Weekly Briefing

Progressive advocates send "open letter" to House and Senate budget conferees

With the end of the fiscal year just days away, state lawmakers are attempting to wrap up negotiations on this year's state budget bill - or, more accurately, the bill to adjust the 2007-'09 biennial budget. As has been reported on numerous occasions in recent weeks by Chris Fitzsimon, this year's process has been anything but a happy or encouraging. Between the lagging state revenues brought on by tough economic times and the General Assembly's frustrating penchant for backroom negotiations (and unwillingness to raise the revenue necessary to adequately fund core public services) it's shaping up to be a "treading water" kind of session on Jones Street.

It doesn't, however, have to be that way. Even without the kind of bold and visionary steps that would be truly desirable, lawmakers can significantly improve the budget - substantively and symbolically - with just a few simple tweaks.

This week, advocates at the North Carolina Justice Center helped put together an "open letter" to the members of the legislative conference committee on the state budget bill that provides a short list of changes that ought to be included in the final budget agreement. The group plans to deliver the letter tomorrow on behalf of a broad coalition of forward thinking advocacy organizations. Groups interested in signing on should contact Meg Gray at the Justice Center's Budget and Tax Center project.

Here is the text of the letter:

An Open Letter to House and Senate Budget Conferees

Dear Ladies and Gentlemen,

We, the undersigned organizations, write to express our deep concern regarding some important, overarching issues that confront the members of the Conference Committee on the 2008-'09 budget bill. It is our belief that failure to address these issues in a thoughtful and responsible manner will have serious ramifications for the funding of many core public services - both next year and in future years.

We are particularly concerned about proposals that would, in effect, shift limited public resources away from core services and toward less essential, even questionable, spending priorities and tax breaks. Our concerns are only heightened by the current tough economic times in which unemployment, the cost of living and economic hardship are all on the rise.

We therefore offer the following specific recommendations for House and Senate conferees as they work to conclude budget negotiations in the coming days:

#1 - Target any new tax reductions at people in need. Given the state's current tight revenue picture and tough economic times, it is essential that any tax reductions be modest in size and targeted toward those North Carolinians who are a) most in need, and b) most likely to spend the money immediately. Now is not the time to bestow windfalls upon the wealthy or to attempt new tax cuts of uncertain impact. For these reasons, lawmakers should reject the Senate's proposals to eliminate the state gift tax (a $17 million proposal that would disproportionately benefit the wealthy) and cut the state sales tax on home heating fuel (a $25 million proposal that would likely provide a windfall for energy companies).

Instead, conferees should accept the House's proposal to expands the state earned income tax credit - a proposal that would put approximately $21 million directly into the hands of North Carolina families who are most in need and who already pay the highest percentage of their incomes in state and local taxes combined of any income group.

#2 - Reject proposals to phase out the so-called Highway Trust Fund transfer and to commence construction of new toll roads. Both budgets include proposals to reduce the General Fund by $25 million or more by beginning a "phase-out" of the so-called "transfer" from the state Highway Trust Fund. The money freed up by this move would then be allocated to the state Turnpike Authority to expedite construction of one or more proposed toll roads around the state.

Such a shift is particularly ill-timed given the state's large and unmet needs in human services, education, the criminal justice system and many other areas. For example, the state Department of Public Instruction will require tens of millions of dollars in additional appropriations in 2008-'09 merely to pay the higher cost of fuel for school buses. When combined with the seismic changes that are currently overtaking the transportation world (and the need to reform and reassess road building priorities), it is essential that conferees stop and, at a minimum, delay this proposed shift. Now is not the time to take money that could be used to keep school buses running, provide healthcare to uninsured children, reduce childcare waiting lists or preserve our natural environment to pay for new and unproven toll road proposals.     

#3 - Minimize the budget hole for 2009. As always, it is essential that lawmakers do their utmost to reduce reliance upon "one-time" revenue to pay for recurring expenditures. In this regard both budgets - particularly the Senate's - are significantly unstable.  If the state is going to avoid even more difficult budget challenges in 2009, conferees should reexamine options to restrain unnecessary spending and boost recurring revenue.

We urge lawmakers to consider two potential solutions in this area: a) a dramatic reduction in the state's costly and controversial corporate subsidy programs (the William S. Lee Act, the Job Development Investment Grant program and the One North Carolina Fund); and b) adoption of a critical business tax reform known as "combined reporting" that would end a truck-sized loophole that allows multi-state corporations operating in North Carolina to shelter income in other states.

In sum, we urge you to adopt a progressive, forward-looking and fiscally responsible state budget that allows our state to keep moving ahead. While we understand that difficult economic times necessitate some difficult choices, North Carolina is much better-positioned than most states to weather the current storms. We urge you to build upon and preserve the state's comparatively strong position by nurturing essential services and promoting a revenue system that's fair, adequate, and sustainable.    

Thank you for your consideration of these recommendations. We welcome your questions and feedback and look forward to working with you in the days ahead.

Sincerely,

CFED

Common Sense Foundation

Community Reinvestment Association of North Carolina

Conservation Council of NC

El Pueblo, Inc.

Friends of Residents in Long Term Care

NC ACORN

NC Budget and Tax Center

NC Coalition to End Homelessness

NC Community Development Initiative 

NC Council of Churches

NC Fair Share

NC Housing Coalition

NC Justice Center

NCPIRG

Working Families Win

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This entry was posted on Wednesday, June 25th, 2008 at 3:32 pm and is filed under Weekly Briefing. You can follow any responses to this entry through the RSS 2.0 feed.