NC Budget and Tax Center

Re: State Govt Employees – Legislature misses opportunity to align state staffing with priorities

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May 31, 2018
In NC Budget and Tax Center

The legislature has been touting its living wage proposal for state employees—an important first step in recognizing the important role that these workers play in our communities and the economy even if it appears not to include some of the lowest paid workers. But alongside consideration of various aspects of state employment should be an assessment of whether the state has the staffing to fulfill its mission of serving the people of this state and effectively and efficiently implementing new legislation. On that count, the legislature seems to have missed another opportunity.

NC OSHR seeks to attract and retain a high-performing, diverse workforce.

Governor Cooper recommended 807 new state government positions for 2019 to help state agencies carry out their missions, meet standardized workforce formulas and support new legislation. However, the legislature’s budget calls for only a third (265) of the total new number of positions that the Governor recommended.

Overall, the number of state and local government employees that serve North Carolinians has fallen behind growth in the number of people in our state. Estimates put our state government jobs deficit, based on our population, at 112,000.

Below is an overview of the state agencies that will be affected most and their notable losses:

Department of Public Safety – This department stands to lose the most from a staffing standpoint as the Governor requested 383 new positions for it, yet the legislature only intends to provide it with 65.

  • While the legislature intends to provide funding for 65 juvenile court councilor positions to support the Raise the Age legislation, it is worth noting that the governor had called for 88 positions to support this legislation. Furthermore, the governor also called for, among other things: 22 positions to support correctional staff safety and facility security; 9 positions for the State Bureau of Investigations to combat illicit activities and focus on opioids, gangs, computer crimes, and human trafficking investigations; 9 positions to enable the National Guard to carry out mission critical projects; and restored 149 of 196 nursing positions as the department has renewed efforts to recruit and retain permanent nursing staff.

Administrative Office of the Courts – Legislators will be cutting one position from this institution even though the Governor had requested 79 more positions for it.

  • Among other things, the Governor had recommended: 26 positions to meet the projected workload associated with the 2017 Raise The Age legislation (Five District Court Judges, eight Assistant District Attorneys, seven Legal Assistants and six Deputy Clerks); 17 Guardian Ad Litem (GAL) supervisors and one Regional Administrator to increase statewide capacity for the GAL program which equips community volunteers to advocate for the best interests of abused and neglected children in court; as well as 25 Assistant District Attorneys and six District Attorney Investigators to meet courthouse position needs.

Department of Environmental Quality – After a year in which various communities in the state have suffered from polluted air and contaminated water the Governor recommended adding 58 positions at this department, but the legislature disagrees and calls for no new positions.

  • The Governor had called for 45 new positions to support the identification of perflourinated compounds and other emerging contaminants through water supply sampling and analysis and to address the existing backlog for issuing water discharge permit renewals; 11 positions to assist businesses in the state with permitting and compliance; and two lab technicians for a new laboratory that will allow for required testing of over 200 coastal sites and shellfish harvesting waters to protect the health of NC’s citizens.

Department of Natural and Cultural Resources – At this often overlooked agency the legislature calls for no new positions. On the other hand, the governor recommended adding a total of 12 new positions. Notable recommendations included 6 positions to improve visitor access and safety at: Chimney Rock State Park, Jordan Lake Recreational Area, and New River State Park; and two positions to allow preventative maintenance and ongoing archaeology programs at state historic sites.

Department of Health and Human Services – At the Division of Health Benefits the governor recommended funding for 30 new positions to transform Medicaid and Health Choice programs, however, the legislature disagrees and calls for no new positions at this division.

  • The governor’s recommended budget specifically called for: “funding to support 30 FTE, an enrollment Broker and Ombudsman Program to support beneficiaries, provider data management/credentialing verification and American Sign Language (ASL) interpreters, and technical and operational integration.”

Department of Military and Veterans Affairs – At this department the governor recommended adding one position to provide “applications support to several business-critical systems serving the military and veteran communities and to provide a strengthened cyber security presence within the department.” The legislature did not agree.

Luis Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

Legislature’s budget fails to properly account for $40 million loss in federal funds for Medicaid

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May 30, 2018
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In NC Budget and Tax Center

By rushing the budget process and working to pass a $23.9 billion state budget in less than a week, legislators are putting our state in a deeper hole by failing to account for the loss of federal funds that have begun under the Trump administration.

It is known that Governor Cooper has called for Medicaid expansion, while the legislature has refused to provide health coverage for over 600,000 people in need. What is not widely known is that the percentage of federal assistance that North Carolina receives from the federal government has decreased for the upcoming fiscal year.

North Carolina’s FMAP (Federal Medical Assistance Percentage) declined from 67.61 percent in federal fiscal year 2017-18 to 67.16 percent in federal fiscal year 2018-19. Even though this change may not seem like much at first glance, the reality is that this loss has an impact to our state of almost $40 million. In other words, our state has to come up with that much to maintain the same levels of Medicaid services.

While the governor recommended addressing the federal cost-shift to North Carolina (while also accounting for updates to enrollment numbers) to ensure our state can maintain the same level of services for those eligible for Medicaid, the legislature assumed the same level of federal support as last year.  The result is that North Carolina will once again come up short under the legislative leaders’ proposal in serving the healthcare needs of its people, the vast majority of whom are children, older North Carolinians and people with disabilities.

Luis Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

It’s official: Legislature’s new budget marks TEN consecutive years of declining state investments

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May 29, 2018
In NC Budget and Tax Center

The legislature has released a $23.9 billion budget for the 2018-19 fiscal year that fails to invest adequately in our schools, communities and people. Under the budget, total state spending for FY2019 remains below 2008 pre-recession spending as the proposed budget marks ten consecutive years that state spending has declined as a share of the state’s economy. The budget for FY2019 – which runs from July 2018 to June 2019 – increases spending by 3.8 percent over the prior fiscal year, but this modest increase does not make up for years of under-investment in North Carolina.

The budget released yesterday will keep giving out tax breaks in 2019 to wealthy people and profitable corporations, instead of investing those resources in growing a prosperous North Carolina.

 

The new budget includes a total of $24.4 billion in revenue available for public investments for FY19. The majority of this revenue is raised through the state’s tax system, which is expected to provide $22.9 billion in base General Fund revenue for FY19. In addition to this base revenue, lawmakers rely on revenue collections coming in above what state officials anticipate ($356.7 million); money from the most recent fiscal year they anticipate agencies will return to the state (known as reversions, estimated at $275 million); non-tax revenues ($911 million); and unappropriated dollars from the most recent fiscal year ($499.4 million). In total, there will be $24.4 billion in revenue available to lawmakers for public investments for FY19.

Unfortunately, lawmakers do not fully appropriate the $24.4 billion of available revenue for FY19, and instead plan to carry over $561.3 million. This means continued inadequate state support for public investment across the state budget — public schools, higher education, health services, and economic development, at a time when North Carolinians have been calling and marching for adequate investments.

Furthermore, the legislature plans to grant $900 million in new tax cuts for wealthy people and profitable corporations starting in January 2019, building on a failed tax-cut experiment that has already resulted in $2.6 billion in annual revenue losses.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

A rushed, closed door budget process doesn’t align with NC values, can’t effectively identify NC priorities

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May 28, 2018
In NC Budget and Tax Center

North Carolina’s legislative leaders will not be in Raleigh for too long during this year’s short session. Over the past few weeks, behind closed doors, legislative leaders in the House and Senate have been putting together their budget and plan to move it through this week through a process that will allow for no input from the public or amendments from members.

Legislative leaders plan to introduce their final bill as a conference report skipping the committee approval processes and prohibiting amendments. Legislators haven’t completely skipped the amendment process since at least the early 1970s. As a result, the two chambers will hold up-or-down votes in the coming days on what is called a “conference report”, with no ability for changes or to vote for some of the $23 billion budget plan.

As a critical document that can support our priorities and the values that we share, a budget crafted in a secretive and undemocratic process won’t ensure that leaders hear all the views and needs of North Carolinians.

Traditionally, lawmakers come back for a short session a year after passing a two-year budget to adjust the second year’s spending. Traditionally, lawmakers review agency needs, emerging opportunities and challenges for communities and discuss policy issues that are connected to appropriations.

Instead, legislators are on track to ignore much of what people have asked for since the last budget was passed. Investments in every child’s educational success, protection of air and water, support to ensure the health and well-being of families and older North Carolinians, and the affordability of higher education, for example.

Legislators seem poised to ignore budget recommendations from the governor that were pointing North Carolina in the right direction, such as stopping the scheduled tax cuts in 2019 and making progress in many areas that have been neglected over the years. These areas included paying our teachers and principals adequately; investing in mental health, air and water clean-up and monitoring, improving prison facility security, increasing low-income housing, and promoting new workforce training and programs that lead to industry credentials in high-demand fields.

As the state budget process is still unfolding legislators have an opportunity do the right thing by promoting transparency, encouraging debate, and stopping the harmful tax cuts that are scheduled to go into effect in 2019. Advocating for these principles demonstrates a real commitment to the people, our democracy, and true accountability in the budget process. Rushing the budget process is not what North Carolinians need or expect from their legislators.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

“Tweaking” North Carolina’s state budget fails to address the underlying issue of failure to invest

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May 27, 2018
In NC Budget and Tax Center

Legislators are planning to release and vote on a state budget for 2019 by June 1. The budget this year will be released as a conference report which according to House Speaker Moore will only deal with minor changes to the second year of a two-year budget, which was debated and approved last year.

While the final details are yet to be seen, based on recent budget proposals it is clear that ”tweaks” to the budget will not address its shortcomings and the under-investment that is occurring because of tax cuts.

Analysis of both the final $23.6 billion budget passed by the legislature last year and the Governor’s recent $24.5 billion budget proposal shows that while they contain different priorities for 2019 they share one thing in common: they are missing investments because of the tax changes that have primarily benefited the wealthy and profitable corporations since 2013.

Reconsideration and debate of the tax changes since 2013 and how they continue to hamper our commitments to community and family well-being is fundamental to creating a budget that reflects our values as a state.

More than tweaking here are also some key areas of investment that are critical and will require a tax code that aligns with the needs of our state:

  1. The aging of North Carolina’s population

The final budget last year put $1 million less in the Division of Aging and Adult Services than was invested in 2017. Preparing for the aging of our state is critical as analysis within the budget shows that North Carolina’s population age 65 and over is already growing faster than other age groups. According to the state’s budget office, “between 2017 and 2037, the older adult population will increase by just over 1 million people (63.3%) to 2.6 million in 2037, and the oldest adults (ages 85+) will more than double from 181,000 in 2017 to 381,000 by 2037.”

  1. The infrastructure for the 21st Century

North Carolina’s infrastructure ranks as the 11th worst in the country yet the final budget did not address in a strategic and comprehensive manner the state’s need to rebuild our infrastructure and create jobs for the 21st Century. A comprehensive approach would target investments towards decaying water systems, mass transportation projects, a clean-energy future, and resilient infrastructure in natural disaster prone areas. It would also advance a more robust investment in broadband access so more people, particularly in rural areas, could access high speed internet.

  1. The preparation of our future leaders and workforce

The final budget fell short of investing in each child’s education because it prioritized another round of tax cuts. Those dollars could have allowed North Carolina to get back to pre-Recession per-pupil spending levels. They could also ensure that children have the textbooks, technology and instructional materials they need to get ahead. Not only in the K-12 classroom but in early childhood, North Carolina continues to miss an opportunity to follow the evidence and commit state resources to expanding pre-k access and supporting access to quality early childhood programs for children in low-income families. At the other end of the education pipeline, North Carolina has not kept post-secondary education affordable or adequately supported a workforce development system that can reach those looking for work and careers that will pay a living wage.

Tweaks won’t make the fundamental fiscal challenge we face go away. It is only likely to make it worse. North Carolinians need leaders to reconsider their prioritization of tax cuts over communities and families.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

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