It is too generous to call the new state budget a spending plan. It is a spending reaction. Leaders should have a plan, a goal. This is a budget drawn by ideologues who blinked.
Much of what is laid out in the $21.7 billion budget is determined by mandatory responses to growth in education and Medicaid costs. There’s also an “I’m sorry” restoration of the medical expense deduction for seniors, a removal that provoked a strong reaction from a constituency the GOP must win.
And there are “never mind” elements in the decision not to follow the state Senate’s call to eliminate funding for teacher assistants and driver’s education, proposals that provoked teachers and parents alike.
The budget that arrived two months late is not the draconian version the Senate approved. The House – and public outcry – took the sharpest edges off the Senate’s cuts. But the modified version is hardly moderate and a long way from adequate.
There are a few positive elements. Community colleges, a resource for young people and workers displaced by the Great Recession, received a significant boost in funding. The legislature did not, as threatened, gut funding for the job-creating N.C. Biotechnology Center. And starting teacher pay will be boosted from $33,000 to $35,000. The state’s reserve fund was prudently bolstered.
But overall the budget, given inflation and population growth, remains mired at recession levels. While other states invest surpluses to increase stagnant state employee and teachers salaries, North Carolina’s legislature proposes a one-shot $750 bonus and gives away the recovery’s growing revenue in tax cuts to wealthy individuals and profitable, multi-state corporations that will take, but hardly need, the state’s largesse.
Middle- and low-income wage earners won’t see a meaningful boost from the tax cuts. But they will feel the bite of an expanded sales tax that applies to the cost of auto and household repairs. And they’ll see a state in decline, its public schools strapped, its public employees stiffed for yet another year and its infrastructure fraying.
Meg Wiehe, state tax policy director for the Institute on Taxation and Economic Policy, a nonprofit, nonpartisan group that advocates tax fairness, says North Carolina is virtually alone in the nation in giving away the fruits of recovery.
“It’s very counter to what we’ve seen in other states where revenue has come back and states are making investments to make up for cuts during the recession,” Wiehe says.
The only other state indulging in repeated tax cuts is Ohio, Wiehe says, but Ohio has approved a federally funded expansion of its Medicaid program and added an earned income tax credit for low-wage earners. North Carolina, along with 18 other states, is still rejecting the billions of federal health care dollars expansion would bring and has eliminated its earned income tax credit.
If North Carolina’s Republican leaders really had a spending plan, they wouldn’t have needed an extra two months to get it through a legislature with Republican super majorities in both both houses.
What they came up with is a budget that follows trickle-down theories even as more Republicans rebel against that folly. Donald Trump is leading the field of Republican presidential candidates by saying he will increase taxes on the rich and won’t let “hedge fund guys rip off the people by paying no or very little in taxes.”
Most North Carolinians understand that the state won’t prosper simply by making the prosperous more so. That’s why an August Public Policy Polling poll found the General Assembly’s approval rating at 15 percent versus a 60 percent disapproval.
Republicans have one more year of legislative control before they face a reckoning with voters. Between now and then, they’ll need to show they can lead rather than cut, react, restore and guess at how much voters will tolerate.