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The 13th Annual Economic Forecast Forum, sponsored by the North Carolina Chamber of Commerce and North Carolina Bankers Association was held on Monday, January 5th. The event raised a range of issues, but a few are particularly relevant to the upcoming legislative session and the economic prospects of North Carolinians.

More cash for incentives is Governor McCrory’s first legislative priority: In his remarks, Governor McCrory launched an impassioned plea for a new economic development fund to lure large businesses to North Carolina. Saying that he is negotiating with companies that are considering investing in North Carolina, the Governor said that his first legislative priority is creating a new incentive fund. North Carolina already gives away millions of dollars a year in incentives, but being even more generous with large companies is the Governor’s first order of business for the new legislative session.

Regardless of what you think about incentives generally, it is rather odd to see the Governor making the creation of a new fund his top priority. First, incentives often go to companies that locate in parts of the state that already enjoy robust economic growth, so doubling down on this approach to economic development will likely do little to help areas that are struggling the most. Second, the program that the Governor described would only help very large corporations, which would ignore the vital role that small and medium sized companies play in creating new jobs. Third, we are heading into a legislative session where funds are already stretched thin for vital state services, so it is unclear what would have to be cut in order to free up funds to pay out to large mobile companies. If this policy is passed early in the legislative session, as the Governor insists is necessary, the real cost will only become clear when it comes time to produce a balanced budget several months later.

Head of Blue Cross Blue Shield of North Carolina touts Medicaid expansion: Brad Wilson, President and CEO of Blue Cross Blue Shield argued that state leaders should change course and opt to expand Medicaid, a move that would cover hundreds of thousands of people, with the bill being largely paid by the federal government. Wilson pointed out that the failure to expand Medicaid has left more than half a million North Carolinians without health coverage and has cost the state $1.1 billion in federal funding. Not expanding Medicaid results in North Carolina taxpayers subsidizing health care costs in other states with none of those funds returning to serve the residents of our state. Moreover, because people who would otherwise be covered by expanding Medicaid are forced to seek medical care through emergency rooms, and often lack the resources to pay for that care, health insurers are forced to increase premiums on North Carolina rate payers to cover the costs of covering the uninsured. The result is that North Carolinians end of paying twice for not expanding Medicaid, once when we file our federal taxes and again when we pay our health insurance bill.

Mr. Wilson referenced a new economic report showing that all counties would benefit from expanding Medicaid. In contrast to most economic development grants, Medicaid expansion would inject capital and create jobs in virtually every community across North Carolina, while also improving the health and productivity of the workforce in the process.  Wilson’s statements are important in and of themselves, but they are also part of a larger trend. More Republican governors, like Florida’s Rick Scott, who initially wanted nothing to do with anything connected to Obamacare, have come to support expanding Medicaid. Beyond the moral dimension, expanding Medicaid has significant economic upside for the state, and it is telling that this event featured a prominent member of the business community making just that case.

Wells Fargo economist projects robust growth in coming years: Wells Fargo Managing Director and Chief Economist Mark Vitner is bullish about North Carolina’s economic prospects in the next few years. Saying that we have finally hit the “sweet spot” of the current expansion, Vitner expects 3-4% growth per year for 2015 and 2016. Vitner noted that all sectors except government saw employment growth in the last year, and expects to see the same this year. Even the residential housing market is starting to recover, having digested the glut of housing left by the recession, and North Carolina’s growing population creating more long-term demand for homes and apartments.

Current growth does appear to be strengthening but the recovery to date has been too reliant on low-wage jobs, has been largely concentrated in urban areas and frankly employment growth has been insufficient to keep up with the state’s growing population. So while North Carolina is poised to follow the national trend of an improving economy, we need to keep an eye on whether growth translates into decent pay and jobs for everyone in the state who wants to work.  State policy decisions over the next year will influence whether the recovery comes home across North Carolina. Policymakers will have opportunities to address the uneven recovery and ensure that people can find good jobs, affordable healthcare, quality education, and economically vibrant local communities.

Concerns about a “barbell economy”: A morning panel on the role of technology in North Carolina’s economic future repeatedly addressed the disappearance of mid-wage jobs. The term “barbell economy” was used to describe the rapid growth in low-wage and high-wage jobs in recent years, coupled with meager job opportunities in the middle of the wage scale. Panelists expressed concern that as technology replaces human labor in many industries, we could be looking at a long-term decline in the number of middle-income jobs. This may be the most troubling long-term trend facing North Carolina. The hollowing-out of the labor market, with more and more of the wealth generated by the economy going to a smaller and smaller group of people, makes it more difficult to sustain the middle class economic activities—buying goods and services, purchasing homes, sending kids to college– that support robust growth.

The forecast presented at the Chamber forum was generally sunny, with solid growth over the next few years across most industries, but there are deeper questions about the long-term structure of the labor market, and whether solid growth will continue to create enough medium-wage jobs to support a middle-class. This is not just a North Carolina story, but it is something that we can do something about, and it was heartening to see this issue highlighted at this event.

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At a Tuesday morning roundtable sponsored by Dell, Intel and the N.C. Business Committee for Education, Gov. Pat McCrory spoke to educators and business leaders who were gathered at the N.C. Department of Public Instruction to strategize about ways to improve teacher effectiveness and next generation learning.

Using the opportunity to reiterate his education goals for the upcoming legislative session, which include paying all teachers more, McCrory hammered home his idea to create a “career pathway plan.”

“We want to ensure teachers have a career…and not a temporary stopover,” said McCrory, explaining that currently teachers have no way to move up in their profession unless they move into higher-paying administrative roles – a career move that not all practitioners are interested in making.

In addition to proposing a two percent average pay increase for all teachers and paying beginning teachers even more, McCrory proposed last week to create a long-term plan that would entice more teachers to stay in the profession by seeing salary increases that are linked to their work as teachers.

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Recommendations resulting from the work of 22 educators, parents and education experts tasked with proposing a plan to improve early elementary school learning and instruction through more efficient and effective use of student-centered assessments was revealed today at Duke University’s Center for Child and Family Policy.

One of the top goals recommended by the group was to equip teachers with better tools to observe student strengths and support learning right from the start of kindergarten.

In order to accomplish this, teachers will need to engage in a formative assessment process that identifies strengths and areas for growth for each student, beginning in kindergarten. Click here to read the plan for developing this process, which includes a pilot program aimed at developing assessment goals and systems that educators can use.

State Superintendent June Atkinson said at the briefing, “Traditional testing is not appropriate for our youngest students,” Atkinson said, “At the same time, we want teachers to gather key information about how their youngest students are learning so that they can meet students’ needs.”

Formal assessments currently begin in the third grade. Because some students begin to exhibit developmental delays prior to that time, these formative assessments are intended to catch learning problems earlier. They are not intended for accountability purposes, such as teacher or school evaluation.

One attendee who said she used to be a teacher with 40 kids, qualifying that experience as “loosely managed chaos,” raised the issue of how to reconcile this individualized assessment approach with the lack of resources teachers are dealing with now thanks to recent cuts made by the General Assembly.

“I hope that North Carolina is in a very temporary state in terms of having fewer resources for our teachers,” said Atkinson. “It’s critical to the economic development of our state and to maintaining high graduation rates.”

“We just need our policymakers to spend a day with a kindergarten teacher,” said Atkinson.

Asked how he envisions technology will play a role in capturing the outcomes of these formative assessments, the group’s co-chair, John Pruette, director of the NC Department of Public Instruction’s Office of Early Learning, said “technology is definitely part of the plan here. We’ll be working with vendors to help us create a way to help teachers think about data they are collecting.”

Amplify, the company that recently provided hundreds of faulty tablet computers to Guilford County Schools as part of a Race to the Top grant program, is also in the business of promoting formative assessments in early grades, ostensibly to be the providers of the technology support that the initiative would demand.

Pruette says they haven’t identified a vendor yet to play a role in the formative assessment initiative. “We have no preconceived ideas about a vendor.”

The work of the group is funded by a Race to the Top grant and the Center for Family and Child Policy at Duke University, in addition to the $18 million set aside for early formative assessments by the General Assembly.