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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

NC Budget and Tax Center

North Carolina officials will soon have spent all available financial incentives the state offers to businesses that are considering locating or expanding in the state. Each year the state awards millions of dollars in subsidies to businesses through its Jobs Development Investment Grant (JDIG) program.

The state is now one project announcement away from spending all of the $22.5 million in funding allocated to JDIG for the current year, accordingly to state Commerce Secretary Sharon Decker. Governor McCrory is being urged by proponents to call a special legislative session before January 2015 to increase funding for the JDIG program. Yet, this is coming at a time when state revenue collections are $62 million below projections for the first quarter of the current fiscal year as the cost of the tax plan passed last year continues to increase. The reality is that absent additional revenue, increasing funding for the JDIG program means cuts in other areas of the state budget to pay for the additional spending.

Secretary Decker states that “Tax reform has helped us because we are no longer the highest in the Southeast, and that is great” and goes on to assert “But, we will not be competitive for those jobs without JDIG.” Yet, it is tax reform that was supposed to spur job creation and boost the economy, but is nevertheless hindering our ability to invest in JDIG and core public services that are stronger determinants of sustainable job creation and economic growth. State revenue collections are $62 million below projections for the first quarter of the current fiscal year and as we have written elsewhere, the cost of the tax plan for the current fiscal year could be more than $1 billion. The tax plan passed last year, sold as a job-creation package, reduced the state’s personal and corporate income tax rates to largely benefit the wealthy and profitable corporations. Still, more corporate subsidies are being asked for in the name of job creation.

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NC Budget and Tax Center

Voters in Mecklenburg, Guilford, and Rockingham counties each rejected a ballot initiative to increase its local sales tax by one-quarter cent. Under these referendums, consumers would have paid 25 cents in additional sales tax per $100 spent on goods and services subject to sales tax. The sales tax increase was expected to generate around $32 million for Mecklenburg County, $14 million for Guilford County, and $1.5 million for Rockingham County in additional local revenue each year.

This rejection of a sales tax increase highlights the tenuous reality of funding for public education in North Carolina. Last year, state lawmakers passed a tax plan that significantly reduced revenue available for public schools and other important public services. The tax plan has proven to be more costly than state policymakers’ initial estimate and the implications of this self-imposed revenue crisis will reverberate across the state in the years ahead. Meanwhile, some local governments are bracing for the revenue losses associated with the elimination of the local privilege license tax, which goes into effect next July.

Of the three counties rejecting a proposed sales tax increase, Mecklenburg County has experienced significant growth in its student population in recent years. Charlotte-Mecklenburg Schools (CMS) is the second largest, and one of the fastest growing school systems in the state. For the most recent 2013-14 school year, more than 144,000 students were enrolled in CMS, with nearly 10,000 additional students entering CMS classrooms since 2008. Guilford County has experienced modest growth in its student population (1,326 additional students) while the student population for Rockingham County has declined (990 fewer students) since 2008. Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

North Carolina is among 14 states that have cut per-student state funding by more than 10 percent for the current school year compared to before the Great Recession, a new report by the Center on Budget and Policy Priorities (CBPP) highlights. This waning commitment to public education by state lawmakers in recent years has heightened the challenge of public schools having to do more with fewer resources.

K12_CBPP Ed Report 2014

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NC Budget and Tax Center, Poverty and Income Data 2013

The gains of economic growth from 2012 to 2013 passed over low- and moderate-income North Carolinians for yet another year, according to  data released by the US Census Bureau last month. Poverty and stagnant living standards in North Carolina have become the norm during the current economic recovery. High rates of hardship persist because of the state’s ongoing job shortage and the rapid acceleration of low-wage work that fails to provide a pathway to the middle class.

A glimmer of hope exists, however. The poverty rate would have been much worse in the absence of public policies that provide necessary support. US Census Bureau data show that work and income supports blunted the extent of poverty’s reach across the United States. Using an alternative poverty measure, the Supplemental Nutrition Assistance Program (SNAP), Unemployment Benefits, and Social Security helped keep poverty in check by lifting millions of American above the federal poverty line. That’s an annual income of $11,490 for an individual and $23,550 for a family of four in 2013.

SNAP, formerly known as food stamps, lifted 3.7 million people out of poverty and helped them meet basic needs, as illustrated in the graphic below. Read More