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Local communities across North Carolina are already feeling the impact of recent tax policies and budget decisions made by state policymakers. A recent news article quotes a Pitt County commissioner lamenting disapproval with the state pushing off on local governments what they should be funding. Indeed, the tax plan passed last year results in self-imposed budget challenges today that will continue for years ahead, resulting in continued state funding cuts to core public investments that serve as the foundation of economic prosperity.

We at the Budget & Tax Center have traditionally talked about the net revenue loss under the tax plan, but that masks something important that happened when policymakers overhauled the tax code. The tax plan passed last year shifts responsibility for funding core public investments to local governments, in part, by recapturing some of the shared revenue from state sources that went to local governments to meet their obligations.

One example of this shift was the decision to repeal and eliminate the allocation of a portion of corporate income tax revenue dedicated to the School Capital Building Fund (SCB Fund), created in the late 1980s to assist local governments in meeting their public school building capital and technology equipment needs. Prior to the tax change, a portion of revenue generated from the state corporate income tax went to the SCB Fund. That practice ends under the tax plan. Over the next five years, this tax change takes away $382 million from local governments who used the revenue to improve education facilities in their communities. Read More

This is the third post of a Budget and Tax Center blog series on public services and programs that face cuts in the budget process or have been underfunded in past years. See the other posts here and here.

The Senate Budget proposal makes significant changes to North Carolina’s child care subsidy program, and not in a good way. In fact it kicks some families off the program. Essentially the Senate eliminates many of the best practices in child care subsidy policy, which results in making it more difficult for working families to access child care. The Child Care Subsidy program provides an opportunity for low-income working parents to access affordable and safe child care while they are supporting their family. As many parents know, child care is often the highest monthly expense for a family, with an average annual cost of full-time center care for one child at about $8,500 a year. The high cost of child care prices many low and middle income families out of the market, which could make it difficult for a parent to get and keep a job, or be forced to choose an unsafe care setting.

Enter the child care subsidy program, which currently provides families who earn less than 75% of the state median income (SMI; about 50,000 a year for a family of four) the opportunity to ensure a safe, quality child care setting for their children while they work. For some parents, the current system also provides a sliding scale for co-payments that decreases as the family size increases. While the program is extremely beneficial both in ensuring healthy early childhood development and allowing parents to work and sustain their family, the funding has been inadequate over the years, leaving over 15,000 eligible North Carolina families on a waiting list as of May, 2014, for months and even years. Read about Lex’s story from Western North Carolina whose children languished on the waiting list for over three years.

A magnifying glass is indeed needed to understand how the Senate budget changes the program because it claims to be revenue neutral and to reduce the number of children on the waiting list. So let’s take a look. The Senate changes eligibility for the program from 75% of the SMI to 200% of the Federal Poverty Level ($47,700 for a family of four) for children ages 0-5 years. This means that to qualify to receive subsidies you have to earn less, even though families who earn up to 75% of the SMI still often can’t afford child care. The Senate further reduces eligibility for families with children ages 6-13 years to 133% of the Federal Poverty Level (about $32,000 for a family of four). The sliding scale is also eliminated, meaning that families with larger family sizes, and thus expenses, have to pay the same copay as families with smaller family sizes. Co-payments are also no longer reduced for partial day care. For some families, the changes in co-payment will price them out of the market, meaning parents could lose jobs or kids could go to unsafe care settings.

The Senate’s proposed changes to the child care subsidy program are just another example of robbing Peter to pay Paul. While they may keep the program revenue neutral, they’re kicking families out by changing eligibility and co-pay levels to do it. And the only way they’re reducing the waiting list is by eliminating those families on the waiting list who are eligible at the current levels that will no longer be eligible with a lower income eligibility threshold. They’re also decreasing state dollars by relying on more federal dollars available through block grants. It’s unclear what the associated impact will be to other block grant-funded programs. A better way forward would be to ensure that all North Carolina’s families who can’t afford care (which according to federal standards could be families earning up to 85% SMI) receive help to support their ability to work and their children’s ability to learn in the critical early years.

 

ff3072013We’re just a couple of weeks into the 2014 session of the North Carolina General Assembly, but the annual legislative silly season has already commenced. Not familiar with silly season? That’s the time of year in which legislative leaders force their members to work all kinds of silly, late night hours in order to limit media coverage and handicap/wear down those who might want to criticize or contest their agenda (i.e. the minority party).

Usually, silly season doesn’t start until there have been several months (or, at least, several weeks) of actual, semi-normal  legislative process, but this year, in keeping with the current majority’s increasingly pathological aversion to sunlight and transparency, it’s starting just days after the session itself commenced. The Senate is kicking silly season off today with a wholly unnecessary Friday afternoon session, followed by an even more unnecessary post-midnight session early tomorrow morning, during which it will ram though its destructive 2015 budget proposal.

And lest you get the mistaken impression that lawmakers will actually be working longer hours during silly season, rest assured that this will almost certainly not be the case. Read More

It looks like the North Carolina Senate will ram through its version of a state budget sometime early Saturday morning under the cover of darkness. It will be an apt time for this dreadful piece of legislation. The bill was crafted in secret so it makes sense that it will be passed by the right-wing lawmakers who put it together (a few of whom may have even read it) while most of the rest of the citizenry sleeps.

But, of course, it is much more than just the way the budget bill was put together that marks it as one of the worst proposals in North Carolina history; it is the destructive substance of it. At its heart, the Senate budget is about destruction — about the latest assault in an ideologically-inspired blitzkrieg against the core public structures that knit together a middle class society. The North Carolina Senate has gone all-in with the Grover Norquist-Rush Limbaugh-Tea Party crowd that believes that government and public servies are inherently evil.

There are many descriptors that fit the Senate plan — especially the hyper-cynical proposal to steal money from everyone else in order to give teachers a raise (a raise predicated upon their surrender of the right not to be fired arbitrarily): “The Divide and Conquer Budget,” “the Blackmail Budget,” “the Extortion Budget,” “the Blood Money Budget,” “the Robbing Peter to Pay Paul Budget,” “the Art Pope-Koch Brothers Fantasy Budget.” Senate Minority Leader Dan Blue rightfully likened to Senate plan to a proposal to burn down the schoolhouse in order to give teachers the insurance money.

Whatever one calls the darned thing, though, one thing is crystal clear: Right now, all that stands between North Carolina and the prospect of being reduced to some kind of bizarre Ayn Randian lab experiment is an ambitious conservative U.S. Senate nominee and a hapless and mostly disinterested governor who has yet to show any real ability to influence the lawmaking process. Dark days, indeed.

If there was ever a time for average North Carolinians to stand up and fight back, now is that time. One good opportunity will take place next Monday at 5:00 pm on Halifax Mall when the Moral Mondays-Forward Together protesters return to the Legislative Building. Hope to see you there.

As Chris Fitzsimon noted this morning, the lack of sunlight and opportunity for public input on a new round of tax cuts currently under construction in the state Senate is truly outrageous.

Now there’s more news on the black hole that is the Senate in this story by Mark Binker at WRAL.com entitled: “Crucial legislation can be crafted behind closed doors.”

As Binker reports, Senate Republicans are literally drafting the state budget behind closed doors with literally no opportunity for public input: Read More