Statement on Governor’s Released Budget Proposal from Alexandra Sirota, Director of the Budget and Tax Center

RALEIGH (April 27, 2016) — Now that the Governor’s budget proposal has been released, it is clear that unanticipated revenues available due to a recovering national economy and the lower than anticipated costs in Medicaid are allowing the Governor to pursue small, targeted investments to promote child well-being and support improved educational outcomes.

These additional investments represent a small fraction of what is needed to realize Governor McCrory’s principles of preparing for future growth and helping those who are struggling in today’s economy. It is certainly unclear how the Governor will sustain any new public investments with the already scheduled phase-in of additional cuts to the personal and corporate income tax and the heavy reliance on Medicaid “savings” as a primary source of dollars.

The Governor is limited by the costly income tax cuts implemented since 2013 that primarily benefit wealthy and profitable corporations, which result in at least $1 billion less in revenue each year than what would otherwise have been available to build the solid foundation that North Carolina needs to ensure the economy works for everyone. This makes it impossible to build into the budget much-needed pay increases for all teachers and state employees and make the smart investments that will support a high quality of life and allow North Carolina to compete.

Specifically, the tax cuts force bad choices like providing bonuses versus salary raises, selecting only certain public employees and not everyone to receive a pay raise that will also boost local economies, leaving certain waiting lists unaddressed and keeping in place many of the tuition increases and fee increases that have been implemented over the years. It is, however, very important that the Governor has chosen to seek even this modest reinvestment over more tax cuts that would primarily benefit profitable corporations and the wealthy, shift the tax load onto middle- and low-income taxpayers, and only further distance North Carolina from achieving our potential.

The General Assembly should choose reinvestment over tax cuts for the wealthy or arbitrary spending targets as well and commit to building an economy that works for everyone.

FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, alexandra@ncjustice.org, 919.861.1468; Julia Hawes, julia@ncjustice.org, 919.863.2406.