NC Budget and Tax Center

Fiscal note only partially accounts for millions that photo ID amendment will cost N.C.

Yesterday, the fiscal note for the latest version of voter photo ID legislation was posted to the North Carolina General Assembly website. The memo is only able to address some of the costs that this new barrier to voting will create, and even this partial accounting shows that it will cost North Carolina millions to solve a non-existent problem. If experiences in other states are any guide, the real cost to governments and citizens is likely to be much higher, and will divert resources from addressing real barriers facing the voting public.

The total official estimates for the cost to state taxpayers of erecting new barriers to voting is between $4 million and $3 million annually, assuming that only 3 new state employees can successfully educate all of our local board about one of the most complex changes to our election process in state history, with no estimate for local Boards of Election charged with the majority of implementation, plus the loss of $3 million annually to the Department of Motor Vehicles for processing and providing identification without a fee.  The memo also does not address many of the costs to local governments and Boards of Elections, litigation costs that will almost certainly arise from legal challenges to this legislation, meaning that the real cost to taxpayers is likely to be substantially higher.

These conservative estimates from the Fiscal Research Division are consistent with partial cost estimates produced by the NC Budget & Tax Center in September. Based on experiences in other states and data obtained on the number of North Carolinians who may require new forms of identification, the direct cost of implementation could easily be $9 million. Adding another $3 million in costs to defend this law against legal challenges, and the total cost to state and local governments could reach $12 million.

There is good reason to believe that the real costs to state and local taxpayers will be even higher than either of these recent estimates indicate. Several costly features of the current legislation are extremely difficult to estimate accurately, including:  the printing and processing of provisional ballots, the maintenance and administration of the law by county Boards of Election, the administration of providing information to the public about the photo ID requirement,  and the potential legal requirement to provide no fee supporting documents for those without identification to secure one. Read more

Commentary, NC Budget and Tax Center

Voter ID bill likely to cost the state millions

The North Carolina Senate has now passed (and the House will soon take up) a bill that would mandate and set the terms for the new state constitutional requirement mandating a photo ID for in-person voting. Unfortunately, the debate has not yet been informed by a fiscal note that outlines what taxpayers will have to pay to implement a bill that will disproportionately exclude Black and brown voters from the electoral process, and create new barriers to voting for voters who live on fixed incomes and in poverty.

The current version of the bill notes the procedure by which a voter will present proof of identity at a polling location, along with a list of the types and categories of photo identification that could be accepted. It is unclear in the bill language, however, just how county boards of elections will fund guaranteed access to no-cost photo identification that complies with the constitutional amendment. Even with the guarantee of no-cost voter identification, a Budget and Tax Center analysis conducted this fall, found that the costs to individuals in securing supporting documents, travel and wait times, and the resultant lost wages could force eligible voters to choose between securing voter identification and paying for groceries, medicine, childcare, and other necessities.

A fiscal note, outlining the cost of the implementation of the bill, is crucial to providing a realistic understanding of the costs to all North Carolina taxpayers and the trade-offs that policymakers will make when other priorities that expand opportunity are unfunded.  Our analysis drew from special data requests to agencies about the costs of educating voters, staffing poll locations and DMV offices, and conducting voter education and outreach to find that the potential costs to the state could be $9 million. As analysts have pointed out, based on the litigation costs to defend the last iteration of North Carolina’s voter ID law ruled unconstitutional by the courts, at least an additional $3 million could easily be spent to defend this bill. Given this data and what we know about the costs in other states of such unnecessary requirements, we approximated a conservative estimate of the cost of this bill to North Carolina taxpayers at $12 million.

At a time when the state budget has failed to meet real community needs, it is important that legislators weigh the costs of erecting barriers to voting for some, against the need to build pathways to opportunity through good quality public schools, health services, and economic development for all. Let’s hope the state House takes such action when it commences consideration of the bill next week.

NC Budget and Tax Center

North Carolina’s tax code isn’t helping the state’s growing inequality

The release last week of new data from the Institute on Taxation and Economic Policy (ITEP) documenting who pays what in taxes across all 50 states confirmed that North Carolina continues to fall short of ensuring that our state and local tax system doesn’t ask more from middle and low income people.

Despite claims by the architects of North Carolina’s failed tax-cut experiment, policy choices since 2013 have not ensured that middle and low-income taxpayers are paying lower shares of their income in state and local taxes. Instead the richest taxpayers—whose average income is more than $1 million—continue to pay 33 percent less in state and local taxes as a share of their income than taxpayers who have averages incomes annually of $11,000, a threshold that aligns with deep poverty.

A useful way to look at whether incomes in the states are more equal, or less equal, after taxes has been developed by ITEP with the release of their Who Pays data last week. The ITEP Inequality Index compares incomes at various points throughout the income distribution both before and after state and local taxes are collected. The actual calculation involves numerous steps, but the following example helps illustrate the basic idea underpinning the Index.

In North Carolina, before state and local taxes are collected the top 1 percent of taxpayers earn an average income that is 97 times larger than the average income of the state’s poorest 20 percent of residents. Our tax system, which is among the 45 regressive tax codes in the nation, only exacerbates this divide. After state and local taxes are collected, the average after-tax income of North Carolina’s top earners stands at 100 times the size of the average after-tax income of the state’s low income residents. This is the predictable result of charging low-income families a 9.5 percent effective tax rate, while asking high-income families to pay just 6.4 percent of their income in tax.

While state tax codes are not a cure-all for economic inequality, well-designed systems can help lessen the problem while steeply regressive systems only make it worse.

Education, Higher Ed, NC Budget and Tax Center

North Carolina’s cuts to higher education are shortchanging future generations

North Carolina’s inadequate public investment in higher education over the last decade has contributed to rising tuition prices, often leaving students with little choice but to take on more debt or give up on their dreams of going to college. The problem is especially serious for Black, Latinx, and low-income students.

North Carolina is one of 45 states that spent less per student in the 2018 school year than in 2008 – even as the economy and state budgets have returned to pre-recession levels, according to Unkept Promises: State Cuts to Higher Education Threaten Access and Equity, a new report from the Center on Budget and Policy Priorities (CBPP).

2008 – 2018 Cuts to Higher Education Funding (adjusted for inflation):

  • North Carolina Average: 18.6 percent per student or $2,357 per student
  • S. Average: 16 percent per student or $1,502 per student

Cuts to higher education have helped drive up the cost of attending public colleges and universities. Between 2008 and 2018, the average tuition at public four-year institutions in North Carolina grew by 45% or $2,293– outpacing the national average growth of 36 percent.

Americans’ slow income growth has worsened the situation. While the average tuition bill increased by 36 percent between 2008 and 2018, median incomes grew by just over 2 percent. Nationally, the average tuition at a four-year public college accounted for 16.5 percent of median household income in 2017, up from 14 percent in 2008.

In North Carolina, the costs of a college education represents 14 percent of median household income for all North Carolina families, 19 percent of median household income for Black North Carolina families and 18 percent of median household income for Latinx North Carolina families. Read more

NC Budget and Tax Center

The growth of income inequality in N.C. and how not to make it worse

North Carolina’s top 1 percent are doing quite well, according to research by the Economic Policy Institute that provides a unique view of income inequality by comparing the incomes of the top 1 percent to the bottom 99 percent in states and counties across the country.

Since the recovery began in 2009 until the last available data in 2015, the top 1 percent in North Carolina have captured more than all of the income growth.  How is such a thing possible?  When the income of the bottom 99 percent of North Carolinians declines over the same period.  Those two staggering facts should be enough to give us pause that something is truly wrong with how our economy works.

But there is more data from the Economic Policy Institute for a shorter time period (2010 to 2015) due to data availability at the county level that shows that income growth for the top 1 percent maps to geographic inequities in North Carolina.  In the state’s urban counties, the top 1 percent have incomes that are 23 times that of the bottom 99 percent, whereas in the state’s rural counties that ratio is 14 times.  Twelve counties saw the income of the bottom 99 percent of North Carolinians in those communities decline.  For these communities, the stabilizing force of people spending locally and building assets is weakened and, with it, the potential for the community to thrive.

It doesn’t have to be this way.  North Carolina’s recent history shows that income growth for the top 1 percent doesn’t have to be out of balance with what is happening nationally nor does it have to so significantly outpace that of their neighbors in the bottom 99 percent.

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