Xing Wu
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North Carolina House finally approved a budget bill last week for the fiscal year that began July 1 – six weeks ago. Now comes a period of negotiation with the Senate, which adopted its version a few weeks before, and after that, hopefully, some measure of legitimate give-and-take with Governor Cooper.
Whether a final deal can ultimately be found – something that has eluded heads of state in recent years – remains an open question.
Unfortunately, at this point the parties have little to work with, as both proposals are deeply flawed and inadequate.
At a time when our state faces and tackles a multitude of enormous and unprecedented challenges and, thanks in large part to the federal government, has exceptionally plentiful resources, both budgets would leave basic services and structures so underfunded. disastrous.
Indeed, as a share of the economy (the best metric for calculating a state’s ability to afford public investment), spending of general state funds under both proposals would drop to a depth ( just over 4.5%) never seen for at least half a century.
It is difficult to insist too much on the vertiginous fall that this represents. Even when you factor in more than a decade of massive GOP budget cuts, the House’s $ 25.7 billion figure is more than 21% below the 45-year average. Compared to the more reasonable, but still modest, budgets of the 70s, 80s, 90s and 2000s, the drop is closer to 30%.
Think about it for a moment.
Imagine what a 30% reduction in base investment would mean for any large, rapidly growing institution, especially after such underinvestment worsened over a period of several years.
And it’s not as if North Carolina was some sort of Scandinavian social democracy when state budget spending hovered between 6% and 7% of the economy at the turn of the century. The original Leandro A court ruling that ordered the state to overhaul and improve its woefully and unconstitutionally inadequate K-12 school system was issued during this period.
Today, a quarter of a century later, the situation is even further at an impasse. And the fact that GOP budget drafters in both chambers quite blatantly and intentionally refused to comply with the regulations developed by experts and approved by the monument court Leandro decision – an eminently reasonable and affordable plan that has the potential to, finally, meet the myriad of needs in our torn and worn education system – only makes the current situation even more glaring.
But wait, it’s getting worse.
Not only would House and Senate budgets shorten a huge list of essential structures and services at a time of deep societal needs, the two would also incorporate even more self-inflicted wounds by enacting a new round of reductions in the cost of life. unnecessary and deeply regressive taxes.
As the NC Budget & Tax Center reported last week:
Much like the Senate plan, the House is proposing a series of tax changes that together would reduce annual revenues by $ 2 billion when fully implemented in fiscal 2025. The plan would reduce the lump sum tax on personal income from 5.25% to 4.99%, and corporate income tax from 2.5% currently to 2.25% in 2024 and further reduce it to 1.99% from 2025.
Analysis of the beneficiaries of proposed tax cuts shows that lower income North Carolinians will only receive a meager 2% share of tax cuts when fully implemented, while 56% would go to those with annual income over $ 110,000.
This, while the gap between wealthy households and low- and middle-income households in the state – especially households of color – has rarely, if ever, been wider.
Now add to all this the fact that both versions of the budget were largely written behind closed doors and are full of so-called “special provisions” – legislative changes unrelated to the budget that have in many cases received little by little. no public release – and one begins to wonder if the architects spoke to anyone other than a narrow clique of wealthy allies and well-heeled special interests.
A classic and infuriating, but hardly isolated example – documented by Policy Watch environmental journalist Lisa Sorg last week – can be seen in the decision to allocate modest additional funds for flood control alongside a Special budget provision would prohibit local governments from enacting stormwater ordinances (rules that can go a long way in fighting flooding) that are stricter than state or federal rules.
The bottom line: hope is eternal. One can always imagine a scenario in which a combination of public outrage and activism along with skillful and determined advocacy by the Cooper administration would result in a final deal that cuts down on the more appalling elements of the competing proposals. But in the short term, House and Senate budget negotiations will be about a trade-off between bad and worst.
