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NC Budget and Tax Center

Budget writers announced over the weekend that the Senate and House leadership agreed to a basic framework for a final budget deal. That framework includes a pay raise for teachers averaging roughly 7 percent and further cuts to the Medicaid program that provides health insurance and long-term care to children and adults who are poor, disabled, and elderly. There is no question that other vital programs and services will be cut due to a lack of adequate funding, resulting from lawmakers’ choice to make room for unaffordable tax cuts for the wealthy and profitable businesses in 2013.

While the full details of the final budget deal will not be released until this afternoon at 1:30pm, below are five things we expect to be true in the final budget deal: Read More

NC Budget and Tax Center

Plans to finance both public education and transit at the local level would be stopped in their tracks under HB 1224 that passed the state Senate Finance Committee yesterday. The bill not only places a hard cap on the local sales tax rate at 2.5 percent but also only allows counties to levy a sales tax increase for either education or transit—not both.  This bill joins a slate of other bills that would restrict local control. The full Senate is scheduled to vote on the bill Monday night.

In effect, the bill restricts local governments’ authority to meet local needs and balance their budgets. Importantly, the bill is aimed at shifting the responsibility of funding public education away from the state and towards local governments. The state clearly cannot afford last year’s tax plan and now legislators are proposing budgets that would make serious cuts to public education as a result. Those cuts would have to be absorbed by children in the classroom or addressed at the local level, putting local governments in a tough spot having to choose whether or not to make up the difference via a local tax.

Local governments are dealing with the fallout from last year’s tax plan in other ways too. They no longer have access to the school Capital Building Fund, which received a portion of revenue generated from the state corporate income tax. Schools used this fund to help them meet their education obligations, as my colleague explained last month. The result is a $382 million dent over the next five years. This loss is on top of the looming $63 million-annual dent resulting from elimination of the local privilege tax in 2015. Read More

Falling Behind in NC

If you work hard and play by the rules, you deserve a chance to get ahead. This is why the Earned Income Tax Credit was invented: to help families with low-paying jobs make ends meet.

Unfortunately, North Carolina is the first state in 30 years to eliminate its Earned Income Tax Credit. This move abandoned a bunch of our neighbors, people with stories like Kara’s:

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There is no more stark illustration of why tax policy matters. With NC job growth coming primarily in low-wage industries, we’re going to need the Earned Income Tax Credit — and other measures that work for working people — more than ever.

 

NC Budget and Tax Center

On Wednesday evening, the North Carolina Senate unveiled its $21.16 billion budget proposal for the 2015 fiscal year that begins in June 2014 and ends in July 2015. The Senate leadership decided to put the budget on a fast track to approval, bypassing the appropriations subcommittee process and scheduling the final debate to begin today at 4pm into early Saturday morning.

Even when lawmakers have an adequate amount of time to review the full budget proposal—and to be clear, in this case, an adequate amount of time was not allowed—budget debates tend to spend a majority of the time on the spending side. Yet, 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.

Examining how the Senate pays for its budget is more important than ever in light of last year’s tax plan that drains $438 million from the state’s coffers in the upcoming fiscal year. This is on top of the fact that lawmakers are facing a current year revenue shortfall, a projected revenue shortfall for the next 2015 fiscal year, and a Medicaid shortfall. Read More

Uncategorized

A final vote is expected in the House Wednesday on a package of tax changes that would among other things place a new tax on e-cigarettes.

Bill backers say the levy  – 5 cents per milliliter of liquid – has the support of the tobacco industry. But Mecklenburg County Democrat Rep. Becky Carney urged her colleagues to pull the e-cigarette portion out of the omnibus tax bill and allow for further debate.

Carney argued that the nickel tax was well-below the 45-cent-per-pack tax on traditional cigarettes.

“If we’re going to tax something, are we doing it to our greatest advantage? Yeah, a nickel is great for the industry, of course,  that’s low. But what about those revenues in North Carolina that we potentially will lose and that we could bring in?” said Rep. Carney.

“I think we’ve kicked the tobacco industry around enough, maybe we owe them a little deference,” countered Cabarrus County Republican Rep. Larry Pittman.

Orange County Rep. Verla Insko also argued that the level of this new tax and the impact on teenage smokers warranted further discussion.

Carney’s amendment ultimately failed Tuesday, keeping the e-cigarette measure as part of the broader tax bill.

One more vote and the bill heads to the Senate. To hear a portion of Tuesday’s debate on House Bill 1050, click below. To learn more about the FDA’s take on e-cigarettes, click here.

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