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If you want to understand why North Carolina continues to struggle to fund the basic public services that provide a framework for a middle class society, check out the following graphic. As it demonstrates, even with the much ballyhooed bumps in spending contained in the House budget proposal, the state would still be spending less than it did before the Great Recession — a point at which public investments were already anemic in many critical areas.  And, of course, inadequate as it is, the House proposal is already being dismissed by members of the Senate and their Tea Partying allies as overly generous. The bottom line message from the power-that-be for their fellow North Carolinians : The pain will continue until morale improves.

House budget

Commentary

The reviews are coming in as more and more people wade through the details of the House budget proposal. Here’s another sobering take from the executive director of NC Child:

Tiny plates and the House budget
By Michelle Hughes, Executive Director of NC Child

One of the most simplistic reheated bits of diet advice ever sold in the grocery checkout line is to eat your regular food, but to use a small plate and a small fork.

You’ll think your plate is full!! If you go back for seconds you won’t overeat so much!

Really?

The latest state budget for children’s services seems to have a few similar beliefs baked in–the key one being that before long you’ll believe that the plate in front of you is a regular-sized plate. Even though plates on your right and left are normal, you will not notice the one in front of you is small. Substitute ”appropriation” for “plate” and you get the point.

Set the budget table with tiny plates for many children’s programs and there you have the post-recession and post-2013 tax cut reality. The legislature fundamentally re-set the state’s budget priorities with tax cuts in 2013 and funding has not reached pre-recession levels since, although the state has grown in population and investment needs.

For instance, North Carolina’s premiere early childhood education programs, Smart Start and NC Pre-K, saw their funding reduced by 20% during the recession and have never seen that funding restored. Now, despite a growing population of children, we’re able to provide fewer of them with the strong start they need. Read More

Commentary

In case you missed it, be sure to check out today’s edition of the Fitzsimon File wherein Chris explains what’s really going on in the latest House budget proposal — part of which was unveiled today after having been written behind closed doors. As Chris notes in “A muddled start to the state budget dance”:

“Overall the parts of the budget made public so far are similar to proposals made by Governor Pat McCrory two months ago in his spending plan with the anemic status quo preserved in most agencies and programs, maintaining funding levels that after several years of deep budget cuts fail to meet the needs of a growing and still struggling state.

House leaders will tout increased funding for education but with a few notable exceptions like more funding for textbooks and restoring support for driver’s ed, most of the new education money will pay to keep services at current levels—funding enrollment increases and keeping the same number of teacher assistants in the classroom after their ranks were reduced significantly in the last few years.

It is much the same in health and human services where House leaders pay for the increased cost of Medicaid and provide some additional funding for programs that desperately need it, like the Home and Community Care Block that helps pay for Meals on Wheels and other services that allow seniors to stay in their homes.

The House budget restores a million dollar cut made to the program last year and while that’s certainly welcome news, bringing a vital program back to a previous level of funding isn’t exactly a cause for massive celebration.”

And sadly, as Chris also notes, this is probably the high point of this year’s budget process: Read More

Commentary

budgetThere were a lot of things that the Democrats did wrong while they were running the North Carolina General Assembly back in the day– especially in the state Senate — and many of them were highlighted at the time on this website. That said, the “process” now in use on Jones Street has degenerated since then to the point at which it truly makes a mockery of democratic governance.

Nowhere is this better illustrated than in the the development of the single most important bill that the General Assembly passes each year — the state budget. Here’s how this absurd process has worked in 2015:

Two months ago, the Governor proposed a budget. After that, the various Appropriations subcommittees held a few meetings to review what the Governor had proposed.

That’s it. There’s been no public discussion or hearings on developing or exploring alternatives. There’s been no public debate or amendments and certainly no public give and take.

Now, this morning, almost four months into the 2015 legislative session and just 45 days before the end of the fiscal year, the House released a new version of the budget (really just parts of the budget — we still don’t know about taxes and employee raises) broken into a handful of separate proposals. Naturally, there’s been no time for legislators, the news media or the public to digest the contents. The proposals were all brought before hastily called and simultaneous subcommittee meetings this morning — which effectively prohibited any one individual from reviewing any more than one or two small corners of the proposal.

At the meetings, legislators were told they’d have till noon to develop any amendments and were given a long list of 11 onerous rules Read More

Commentary

Tax shiftThe lead editorial in this morning’s Charlotte Observer offers a compelling explanation and critique of yesterday’s “April surprise” in which state leaders announced that North Carolina has eked out a 2% budget surplus. The bottom line explanation: the Great Tax Shift in which average folks are paying more and the rich and corporations are paying less. Here’s the Observer:

“News of a surplus is indeed cause for relief. But before GOP leaders dislocate their elbows in over-exuberant back patting, let’s look closer to see how they achieved it….

The returns are in. And the numbers don’t point to an expanding economy as the main cause of the huge swing from deficit projections to surplus. Instead, the memo [from the legislature’s Fiscal Research Division] noted that tax refunds dropped by 57 percent this year (not the 35 percent predicted). It was by far the biggest drop-off in 25 years.

Personal income tax collections surged, giving the state $375 million more than the staff expected. Some of that came from bigger collections in small business income. No surprise there, since tax reform killed the $50,000 business income exemption such establishments enjoyed.”

GOP leaders say lower tax rates will draw more corporations and jobs to the state. But the new-found surplus didn’t come from new-found corporations. Wage growth is expected to be 1 percentage point below forecast for the current budget year, the memo says, and withholding tax revenue is projected at 3 percentage points below forecast. Corporate income tax and franchise taxes moved up only slightly since the staff’s February budget projections.

That means surging collections from small businesses and individual taxpayers – not corporations – turned the deficit forecast into a surplus.”

The editorial closes this way:

“GOP leaders say refunds are shrinking because they made paycheck withholding more accurate. The state’s keeping less of your money through the year. Even if true, that doesn’t change the bottom line fact that personal income tax revenue has surged.

Make no mistake. We do believe the state needs more money for schools and other public investments. But its leaders are lifting money from everyday taxpayers’ pockets while seeking praise for supposedly putting more money in them.

And for that sleight of hand, perhaps they do deserve a round of applause.

A sarcastic one.”

Read the entire editorial by clicking here.