June 19, 2013. The NC House budget plan would risk North Carolina’s economic health, a new report finds.
The North Carolina House of Representatives approved a two-year budget that “falls far short of meeting the needs of children, working families and communities, and will hamper North Carolina’s economy,” according to an analysis released today by the Budget & Tax Center, a project of the North Carolina Justice Center. The proposal features dramatic service cuts and a tax hike for, on average, 95 percent of taxpayers – but large tax cuts for the wealthy and profitable corporations.
“House budget writers chose to prioritize tax cuts that primarily benefit the wealthiest over adequate investments in vital public services,” writes report author Tazra Mitchell, a public policy fellow with the Budget & Tax Center. “Such tax cuts will make it much more difficult for North Carolina to rebuild the vital public services that are the foundations of a strong economy and enable children, families, and communities to thrive.”
The House budget would spend $12.2 million less than the Senate budget and $29.1 million less than the governor’s budget. The cuts are especially stark when compared to pre-recession levels. During the 2014 fiscal year, which begins July 1, the state would invest $1.9 billion—or 8.6 percent—less than before revenues plummeted in 2008 due to the Great Recession.
In certain areas of the budget, however, the House budget allocates more revenue than the budgets of the Senate and governor. Those areas include the K-12 education system and health and human services.
The House tax cuts would cost $528.6 million in lost revenue over the next two years, with the cost ballooning to $651.1 million annually once the plan is fully implemented in the 2018 fiscal year. These figures represent the net tax changes of the House tax plan plus the repeal of the estate tax. The loss of these revenues would cause grave harm to vital public investments.
The House budget has some things in common with the Senate plan and the governor’s proposal. All of the plans include the repeal of the estate tax that benefits a few wealthy estates, cuts to teaching assistant positions, and a cut in economic development investments targeted at low-income, distressed populations and communities.
“All three budgets would fail to keep up with the rising cost of providing public services to a growing population in several key areas of the budget,” said Mitchell.
Read the full report at this link.