June 28, 2011
THE FINAL BUDGET: Costs jobs, delays economic recovery
The numbers speak for themselves.
The North Carolina General Assembly has proposed a $19.7 billion budget for 2011-2012. The final budget is fundamentally unbalanced, closing the budget gap with $1.7 billion in spending cuts, even as it added $188 million in tax cuts for businesses and the wealthiest North Carolinians.
In addition to allowing the temporary tax package to expire, at an annual cost in revenue of more than $1.3 billion, the final budget includes tax cuts totaling $189 million in the first year of the biennium and $407 million in the second year. Of its $1.7 billion spending cuts, the legislature made 28 percent in the public education budget ($459 million); 26 percent in health and human services ($432 million); 20 percent in the UNC system ($347 million); and 10 percent in justice and public safety ($165 million).
Economic impact analysis by the NC Budget and Tax Center shows that by the fiscal year 2012-13, the cumulative impact of the tax cuts and spending cuts in this budget will cost the state a net 29,782 jobs, $1.2 billion in lower wages, and $2.3 billion in lost industry output.
The numbers don’t lie – this state budget puts North Carolina back in time.
E-VERIFY: Gov. Perdue signs immigration bill
Last week, Gov. Bev Perdue signed House Bill 36, requiring every employer of 25 or more to use the federal government’s “E-Verify” system to determine whether employees are authorized to work in the United States. The law, which will be phased in over the next two years, also opens the door for anonymous complaints to be filed with the N.C. Commissioner of Labor, if a person suspects a business of employing undocumented workers. The law will only apply to 20 or 30 percent of businesses across the state, a fact bemoaned by the bill’s sponsors.
However, the law could also succeed in creating employment roadblocks for both citizens and non-citizens. The system has proven to have a higher error rate, often missing undocumented job applicants and also wrongfully flagging U.S. citizens. A federal evaluation of its own program found that E-Verify is unable to correctly identify an unauthorized worker more than 50 percent of the time.
VOTER ID: Bill intended to deter fraud also disenfranchises voters
Last February, North Carolina Republicans introduced House Bill 351, “Restore Confidence in Government.” It’s a misleading title for legislation that would entirely negate such confidence in the low-income, senior, female, disabled and minority voters that would be disenfranchised through the passage of this bill.
Gov. Bev Perdue vetoed the Voter ID bill last week, a law that would have required all voters to show photo ID before they could vote. “North Carolinians who are eligible to vote have a constitutionally guaranteed right to cast their ballots, and no one should put up obstacles to citizens exercising that right,” Perdue said. “This bill, as written, will unnecessarily and unfairly disenfranchise many eligible and legitimate voters.”
The bill was sold as being a countermeasure to voter fraud, despite the fact that investigations by the State Board of Elections only found 5 votes per million cast in North Carolina from 2004 to 2010 involved identify fraud. Fraud is not the issue here. Instead, it’s the thousands of voters who lack driver’s licenses or other government ID and simply wish to cast their ballot as North Carolinians that will suffer from a bill that pushes the state back, not forward.
This spring, no fewer than 13 state legislatures across the U.S. have attempted to advance Voter ID legislation. After a presidential election in 2008 that saw record turn-outs for students and voters of color, a bill that only makes the election process harder seems to be a preemptive move against future elections that once again may bring first-time voters out of the woodwork. Gov. Perdue acted rightly in rejecting the voter suppression act. Without the turnaround votes of any House Democrats, we can only hope that a veto override fails, and the Voter ID bill is defeated for another year.
RAINY DAY FUND: Protecting the state in a future recession
This year’s budget cuts for public investments might have been a little less painful if only our state leaders had saved for a rainy day
New research from the Budget and Tax Center found that implementing reforms for the North Carolina Rainy Day Fund could help protect our vital public investments in a future recession. The Fund was initially created to minimize the effect of economic downturns, through making responsible saving deposits in years of economic growth. State policymakers failed to save adequately in the years before the 2001 or the Great Recession, and now economic recovery has slowed even more than necessary.
Although the current target for total savings in the Rainy Day Fund is 8 percent of the previous year’s budget, the Fund’s balance has never exceeded 5 percent of the prior year’s budget in its entire 20-year existence. There is rarely money left-over for the fund. But doubling the Fund’s target to 16 percent and making saving decisions at the beginning of the budget cycle could protect the state’s economy and investments.
Such reforms could have a huge effect on the future economy. It’s time to set aside short-term quick fixes and excessive budget cuts, and instead, save for the future so that North Carolina’s public structures aren’t paying for the sins of the past.
JUDGE MANNING: Ruling could deem education cuts unconstitutional
Superior Court Judge Howard Manning Jr. is currently in a potentially powerful position, one that could have a direct effect on the future of education in North Carolina.
With the new $19.7 billion budget going into effect on July 1, Judge Manning seems to be the last defense between devastating budget cuts and the public education programs that could be eviscerated without intervention. Last week, attorneys representing five low-wealth school districts requested that the Wake County judge issue an injunction against budget plans that would cut the early childhood education program More at Four by $32 million. They argued that cuts could lead to “immediate and irreparable” damage to the state’s most vulnerable students, and that the new budget fails to fulfill the state’s constitutional mandate – under the Supreme Court rulings known as Leandro – to provide a sound, basic education for all children.
Judge Manning heard arguments that co-pay requirements for More at Four would create a significant barrier for low-income families, and that the elimination of tutoring and summer programs would deny thousands of children access to critical education opportunities. More at Four, a program specifically designed to prepare low-income children before kindergarten, would essentially lose the elements that make up the heart of the program.
It’s unlikely that Judge Manning ever thought he’d be at the heart of such a critical political battle, but in calling the hearings, he made it clear that the state should not be excused from its constitutional obligation to its children, regardless of financial troubles. He is in the position to make an important decree – that the current state budget undoes the Leandro rulings and dismantles North Carolina’s valuable early childhood education programs.