Prosperity Watch Issue 51, No. 3: State Budgets Can Be Strong Anti-Poverty Tools

July 14, 2015

Today, more than 1.7 million North Carolinians find affording basics like rent, food, and childcare to be a daily challenge. The state’s poverty rate has either increased or stayed flat each year since 2007 even with the modest economic recovery. Despite such persistent levels of economic hardship, North Carolina’s top policymakers have yet to forge a comprehensive anti-poverty strategy for people and communities across the state.

The state budget is one tool that lawmakers can use to reduce poverty if it adequately invests in programs that connect low-income children, families, and communities to ladders of opportunity. However, public investments that reduce poverty and promote a strong, inclusive middle class—things like quality schools, affordable housing and healthcare, a sound transportation system, and safe, healthy neighborhoods—are increasingly scarce in North Carolina.

The proposed state House and Senate budget proposals miss the mark when it comes to including a strong anti-poverty vision. For starters, neither budget would create an anti-poverty task force to kick off a comprehensive statewide conversation on Tar Heel poverty (as outlined in House Bill 28). And neither proposal reenacts the state Earned Income Tax Credit, which built upon the successes of the federal credit, the nation’s most effective anti-poverty tool.

Worse yet, both proposals continue to underinvest in people and communities. Stark levels of underinvestment would remain in the NC pre-kindergarten program, per-pupil spending in the public school system would still be lower than when the recession hit, community college tuition would increase for the eighth year in a row, affordable housing investments would increase but remain below peak levels, and hundreds of thousands of North Carolinians would be shut out of affordable health care options—to list just a few examples.

Both proposals are hampered by further tax cuts that do nothing to reduce poverty. The resulting revenue loss limits reinvestments that build foundations of opportunity and help people move up and out of poverty. Some of these investments are outlined in the graphic below.

Economic exclusion and hardship keeps us all from achieving a better future. It is an economic imperative for North Carolina’s lawmakers to develop a comprehensive strategy to reduce poverty and create pathways into the middle class. Doing so would move North Carolina forward.

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