10 things to know about the N.C. budget + what it tells us about our state’s priorities
Late on Friday, September 18, the North Carolina General Assembly passed a budget that will govern how the state spends its money over the next two years. Before your eyes glaze over at the thought of reading an article about a budget, I’d like to challenge you to think about the budget as more than a list of what money goes where. Rather think about the budget as a way that the people who represent you in the legislature tell you what they think is important for your government to do for you and your neighbors.
Think about your own household budget. What are your priorities for how you spend your income? Housing. Groceries. Transportation. Health care. Necessities for your children. Saving for retirement or a rainy day. Maybe you are lucky enough to have a bit left over after you take care of these necessities.
I allocate a bit of my left over money to candidates running for office – because I believe it’s important to support people who are or would be good lawmakers and that have demonstrated a commitment to public service. Maybe you donate to a favorite charity, cultural organization or your church. Maybe you’d rather spend your money on keeping your Kindle library stocked while your significant other thinks movie tickets are the way to go. The way you spend your money reflects your preferences and what’s important to you. Just like the way legislators spend money reflects what they feel is important to our state.
Below are ten things that you may find interesting about how the legislature plans to spend your tax dollars. The budget is over 400 pages long, so this is by no means a complete list.
(1) We’re spending more on education, but not nearly enough
- The budget allows for TA funding at around the same levels as last year, but that’s still about 7,000 fewer TAs than we employed pre-recession. You should check out the Twitter feeds associated with #1dayTA. Several elected officials, including Mecklenburg’s own Sen. Jeff Jackson, have shadowed TAs in local public schools and learned just how hard these folks work and what an invaluable resource they are to the education system.
- It gives teachers and staff a one-time bonus of $750, and slightly increases the salaries of new teachers. It does not include a plan to raise teacher pay to meet the national average. Hey, but teachers you’re supposed to get that $750 by December, so happy shopping! Mecklenburg Rep. Tricia Cotham advocated for more, calling this $750 tantamount to a “tip.”
- It increases amounts spent on summer reading camps for at-risk elementary school students, reducing class size, digital learning, and WiFi/broadband access by schools.
- While there’s a slight increase in textbook funding, we still are not at pre-recession levels.
- It does nothing to change North Carolina’s rank in per-pupil spending.
(2) It focuses more on fixing potholes than funding mass transit
- There’s $189 million in increased funding for bridges, road resurfacing, and road maintenance allocated for this year alone. This is pretty desperately needed as our infrastructure is aging and needs to be maintained.
- However, the legislature specifically capped the amount of state funding that can be allocated to light-rail projects at $500,000. The triangle has been trying to get a light-rail project off the ground for nearly a decade, and Charlotte has light rail expansion plans. Both projects could be affected by this cap.
- Since you’ll be in your car instead of on the light rail, the budget also contains provisions to establish a special “DOT Report” program that requires the DOT to patch potholes within two days of when you complain!
(3) The renewable energy tax credit is no more
- While the tax credit was scheduled to end this year, the legislature has been urged by businesses, solar producers, and economic development specialists to extend the credit. The booming solar business in North Carolina has largely been attributed to the 35 percent credit. According to proponents of the credit, every $1 spent on the tax credit has resulted in $1.53 in new tax revenue for state and local government.
- Sen. Bob Rucho from Mecklenburg was one of the leaders of the charge to do away with the credit. In general, opponents of the tax credit say that doing away with it saves taxpayers and utility customers money, even though the power is sold to utilities at mandated rates designed not to increase charges for power.
(4) It prohibits money being spent on family planning services, pregnancy prevention activities, or adolescent parenting programs if Planned Parenthood is involved
- Melissa Reed with Planned Parenthood South Atlantic says the provision would affect renewals of teen pregnancy prevention programs in Fayetteville and Wilmington, which receive $135,000 from the state. Reed says eliminating the grants for highly effective programs would likely lead to more adolescent pregnancies.
- Technically it prohibits renewing or creating contracts for these programs “with any provider that performs abortions.”
(5) There are several new public safety expenditures including raises to personnel at the Department of Corrections and funding for dash and body cams
- Gov. McCrory pushed hard for prison guard raises, seeing this as a big public safety issue. There were a couple of big prison breaks this year in other states that garnered national attention, so he may be right. Plus, have you seen the third season of Orange is the New Black?
(6) It sets aside $225 million to privatize Medicaid
- Medicaid, our government health insurance program for the poor, has been the bane of the legislature’s existence for a while now, as it regularly comes in over-budget. Mismanagement, over-spending, technology screw-ups, you name it, we’ve suffered it. So they’ve decided privatization — changing from a fee for service system to one in which managed care entities receive a set monthly payment per patient — is the solution to the problem.
- No plans appear in the budget to pass Medicaid expansion and receive additional money from the federal government under the Affordable Care Act.
(7) Grants to bring film industry jobs back to the state got increased cash
- Maybe learning from the error of their ways as Atlanta became the Southeast film hub that Wilmington used to be, the budget accounts for an increase in funds in a grant program for film, TV, and commercial productions from $10 million to $30 million, with increased caps on grants for individual productions.
(8) You’ll probably pay somewhere around $150 less in personal income taxes, and the exemption for medical expenses is returning
- The current personal income tax rate is 5.75 percent. It will drop to 5.499 percent in 2017. For someone who has to pay income tax on $60,000, after excluding the standard deduction amount, the tax bill would be about $150 less.
- The 2013 tax reform bill eliminated many personal income tax exemptions, which resulted in a larger state tax bill for some than they were used to paying. Seniors were hit particularly hard when the medical expense deduction was dropped. This year, the medical expense deduction returns for everyone. Grams will be happy.
(9) The corporate income tax rate will drop to 4 percent this year and corporations will now pay tax based on a “single sales factor” system, which will result in $7.9 million less in revenue coming to the state in 2016 and $70 million less by 2018-19
- This single sales factor system is a boon to manufacturers who will pay based on how much they sell rather than how big their payroll is or how much equipment they own and use.
(10) You will now pay sales tax on the repair, maintenance and installation of “tangible personal property,” like your car. Oh, and you’ll also get charged more at the DMV
- The North Carolina Constitution requires that our budget be balanced. The money that is given back via corporate and personal income tax breaks has to disappear from budget expenditures or be replaced by a different revenue source.
- The revenue source that the legislature chose to enact under the budget is an expanded sales tax. In the past, when you got your car repaired, you weren’t taxed on the service. Under this new scheme, you will be.
- The changes take effect on March 1, 2016 and are expected to raise $159.5 million a year.
- Fees will also be raised on a number of services from a number of state agencies. DMV fees will go from 25 to 33 percent, generating $227 million in new revenues over two years. However, those of us that will have to renew our driver licenses next year (like me) will have to pay $40, versus the current $32.
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