The Legislature’s upcoming budget debate offers an opportunity to change North Carolina’s direction and ensure a stronger recovery from the Great Recession by making critical investments in areas that support North Carolina families and communities, says a new report.
Legislators can make the 2014 session a success by increasing investments in the classroom, public health, environmental, and the courts, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. Such investment will require adequate revenue, meaning lawmakers must revisit the huge tax cuts they passed last year.
“The areas that promote a strong middle class—from quality schools to a sound transportation system—continue to see inadequate investments in North Carolina,” said Alexandra Sirota, Director of the Budget & Tax Center. “The state budget plays a critical role in building these foundations of opportunity and promoting a strong economy in communities throughout North Carolina.”
The lack of resources for public services threatens to erode their quality, efficiency and effectiveness, the report said. Past investments in roads, schools, public universities, and research and development paved the way for an economy that in past decades has outpaced many other Southern states. Policymakers should return to these strategies, among others, in the upcoming legislative session:
- Provide high-quality education. Fund pre-K for at-risk children, increase teacher pay, restore funding for classroom resources, and support the UNC system by increasing funding for need-based financial aid and ending cuts that force increased tuition and threaten the system’s retention and recruitment of world-class faculty and research dollars.
- Protect public health by funding Medicaid without cuts to services, eliminating the waiting list for child care subsidies, and restoring funding to tobacco prevention programs.
- Invest in infrastructure. Reinvest in public transit, restore funding to the Affordable Housing Trust Fund, and encourage placement of healthy food stores in low- and middle-income communities.
- Protect natural resources by funding water quality inspections, and providing funds for land and farmland conservation and wildlife protection.
- Support workers and re-employment. Reinvest in workforce development and support community college efforts to align workforce training with economic development.
- Ensure equal access to justice. Fund defense and civil legal services for low-income clients, restore state funding for drug treatment courts, and increase funding for establishment of local reentry councils and to provide reentry services.
- Support economic security during tough times by investing in technology that delivers SNAP, Medicaid, and other critical programs to struggling families.
Tax cuts passed by the legislature last year will bring in less revenue each year than under the previous structure. The current year budget gap is $335 million due to the additional $445 million revenue shortfall announced last week and an estimated $140 million Medicaid shortfall. By next fiscal year, policymakers will face a budget gap again, one that will be significantly larger due to the cost of the tax plan. New estimates by the Institute on Taxation and Economic Policy find that the cost of the tax plan could reduce revenue by as much as $600 million because of higher costs associated with the adoption of a lower, flat personal income tax rate among other changes. This would result in a budget gap of $637 million in the next fiscal year.
“As a result of policymakers’ decisions to pursue tax cuts that primarily benefit the wealthy and profitable corporations, the availability of revenue remains far below what is needed to reinvest in our state and the foundations of a strong economy,” Sirota said. “North Carolina will struggle to make the investments needed to move the economy forward and support North Carolina families into the future unless policymakers make changes to ensure the tax system is adequate.”