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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

The 2015 state budget for creating jobs and growing the economy doubles down on the wrong turn taken by the legislature on economic issues over the last year. First it was the decision to continue to last year’s ill-advised tax cuts for the wealthy instead of investing in job training and education—the real building blocks of sustainable economic growth. Then it was the decision to privatize the business recruiting activities of the Department of Commerce—despite evidence from other states these initiatives produce more scandals than jobs—and eliminate regional planning initiatives that helped small communities coordinate their economic development efforts.

And now the state budget completes this trifecta of poor choices for economic development by spending more of our state’s limited resources on programs that are both ineffective at creating jobs and are overwhelmingly targeted to the wealthiest urban areas of the state instead of the more distressed areas in rural North Carolina.

Read More

Falling Behind in NC, NC Budget and Tax Center, Poverty and Income Data 2013, Poverty and Policy Matters

New data released by the US Census highlight the pervasiveness of poverty nationally and in North Carolina. In 2013, one in six North Carolinians lived below the federal poverty rate – less than $24,000 a year for a family of four and  $12,000 a year for an individual. For communities of color, the poverty rate is far worse: 32.5 percent for Latinos, 28.9 percent for American Indians, and 28 percent for African Americans.

These daunting poverty rates highlight that far too many individuals and families across the state face economic hardship. The persistence of poverty has been accompanied by a rise in income inequality, which poses consequential implications for the overall economy and North Carolina’s state economy. The bulk of economic gains from the ongoing economic recovery have flowed to a small group of high-income earners. In the first three years of the economic recovery, the top 1 percent of income earners captured 95 percent of the income gains nationally. Here in North Carolina, income for the top 1 percent of income earners in the state grew by 6.2 percent from 2009 to 2011 while the bottom 99 percent saw their income decline by 2.9 percent. The latest US Census data show that this early post recovery trend is likely to hold. By 2013, the top 20 percent of households in North Carolina captured more than half of all income earned by all households in the state (see graphic below). Read More

Commentary

The Greenville Daily Reflector ran an editorial this week (which the Charlotte Observer re-ran in part of this morning) that rightfully decries the shell game played by the General Assembly this year in shifting the costs of driver’s education off on to the parents of high schoolers.

In passing the cost of driver education to parents of high school students, state lawmakers appear to be playing a shell game with the taxes North Carolina drivers have been paying for 57 years to support the program. When tax dollars earmarked for specified services no longer pay for those services, the government should not get to keep the money.

If that is what is happening in the case of a $3 charge added to license plate fees for driver education, it represents more than an injustice to taxpayers. It collides head-on with the conservative ideology espoused by the majority leadership in Raleigh….

What is not debatable is that for nearly 60 years tax dollars have been flowing from the pockets of every North Carolina motorist to pay for driver education. To remove the service with no relief to those paying for it — and requiring others to pay again — amounts to something akin to highway robbery.

Not what we should expect from a GOP-led Legislature that professes a desire to shrink government’s reach into our personal lives.

What the piece should have noted, of course, is that rather than being some kind of aberration, “fee for service” government is the right’s favored model these days, while the notion of broadly applicable, fairly distributed taxes are quickly becoming a thing of the past.

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"Healthywealthy" by threestooges.net. Licensed under Fair use of copyrighted material in the context of Healthy, Wealthy and Dumb via Wikipedia - http://en.wikipedia.org/wiki/File:Healthywealthy.jpg#mediaviewer/File:Healthywealthy.jpg

“Healthywealthy” by threestooges.net. Licensed under Fair use of copyrighted material in the context of Healthy, Wealthy and Dumb via Wikipedia

No, this post is not an attempt to personally disparage the folks running North Carolina government. Rather it is an attempt to conjure up an image that captures the impact of the decisions that state leaders have been inflicting of late on their brethren and sistren at the local level.

As some readers will recall, The Three Stooges were an outlandish and slapstick comedy trio that had a long run in the middle part of the last century. In one of the trio’s recurring bits, one Stooge (usually Moe – pictured on the left) would slap or punch the second Stooge, who would then, in turn punch the third member of the group. The third and most hapless Stooge would then turn beside him and find that he only had thin air to punch.

Sadly, this comedy bit pretty well captures the essence of what’s going on in North Carolina government right now: Whether it’s the McCrory-Pope team or the General Assembly that starts the punching, the ones left flailing at thin air are local governments.

For the latest classic example, check out the bill under consideration in the state Senate during the waning days of the 2014 session that would hamstring local governments in their ability to raise local sales taxes for important needs. While Senators sought to alter some of the the impacts of the bill last evening, it still promises to have a deleterious impact — especially on big counties like Wake and Mecklenburg. And, of course, this comes on the heels of several previous haymakers in which state leaders have slashed state support for locals.

The bottom line is that the overarching policy of the current conservative state leadership when it comes to local government is this: We’re all for local control that’s closest to the voters — except when we’re not (i.e. any time anyone at the local level even thinks about doing something — like raising taxes to provide essential public services — with which we disagree). SLAP!!!