By Tazra Mitchell, Fellow of the NC Justice Center’s Budget & Tax Center
There is a “new normal” on Jones Street in Raleigh, where the NC General Assembly meets. It is marked by a state legislature seeking to undermine and dismantle North Carolina’s public structures—such as public schools, roads, courts, job training and other safety-net programs—that lay the groundwork for a more prosperous future. By doing so, lawmakers are hurting the state’s ability to compete and reversing decades of progress as many moderate- and low-income North Carolinians still struggle to make ends meet in this slow economic recovery.
The current legislative session reveals the changing values among legislative leadership. So far, lawmakers’ efforts have been to the detriment, rather than to the benefit, of the state’s underdogs—those who are uninsured, unemployed, or poor.
Here’s a rundown of what the legislature has done in less than two months in session:
- Within the first two weeks of the session, legislative leadership ushered through a radical restructuring of the state’s unemployment insurance system. Without blinking an eye, legislators chose to adopt the NC Chamber of Commerce’s plan and permanently cut benefits to jobless workers. They also rejected more than $700 million in federal funds for unemployment benefits for those facing long-term unemployment.
- Legislative leadership subsequently rejected the Medicaid expansion, forgoing the opportunity to provide health coverage for a half-million poor, uninsured working parents and other adults. These North Carolinians will face a coverage gap—both unable to enroll in Medicaid and ineligible for the tax credits to buy coverage in the new health insurance exchange—meaning they will continue to rely on costly emergency room visits for their health care. Legislators’ short-sighted decision will not only forfeit state savings and federal dollars but will also lead to a less healthy workforce.
- Next, legislators voted to immediately reduce the state’s Earned Income Tax Credit (EITC), which is a modest but vital support for nearly 907,000 workers earning low wages, and to axe the credit at the end of year. Similar to unemployment benefits and Medicaid coverage, the EITC helps ensure some measure of financial stability for struggling families at a time when good-paying jobs are still hard to come by. Legislative leadership asserted the state could not afford the EITC’s $105.2 million price tag—worth, on average, $116 per tax-filing household. Then just one day later…
- Legislators spearheaded an effort to repeal the estate tax that would result in a $52 million loss to state revenues. And here is the kicker: only 23 North Carolinians with multi-million dollar properties paid the estate tax last year. Combined, these measures form the start of the Great Tax Shift (see pages 5 and 6) that will ultimately stifle North Carolina’s recovery and ability to compete.
These policy decisions are a sure sign of what is to come during the remainder of the legislative session, which will likely end sometime in the summer. The prospect of a new state budget that invests in the public structures that support an inclusive economy is not promising. Round after round of budget cuts over the last several years have already taken an enormous toll on North Carolina’s core education, health, transportation, and community safety structures. No area of the state budget has been untouched, with investments in public services down 11.4 percent compared to pre-recession levels.
North Carolina cannot afford another bare-bones state budget that fails to rebuild the foundation for shared prosperity and a strong state economy. Nor can the state afford to expand tax breaks for profitable big businesses and wealthy North Carolinians when the cost is teacher layoffs, ever-growing waiting lists for pre-kindergarten programs, and the dismantling of public policies that serve as a lifeline for the state’s jobless, uninsured, and low-paid workers. Better options exist.
State legislators have the opportunity to make policy decisions that put North Carolina on a path to a better future. Yet, rather than digging the state out of its economic hole, legislators are making it deeper by undermining the foundations of our public structures. They say these policy changes are economic necessities, but that is simply not the case.
Such austerity fervor amidst a depressed economy defies mainstream economics and common sense. It is due time to reverse the state’s wavering commitment to the well-being and safety of the state’s working families by protecting the critical public investments that are key to building a strong middle class, a high quality of life, and a stronger economic future for the state and all North Carolinians.