NC House can choose a different future for North Carolina

Yesterday, NC House members began releasing details of their budget proposal in committees. Without a transparent view of how these pieces fit together and other considerations that factored into the plan, we will have to wait for a full assessment of the path that the House will take.

More than a month has passed since the Senate passed its budget and the start of the new fiscal year — July 1. However, preliminary information from yesterday’s committee review suggests there is still time to choose a better path for North Carolina.

House leaders agreed to an arbitrary spending limit with the Senate before the start of the process, but the sheer scale of need demands more careful consideration of public input and more responsible stewardship of public resources than the Senate put forward.

As was evidenced in a number of committee reviews yesterday, the House budget misses committing long-term to community needs by making small-scale allocations rather than bolstering public systems, as well as using one-time money rather than recurring resources.

House leaders appear poised to accept the Senate tax plan that would slash income tax rates for the wealthiest and profitable corporations. The personal income tax changes alone would deliver 74% of the net tax cut to the richest 20% of North Carolinians.

The standard deduction and lower flat rate that Senate leaders propose actually excludes hundreds of thousands of North Carolinians with low incomes who carry a heavier sales and property tax load. The Senate proposal also provides just half the tax reduction, when calculated as a share of income, to North Carolinians with income below $66,000 (those in the bottom 60% of the income distribution) than is provided to the richest 1%.

The House can afford to choose a different future for North Carolina — one that advances the well-being of all people rather than focuses on tax cuts for the rich and profitable corporations as the Senate did. By establishing the systems and structures that strengthen communities and the economy for the long-term, lawmakers can help families move past the pandemic to sounder footing.

The North Carolina Justice Center delivered a letter to the House two weeks ago detailing some of the areas for public investment. This list of recommended appropriations — while not exhaustive — would fall well within the resources the state has available today.

The list of recommendations includes commitments for the next two years to providing a sound, basic education to every child, increasing affordable housing development, stabilizing the early childhood system, helping people access health care, and ensuring that people re-entering communities are supported for success.

Redirecting 40% of dollars that the Senate proposed for tax cuts and for additional allocations to savings reserve and the state capital and infrastructure fund in the first year, and 60% in the second would be more than sufficient to meet these recommendations.

North Carolina leaders committed to helping people could go even further to advance the well-being of us all right now.

We need our elected leaders to choose a different path — one that helps people and makes sure our state can be ready to support people’s well-being for the long haul. It is the best path to a brighter future for North Carolina.

Alexandra Forter Sirota is Director with the Budget & Tax Center, a project of the NC Justice Center.

New poll: North Carolinians overwhelmingly oppose eliminating corporate income tax

Last month the North Carolina Senate passed a bill that would eliminate the corporate state income tax over five years, beginning in 2024.

New polling, released Thursday by progressive policy group State Innovation Exchange, (SiX) shows North Carolina voters overwhelmingly oppose such a change.

The poll, of 800 registered voters in the state via telephone and online between July 6 and July 11, found 66 percent against completely eliminating the state income tax.

That view held across the political spectrum with 59 percent of Republicans opposing the change, 74 percent of Democrats and 58 percent of Independents. Of those who voted for Donald Trump in the 2020 presidential election, 58 percent opposed the change. Among supporters of President Joe Biden, 76 percent were opposed.

“It’s something we saw across the board, across parties,” said Nida Allam, state director for SiX. “People want to see more investment within North Carolina communities. They don’t want to see corporate taxes being eliminated.”

Allam, who is also a Durham County Commissioner, said the polls shows North Carolinians realize the impact that could have on investment in public education, infrastructure and essential services.

TargetSmart, the firm that conducted the poll, has done similar surveys in Pennsylvania, Michigan and Minnesota. Ben Lazarus, the company’s director of research solutions, said the polling on this issue appears to be consistent across the states.

“It happens to be one of these rare circumstances where it’s really bad policy and really bad politics,” Lazarus said.

In North Carolina, Lazarus said, respondents strongly opposed cutting the corporate income tax whether they were told the annual five-billion-dollar cost or not.  Sixty-eight percent of respondents who were informed of the cost opposed it, as did 66 percent of those not given the information.

“The polling shows that people want to see that money put into schools, roads, a lot of other good things that help working people,” Lazarus said. “They don’t want to see corporate taxes cut.”

See the  poll results, including information about methodology, here.


The NC Senate budget isn’t all about money. It’s got plenty of new policies, too.

Image: AdobeStock

Reading the state budget is like hunting through tall grass looking for things that don’t quite belong – items that are or could have been their own separate bills and don’t directly deal with money, yet ended up as few paragraphs in a 427-page document.

The budget proposal the Senate passed last week, and which House members started formally reviewing Tuesday, is chock full of interesting nuggets that got mixed in with the money.

The provisions that would strip power from governors and attorneys general have been the most discussed so far. Here are a few more.

The Senate budget would eliminate the controversial innovative school district. Created in 2016, the district as originally planned, would have up to five schools in it by now. It has only one, Southside-Ashpole Elementary School in Robeson County.

The idea was to take low-performing public schools and give them to outside organizations to run. A wealthy charter school backer from Oregon, John Bryan, bragged about his work getting the state to create the special district.

Most local districts fought handing over their schools, and the innovative district never expanded.

Achievement for All Children was selected to run Southside-Ashpole Elementary. That didn’t go well, and the State Board of Education and Achievement for All Children ended their relationship, Policy Watch reported this year.

The budget says state Superintendent of Public Instruction Catherine Truitt should come up with some new ideas and tell legislators about them on February. The Southside-Ashpole would go back to Robeson in the 2023-2024 school year. This provision is on page 45 of the budget.

Should athletes who play for UNC system schools be considered in-state students for tuition purposes? The state has been kicking this around for a while. The tuition break was around for a few years in the mid-2000s before it was dropped.  In-state tuition for UNC schools’ athletes would save athletic booster clubs boatloads of money.

A 2019 bill that would have allowed it got stuck in a Senate committee.

This year’s Senate budget has restoring in-state tuition for athletes on page 72.

Another provision would give child care facilities a break with the state star-rating system if their lead teachers don’t have the education credentials that help facilities earn the highest ranking of five stars. A bill that would do this passed the Senate in April and is moving through the House.  The budget provision starts on page 109. Child care facilities would be able to keep their five-star ratings while having fewer teachers with post-high school education for two years.

Lowering the education requirement for lead teachers is controversial, North Carolina Health News reported.

A bill that would require health services facilities – hospitals, rehab centers, or other places people seek care —  tell patients if they’ll be treated by out-of-network providers landed in the Senate budget on page 155. This provision passed the Senate unanimously in May as a separate bill that is sitting in the House Rules Committee.

Members of the National Guard reserve would be given preference when applying for state government jobs, under a budget provision that starts on page 284.

State policy already gives hiring preference to war veterans.

State Senate budget would fund new DEQ section to address PFAS in drinking water

The state Department of Environmental Quality would receive more than $974,000 to establish a new emerging compounds section, according to the State Senate budget published today. The money would pay for 10 new positions within the Division of Water Resources; it is recurring, which means funding is expected to be renewed each year.

Emerging compounds include PFAS — perfluorinated and polyfluoroalkyl compounds — and 1,4-Dioxane. Both are toxic and have been widely detected in the state’s — and nation’s — water supplies.

The funding is a small part of the department’s overall appropriation of $104.7 million for the 2021-2022 biennium. In 2022-2023, the agency would receive $107.9 million.

The addition of an emerging compounds section marks a reversal in decade-long cuts to personnel within DEQ. The proposed number of full-time equivalent positions is 1,123, up from 1,096 in 2017. However the Senate figure is still 100 positions fewer than what was budgeted for in 2016.

The current budget would create several more positions as part of DEQ’s permit transformation program.

Under the Senate budget, the NC Policy Collaboratory would become permanent. Created in 2016, it harnesses researchers from North Carolina universities to study environmental and public health issues. Its main tasks early on were to conduct research on water quality issues in Jordan Lake, then expanded to PFAS monitoring and removal in drinking water, and more recently COVID-19.

The budget would require the Collaboratory to work with the Office of the State Fire Marshal to track the storage and use of Aqueous Film-Forming Foams, known as AFFF. These foams historically have contained PFAS, which not only jeopardizes the groundwater, but it can cause serious health problems in firefighters who are chronically exposed to the material.

The Office of the State Fire Marshal would report each year to the Environmental Review Commission on the use and inventory of AFFF by fire departments across the state. Information would include the names and addresses of the fire stations; the number of trucks that carry AFFF and the volume; where the foam was used; and the trade names.

People whose private drinking water wells are contaminated with PFAS could also be eligible for public funds to pay for alternative water supplies, regardless of income.

Since 2006, the Bernard Allen Memorial Drinking Water Fund has paid for private well testing in areas with suspected groundwater contamination for low-income households. If contamination is detected, those households can also receive funding to be connected to a public water supply or other alternatives, such as drilling a deeper well or installing a reverse osmosis system.

The income limitation is lifted for households whose water is contaminated with PFAS above the health advisory goals set by the state Department of Health and Human Services or the EPA; that maximum level is currently 70 parts per trillion, although some states have established stricter standards.

Chemours, which is responsible for contaminating private groundwater wells in the Lower Cape Fear River Basin, must pay for testing and alternatives under a consent order; these funds would presumably help cover households whose contamination has not been traced to Chemours.

To accommodate the anticipated demand for testing, the Senate has nearly doubled the Bernard Allen Fund, from $400,000 to $700,000 in nonrecurring funds each biennium.

More tax cuts, small teacher raises, major infrastructure spending in the NC Republican Senate budget

NC Senate leader Phil Berger

The Senate Republicans’ state budget proposal features tax cuts deeper than those they’ve already approved, smaller than usual teacher raises, and billions for infrastructure.

The Senate has already approved a bill that cuts personal income taxes and phases out corporate income taxes. Senate leader Phil Berger on Monday said the budget will include a cut in the personal income tax rate to 3.99% over five years. The rate is now 5.25%.

The budget “reflects our commitment to tax relief,” Berger said at a news conference Monday.

The budget proposes teacher and state employee raises of 3% over two years and bonuses paid with federal money. Employees who make less than $75,000 a year would receive $1,500 bonuses, and employees who make more than $75,000 would receive $1,000.

Under the Senate budget proposal, non-certified school employees would make a minimum of $13 an hour.

Cooper included raises for teachers of 10% over two years in his proposed budget. Teachers were caught in a budget impasse between the Republican-run legislature and Democratic Gov. Roy Cooper in the last two years and did not receive raises. They did receive step increases and bonuses, however.

Republican senators held their budget news conference Monday afternoon, before they released the complete document and ahead of committee discussions that will start Tuesday. The pre-release news conferences allowed Republican senators to discuss budget highlights while limiting public scrutiny of details.

North Carolina is flush. The state has a surplus of more than $5 billion, largely because of the failure to adopt a comprehensive budget in the last two years. It’s getting billions in COVID-19 federal relief money. And last week, economists with the state budget office and the legislature projected the North Carolina will to take in $6.5 billion more in tax revenues than expected over the next two years.

House and Senate Republicans have agreed to spend $25.7 billion this year.

Given the state’s healthy economic outlook, the proposed raises are disappointing, NC Association of Educators President Tamika Walker Kelly said in a statement.

“When presented with $6.5 billion in unexpected revenue, the NC Senate has opted to reward North Carolina educators for working nonstop to support our students through the most difficult school year in history with a pitiful 1.5% annual pay raise. This proposed budget shows that corporate tax cuts take priority over North Carolina students yet again.”

During the news conference, Berger, an Eden Republican, seemed to indicate that the proposed raise was as negotiating position, but would not say what raises Senate Republicans would accept.

“This is not going to be the final budget,” Berger said. “Let’s see what the House does.”

State government retirees would not get the 2% cost-of-living increase they are seeking under the Senate plan.

Richard Rogers, executive director of the NC Retired Governmental Employee Association, said in an interview that retirees have received cost of living adjustments in only three of the last 12 years, and they are “struggling more and more to make ends meet.”

Rogers said the association wants to continue to work with legislative leaders on a cost-of-living increase.

“It’s disappointing that the leadership in the Senate did not see with the budget surplus we have, see it as an opportunity to support public service retirees in North Carolina.”

He is hopeful that a COLA will be in the final budget, after the House and Senate negotiate a final deal.

“This is the first step in the budget process,” Rogers said. “We know that.”

A House committee has already approved a 2% COLA for retirees, he said.

The Senate will hold committee meetings and vote on a budget, then sent its proposal to the House. The House will write its own version. Then, typically, representatives from the House and Senate will get together to agree on a compromise version to send to the governor.

Cooper proposed asking voters to approve a $4.7 billion bond for K-12 school construction, community colleges and universities, Department of Health and Human Services buildings, and state attractions.

Senate Republicans prefer pay-as-you-go infrastructure improvements. Their budget includes $3 billion for infrastructure over the next two years.

Sen. Ralph Hise, a Spruce Pine Republican, said budget includes $1 billion in federal grant money for water and sewer projects and $100 million for to help local governments with water and sewer infrastructure.

State Treasurer Dale Folwell, a Republican, thanked the Senate for its budget, which includes money for a fund meant to pay down unfunded pension liabilities.

Folwell said in a statement that this is the first proposed budget to include money for the reserve fund.

“Additionally, it provides unparalleled resources for water and sewer infrastructure needs at a time when communities are struggling to maintain fiscal stability while meeting public health and environmental responsibilities,” Folwell said.