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Gov. McCrory’s proposed budget for fiscal year 2015 and respective budgets by the House and Senate include significant cost savings from closing and downsizing various correctional facilities. Savings from these changes total around $14.2 million in both the House and Senate budgets and $14.9 million in the Governor’s budget.

Savings generated from these changes could have been used to promote safer communities across the state.  However, lawmakers went down a different path. For instance, Gov. McCrory advocated for state funding for drug treatment courts to be included in the state’s current fiscal year budget. These courts cost a fraction of the nearly $28,000 it cost to keep individuals in prison. However, the final budget passed last year by state policymakers did not include funding for drug treatment courts.

All three budget proposals for fiscal year 2015 – which begin July 1, 2014 – fail to include funding for drug treatment courts. The House and Senate budgets, however, go further and cut funding for programs that promote fair and equitable access to the justice system and safe communities across the state.

Funding cuts to Justice and Public Safety in the House and Senate budgets include:

  • Elimination of the Access to Civil Justice Fund, which supports the representation of poor North Carolinians in civil cases.
  • Reduction of administration funding for Indigent Defense Services, which in part oversees the provision of legal representation to indigent defendants and others entitled to counsel under North Carolina law.
  • Reduction of administration funding for Administration of the Courts

Due to tax changes enacted last year, state policymakers are constrained in major ways. This is effectively a self-imposed budget challenge. Nevertheless, as demonstrated with choices made within the Justice and Public Safety area of the budget, where there’s a will, there’s a way.

Budget writers found revenue by making significant changes to the operations of various correctional facilities as well as by cutting state funding for programs that work to enhance the efficacy of the state’s justice system. These state funding cuts would limit service providers’ ability to assist individuals and families in need to legal representation.

What is clear from all three budgets is that state lawmakers are continuing down a dangerous path of more state funding cuts rather than reinvestment as the state recovers from the Great Recession. One can only hope that as budget writers work to negotiate a final budget for the upcoming 2015 fiscal year, state funding is restored for these programs that were put on the chopping block in the House and Senate budgets.

In a good conversation with Becki Gray yesterday on News 14 we discussed the different visions for Medicaid reform proposed in the respective budgets of the Governor, House, and Senate. In particular, Gray, who works for the John Locke Foundation, noted that the state has a “rich” benefits package in Medicaid because we offer many optional services, that is, services that are not required to be covered by the federal government. The Senate, she correctly pointed out, wants to whittle away these optional services.

Ending optional services in Medicaid is a popular policy among conservative think tanks in the state. Apparently the Senate is listening.

As this debate progresses it is important that we know what services we are talking about when we talk about optional services. Let’s review a few: transplants, prescription drugs, dentures, hospice, prosthetics. None of these treatments are frivolous or lavish.

And that’s the trouble with optional services. If you want to get at some of the more expensive options then you are limiting life-saving care. Former Locke Foundation analyst Joe Colletti even praised Arizona for cutting optional services like transplants in a report on Medicaid reform. But these cuts inflicted so much pain in Arizona that the state made a volte-face on its decision.

That brings us to the Senate budget. Among other things the Senate wants to end the optional Medically Needy program in Medicaid. This program allows people who have enormous medical expenses, but earn too much to qualify for Medicaid, to apply these medical bills to their income to access Medicaid. This makes sense. If, for example, you earn $30,000 per year but need expensive drugs or nursing home care then these costs will quickly eat through your monthly income. Although you may have some money your medical needs erase it all. It’s not fair to tell this person that he or she is too wealthy for Medicaid when they effectively have nothing.

But this is exactly what the Senate aims to do.

As we have said many times before, “optional” refers to a regulatory requirement and does not mean anything about the necessity or quality of specific Medicaid services. You may call it foolish for the state to cover optional services. I call it basic human decency.

 

State lawmakers haven’t decided if the N.C. Education Lottery will be able to double the number of ads it runs and then use proceeds from increased sales to pay for teacher raises.

The House and Senate sides of the Republican-led legislature have stark differences in this year’s budget, and one of the biggest areas of difference is how to pay teachers and with what money.Lottery

House lawmakers want to double the advertising budget for the state-run lottery, in hopes it would turn out $106 million extra dollars to use for teacher raises. The budget proposal also includes several restrictions on advertising– including disclosing the odds of winning a top prize and a ban on advertising during collegiate athletic events.

(In case you missed, N.C. Policy Watch published an analysis of 2013 lottery data yesterday that found that all 10 of the counties with highest per capita sales all had high rates of poverty. Click here to read the article.)

The Senate proposed a much different teacher salary plan that required teachers to give up tenure in exchange for raises paid for with cuts to other education programs and the state Medicaid program.

Senate members heard from the N.C. Education Lottery director Alice Garland, who said the proposed restrictions put in place by state Rep. Paul “Skip” Stam, a longtime critic of the lottery, was an attempt to get rid of the lottery.

“The author of this language wants to see the lottery fail and wants to put the lottery out of business,” Garland said. “That is why those restrictions were put in the House budget.”

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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.