2017 Fiscal Year State Budget, NC Budget and Tax Center

Statement of Final Budget Passage from Alexandra Sirota, Budget and Tax Center Director

A budget is the set of choices our policymakers make to lay a foundation for North Carolina’s future.  Will it stand future tests of economic challenges and opportunities? Will it extend to every corner and household of our state? The answer for this budget is that it will not.

For those who say this is as good as we can get, the reality is we can do better. Our leaders have chosen to limit our sights.

There is no great mystery about what has happened in this year’s budget debate. Policymakers have set a low bar based on a rigid formula and ignored the realities of our growing state and the families who strive to do well. They have continued to allow tax cuts to phase in that benefit the wealthy and profitable corporations, and they even pursued more poorly targeted tax cuts that will fail to effectively address the increase in sales taxes that North Carolinians will pay.

To those satisfied with baby steps, this final budget may be okay. As those who seek leadership that charts a stable path into the future and embraces the challenges of our changing state, we are disappointed.

2017 Fiscal Year State Budget, Commentary

Budget cuts workplace safety inspectors, puts workers at risk

Every worker deserves a safe workplace where their lives and health are protected. Unfortunately, a small provision in the joint budget does just the opposite—it puts workers at risk by weakening the ability of the Department of Labor to enforce the state’s occupational safety laws.

Specifically, the joint budget adopts a House recommendation to eliminate two inspector positions at the North Carolina Department of Labor’s Occupational Safety and Health (OSH) division. This measure could not be more ill-timed—137 workers died on the job in 2014, up from 109 the year before. And already in 2016, the US Department of Labor has reported 30 fatalities so far this year at the workplaces the agency was able to inspect. And the death toll is likely much higher, as the count only includes those workplaces the Labor Department is able to inspect.

Tellingly, the budget notes that NCDOL eliminated these positions specifically because they remained unfilled for two years—which supposedly suggests that they were unnecessary. But this is not a reasonable explanation, given the rising number of workplace fatalities. Rather, it appears much more likely that the Secretary of Labor, Cherie Berry, has proven as lax in enforcing state occupational health and safety laws as she has in enforcing wage theft laws.

Workplace deaths are unacceptable. Both the General Assembly and Secretary Berry need to reverse course and support the hiring of more OSH inspectors, not fewer.

 

Carol Brooke contributed to this report.

2017 Fiscal Year State Budget, NC Budget and Tax Center

More evidence that limiting our Constitution puts NC’s coveted AAA bond rating at risk

The Bond Buyer, an insider investment industry publication, has taken note of North Carolina Senators’ passage of a proposed change to the state’s Constitution that would limit the income tax rate to the low and arbitrary level of 5.5 percent.

In a recent article on the risk to the state’s “gilt-edged credit rating,” the reporter quotes a Moody’s analyst who provided general comments about the challenges with the direction that Senators seek to take North Carolina in. From the article:

“A majority of state budgets rely on a combination of income and sales tax revenues, according to Nick Samuels, vice president and senior public finance credit officer with Moody’s Investors Service. … Whatever the source, state budgets are sensitive to volatility in revenue, depending on how spending plans are structured, said Samuels. He declined to comment directly on North Carolina’s bill because it hasn’t passed. …

“Illinois has a flat income tax rate mandated by the state’s constitution that can be difficult to change, he pointed out.

“Moody’s rates Illinois’s senior debt Baa2 with a negative outlook as the state nears its second fiscal year without an adopted budget due to a political stalemate over spending issues between parties.

“In North Carolina, Moody’s rates the state’s general obligation bonds AAA because of its strong fiscal management and economic growth, which benefits tax collections, the agency said in a report in February. …

“Samuels said state ratings tend to be high because budget leaders have flexible governing strength.”

Read the full article here.

2017 Fiscal Year State Budget, NC Budget and Tax Center

ANER budget doubles down on marketing, spreads a few modest investments around

The Agriculture and Natural and Economic Resources (ANER) budget makes one thing clear: North Carolina has image problems. Scattered throughout this section of the budget are a variety of additional funds to support marketing, promotion, and public relations work. New funds are made available to market North Carolina’s agricultural products overseas, to boost the state’s image as a business destination, to promote tourism, and to recruit foreign companies to the Tar Heel State. All of these activities were already supported to some degree by state funds, so the new appropriations show that budget writers are concerned about North Carolina’s image across the U.S. and around the world.

Some important new investments are included, but the ANER budget leaves many of the fundamental economic and environmental challenges facing our state unaddressed. Some of the notable funding increases include additional support for rural downtown revitalization, water and wastewater infrastructure, and shellfish industry development. While there is merit to most of the areas where additional funding is allocated, the ANER budget lacks a cohesive vision for a prosperous future.

See below for a list of selected changes included in the ANER section of the budget: Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Highlights of Justice and Public Safety Budget in joint budget agreement

The joint budget for Justice and Public Safety for the upcoming fiscal year entails a 3.5 percent increase to the original JPS budget passed by state lawmakers last year. Despite unmet needs in North Carolina such as re-entry services for ex-offenders returning into local communities, little progress is made beyond funding for pay raises and one-time bonuses.

Highlights from the joint budget for Justice and Public Safety:

Public Safety Read more