a waiting list of thousands. Lawmakers did little to address the shortage of services and actually made it harder for some low-income families to access this support. They lowered the income eligibility requirements for children under five years old to 200 percent of the federal poverty level (about $39,000 for a family of three). The program used to be available to young children in families earning up to 75 percent of the state median income (about $42,000 for a family of three). The changes were even worse for school-age children using subsidies for after school care. One positive change lawmakers made in this year’s budget was to how much child care providers are reimbursed for serving children who get subsidies, bringing the cost per child closer to the market rate and helping providers recoup more of their expenses. However, providers still are not paid the full market rate, making it hard for many child care settings to accept children who receive subsidies.

Read More