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NC Budget and Tax Center

Earlier today, the North Carolina Senate gave final approval to the 2013-15 fiscal year budget. The House chamber is poised to follow suit later this afternoon. Throughout the budget debate, legislators have spent a considerable amount of time providing an overview of the final budget but continue to skip over how they pay for the proposal. This practice is not uncommon. How the state raises the billions of dollars that fuel the state budget gets relatively little scrutiny compared to the rest of the budget during the budget process.

But because the final budget includes tax cuts that will primarily benefit the rich while significantly reducing resources to pay for vital services, examining how the state will make up for $683.8 million in tax cuts over the next two years and $2.8 billion over the next five years it is more important than ever.*

Here’s what you need to know regarding how legislative leaders chose to pay for the final budget: Read More

Falling Behind in NC, NC Budget and Tax Center

Yesterday evening, legislators released a $20.6 billion budget compromise that will likely to be voted upon and sent to the Governor’s desk for final approval later this week. This budget shorts investments in vital public services, and fails to catch up and keep up with the needs of a growing North Carolina population across major service areas (see the chart below). Some of the budget cuts could have been avoided had lawmakers decided not to drain available revenues by $524 million over the next two years through an ill-advised series of tax cuts that primarily benefit the wealthy and profitable corporations.

As the Director of the NC Budget and Tax Center asserted in her statement, “This revenue loss isn’t just a number on a piece of paper—it means fewer teachers in more crowded classrooms, higher tuition rates and elevated debt load for families, scarcer economic development opportunities for distressed communities, and longer waiting lists for senior services.”

Final_falling behind

Here is a short list of noteworthy items in the major budget areas:

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NC Budget and Tax Center

As lawmakers work to change the state’s tax code, there has been renewed discussion of who pays taxes in North Carolina. Creative storytelling by legislators won’t change what we already know: every household in North Carolina pays taxes.

We’ve been doing a lot of myth busting around tax reform, including a point made earlier today by a legislator on the House floor. This member claimed that all taxpayers would be better off under this plan compared to the current tax code. This would be great news because currently low- and middle-income families pay a greater share of their incomes in state and local taxes compared to high-income families. But again, the facts just don’t support the member’s claim.

The chart below shows Read More

NC Budget and Tax Center

Last week, the Senate approved a tax plan that would drastically reduce needed revenues and shift the tax responsibility downward, away from the wealthiest tax payers.

This tax plan would also reinstate the cap on the state’s gas tax, which is a revenue source that accounts for more than half of state revenues dedicated for transportation projects. If the plan passes, the cap would be in place for the current 2013-14 fiscal year that began last week, resulting in a $5 million loss to the transportation budget that supports road construction, road maintenance, and public transportation.

Five million dollars is a very small share (.2 percent) of the $2.8 billion transportation budget. The larger cause for concern is that budget writers are following the imprudent precedent set by lawmakers from both sides of the aisle who keep enacting short-sighted, quick fixes to the gas tax—rather than reforming the structure of the tax to smooth its volatility. Read More

Falling Behind in NC, NC Budget and Tax Center

Thanks in large part to the rebound in the personal income tax, North Carolina is finally experiencing a slight uptick in revenues as the tepid economy slowly improves. Yet, at the first sign of revenues recovering, state lawmakers are pursuing tax policies that will pull back investments prematurely. North Carolina is already in a hole, and the tax plans being debated would make it very difficult for the state to dig itself out, make progress on unmet needs, and move forward.

These tax plans cut taxes for the wealthy and profitable businesses at the expense of everyone else. Proponents claim that these deep and lopsided cuts will create jobs and benefit everyone, but research simply does not support this conclusion. Read More