North Carolina remains stuck in reverse

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Lawmakers finished session with so much activity on important and controversial issues, that it almost overshadowed the 429 page budget they passed. A new report from the fiscal policy experts at the North Carolina Budget and Tax Center should help return public attention to the budget that fails to support economic growth.

From NC Policy Watch, 

Sadly, the overarching findings of the report are not encouraging. Most notable is the fact that “tax changes made in the new budget will limit North Carolina’s ability to support the public investments that promote widespread prosperity.”

The following is from a media release that accompanied the new report:

Tax cuts will reduce available revenue for the biennium by $841.8 million, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. Within four years, the annual cost of the tax changes will balloon to more than $1 billion each year, due to the phase in of tax rate reductions for individual taxpayers and profitable corporations. This revenue hit will limit the ability to support state investments in public education, economic development, the court system, and other services that serve as essential building blocks of long-term economic growth, the report said.

“At this critical point in the state’s uneven and slow economic recovery, policymakers chose to deliver greater tax benefits to the wealthiest few rather than build a solid foundation that supports opportunity for many,” said Tazra Mitchell, a policy analyst with the Budget & Tax Center and co-author of the report. “Public investments that promote a strong and inclusive middle class—quality schools, affordable healthcare and housing and safe, healthy neighborhoods—are being sacrificed to pay for tax cuts that primarily benefit the wealthy and profitable corporations.”

Compared to the 2015 fiscal year budget, the new budget increases total General Fund spending by 3.4 percent in the first year. Most of these funds will pay for higher public school costs due to rising enrollments, the UNC system, and Medicaid, as well as pay raises and bonuses for teachers and other public employees. Accordingly, the state budget will barely cover the pressing needs of North Carolinians and leaves little for rural economic development, environmental protection, and other vital services.

Since 2010, North Carolina’s state budgets have increasingly failed to keep up with public needs, the report said. State spending as part of the economy has consistently shrunk year after year, and only continues to do so with the new budget—at a time when public needs are growing, not shrinking. State budgets typically allow spending to increase as the population grows and the economy changes, especially after an economic downturn, as it helps the state to keep up with its residents’ needs.


  1. Tom Murdck's avatar
    Tom Murdck
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    Economic Sciences, Angus Deaton, believe that income and wealth inequality are of major concern. How does the recent NC budget reduce that concern? It doesn’t? Who are the legislators and Governor McCrory making laws for – “we the people”? In a vein similar to Thomas Friedman’s admonition in one of his books, Hot, Flat, and Crowded, when he was talking about climate change, “Don’t change your lightbulbs; change your politicians.”
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