Budget see sawLegislative leaders did their best yesterday afternoon to spin their new budget agreement in a positive light by describing it as a compromise that spends more than last year in absolute dollars and that eschews some of the more radical proposals that had been discussed during the seemingly endless 2015 legislative session. Much of what’s in it remains to be seen as it appears the 429 page document is chock full of special provisions unrelated to the budget.

That said, the central, overarching reality is this: The new agreement is another austerity budget that keeps state employees and veteran teachers stuck on the salary treadmill to nowhere on which they’ve been trapped for years.

As this morning’s Weekly Briefing notes:

“In the last decade and a half, most state employees have seen only two years of decent pay hikes – 2006 and 2007, when lawmakers granted raises of 5.5% and 4% respectively. Other than those two years, raises have been non-existent or tiny. It’s gotten so bad that a page on the website of the State Employees Association of North Carolina (SEANC) actually brags about the 2014 annual raise of $1,000 (less than $20 per week before taxes) as a major accomplishment!

And, of course, it was just yesterday that legislative leaders pushed the repeat button by confirming that most state employees would receive only a flat, one-time bonus of $750 for the new fiscal year. That’s $14.42 per week before taxes or about $2.88 per day. Next year, employees will be back where they were last year when and if the issue is revisited. State government retirees will get no increase at all.

It doesn’t take a math degree to understand that such treatment is pushing state workers further and further behind the eight ball. Since 2001, general U.S. inflation has been around 35%. And, of course, many other expenses have risen even faster. And while U.S. workers have, overall, experienced only flat wage growth for years, at least it’s been flat. State employee compensation in North Carolina, on the other hand, has risen roughly half the inflation rate since the start of the century.”

Simply put, there’s no way to move a state forward when year after year, the human beings who make up the government are repeatedly disrespected and treated as expendable cogs.  Sadly, this year’s budget does just that once again.

NC Budget and Tax Center

North Carolina leaders have missed another opportunity to build an economy that works for everyone.

Rather than making the truly tough choices that reflect the priorities of North Carolinians, policymakers have once again decided to cut taxes and forgo critical investments that boost the economy.

Such investments include providing every child with a sound education; bolstering the public sector foundation that supports innovation, builds opportunities for research and development, and trains workers; and protecting the health and well-being of our state’s residents and communities.

These should be our leaders’ priorities, not tax cuts that continue to shift the tax load onto average North Carolinians and push costs down the road.


As rumors continue to swirl on Jones Street about a deal reached Friday night on the FY2015-2017 budget (details to be released Monday), investments in North Carolina’s community colleges and workforce development programs remain an area of critical concern. These programs are essential for improving the skills and competitiveness of our labor force and ensuring that low-income workers have accesses to the training resources they need to achieve long-term upward mobility in their careers and lifetime earnings.

Job training and basic adult education are critical investments that give workers—especially those at the bottom of the income scale—the tools they need to enter higher-wage occupations. For many, these programs can mean the difference between a life trapped in poverty-wage jobs and a life with opportunities to climb the career ladder and enter the middle class. Career pathway programs in particular create avenues for workers to build occupation-specific skills consecutively over the course of a career, creating stepping stones for long-term advancement within that occupation.

As a result, these programs provide a powerful policy-level antidote to income inequality and wage stagnation. As the recent State of Working North Carolina report points out, wages remained largely flat in decade prior to Great Recession and then experienced significant decline in years since the recession. This is largely the result of policies that allowed corporate executives and investors to earn the lion’s share of increased productivity achieved by technological advancements.

Building skills through job training and workforce development is an important tool for returning these productivity gains to workers—both by strengthening the ability of individual workers to bargain for better wages and by improving the overall recognized skills of the state’s workforce, a key competitive advantage that will create more quality jobs in North Carolina.

Given this reality, all eyes are on the emerging final budget deal to see how legislators treat these important programs. Thus far in the budget debate, the Senate has cut more funding for these investments than the House in its proposal. In the House proposal passed earlier this summer, the Community College System received a $52 million cut compared to the $59 million cut served up by the Senate. Similarly, the House provides $15 in new money for instructional equipment at the community colleges, while the Senate provides just $5 million. And while the House provides $1.9 million for job training in economically struggling areas, the Senate does not, instead opting to invest $1.5 million to put community college “coaches” in high schools with the goal of helping high school students transition into vocational training programs upon graduation.

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News reports this morning continue to advance the notion that state lawmakers will come together on a state budget prior to the expiration of the current continuing resolution next Friday. As most reports have noted, the issue is made more complex by a House rule that requires 72 hours of public notice prior to the final votes on the budget. This means that lawmakers have to cut their final deal and get it published by the beginning of next week in order to meet the deadline.

While this may, indeed, be possible to pull off, it is worth noting that another House rule could impact the timing of next week’s process as well.

House Rule 44(b) (click here and go to page 21-22) reads as follows:

(b) The conference report may be made by a majority of the House members of such conference committee and shall not be amended. If the Senate has a similar rule, only such matters as are in difference between the two houses shall be considered by the conferees, and the conference report shall deal only with such matters. If the Senate does not have a similar rule, a conference committee report which includes significant matters that were not in difference between the houses, shall be referred to a standing committee for its recommendation before further action by the House.

The matter at issue with this rule is the question of inserting new items into the conference report that were not in the versions of the bill passed by either body. The common sense principle is that conference committees established to work out the differences between the two houses ought not to be adding completely new provisions out of thin air that were never in either version of the bill.

Not surprisingly, the wild and crazy Senate has no rule barring such shenanigans, but the House (see above) does. The clear impact of this rule is to require, at a minimum, an additional House committee meeting (presumably of the Appropriations Committee) to consider the new provisions added by conferees.

This means that if, for instance, the final conference report has a provision on the construction of terminal groins along the coast (something that was not in either version of the budget) the House must have a committee meeting to consider and approve such an addition. And while such a meeting could, presumably, be put together in relatively short order, it does offer the prospect of at least some minimal public airing of the details of what is sure to be a massive, secretly negotiated document.

Let’s hope House Speaker Tim Moore does the right thing and enforces this rule.

NC Budget and Tax Center

As part of ongoing negotiations to produce a state budget, state lawmakers would like to provide more tax cuts to North Carolina taxpayers. This tax proposal, while unclear in the details (is it another reduction to the already low 5.75 percent personal income tax rate?), would offset the increase in various DMV fees included in the budget passed by House members.

A refundable state Earned Income Tax Credit (EITC) is a great way for state lawmakers to fulfill their desired goal of ensuring working families aren’t paying more as a result of their budget choices. The EITC provides a modest boost to the wages of low- and moderate-income workers, which will help offset additional costs resulting from an increase in DMV fees. Prior to its elimination in 2014, more than 927,000 North Carolinians claimed the state EITC, with working families in each of the state’s 100 counties benefiting from the tax credit.

State lawmakers’ reported agreement to provide $110 million in tax cuts to offset the DMV fee hikes is close to the value of the state EITC. For FY 2013, prior to its elimination, the state EITC cost around $101 million, which is less than the tax cut target agreed to by state lawmakers. The EITC is the best targeted tool to address the upside-down nature of the state’s tax code. Better than an increased standard deduction, the tax credit is proven by years of experience and research to effectively target working families who earn low wages so that they can make ends meet, support their children’s healthy development and boost the economy.

If state lawmakers are serious about correcting the imbalance in the state’s tax code, a refundable state EITC is the most effective way to support children and working families and help spur economic activity in local communities across the state.