MEDIA RELEASE: Governor’s budget fails to fully support public services, vulnerable North Carolinians

New report finds the budget proposal underinvests in education, health, public safety, environment

RALEIGH (April 4, 2013) — Governor McCrory’s budget proposal, while representing a small step toward overall reinvestment, fails to fully support crucial public investments and North Carolina’s most vulnerable residents, a new report finds.

Despite the state’s improving economic picture—which allows for some expansion items—the $20.6 billion budget proposal does not provide the resources necessary to educate our children, support the health and well-being of our most vulnerable citizens, and ensure access to the courts, according to a new report from the Budget & Tax Center, a project of the North Carolina Justice Center. The BTC report and accompanying factsheet focus on the potential impacts of the budget on low- and moderate-income North Carolinians and highlight five important issues that remain part of the budget's untold story.

Although the proposal increases spending by 1.8 percent over the base budget, it falls short of what is needed to maintain existing levels of public services in five of the six major areas of the state budget: the public K-12 system, Community Colleges, UNC System, Justice and Public Safety, and Natural and Economic Resources. Only Health And Human Services would experience a net increase.

In historical context, the Governor’s proposal reflects a diminished baseline budget when compared to pre-recession levels of spending, the report said. The proposal would spend 8.4 percent less than the last state budget approved before the Great Recession. In fact, the proposal would make FY2013-14 the year of North Carolina’s lowest overall state General Fund dollars as a share of the economy in 42 years.

The proposal also represents a shift away from economic development investments targeted at low-income, distressed populations and toward more broad-based economic development efforts focused on attracting businesses. This move often leaves distressed communities behind, the report said.

The proposal uses language indicating support for revenue-neutral, rate-reducing tax reform – an approach based on the false premise that income taxes are a barrier to economic growth, despite history and empirical research showing that tax cuts have little impact on economic performance. Revenue-neutral tax reform is misguided at this current juncture, as such reform would lock in historically low levels of revenue and, as a result, underfund the vital public structures that are the foundations of a strong economy.

“The governor’s proposal significantly underinvests in expanding economic opportunities for all residents,” said Tazra Mitchell, BTC fellow and co-author of the report. “It ignores the reality in communities across the state: public investment is needed to address hardship and build the foundations of economic growth."

Click here to read the full report and factsheet.

FOR MORE INFORMATION, CONTACT: Tazra Mitchell, Tazra@ncjustice.org, 919.861.1451; Jeff Shaw, Director of Communications, jeff@ncjustice.org, 503.551.3615 (cell).
 

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