Report: Senate budget shorts education, vital economic structures


Report: Senate budget shorts education, vital economic structures
Budget includes tax cuts for wealthy, harms lower- and middle-class North Carolinians

RALEIGH (May 24, 2013) – On Thursday, the NC Senate approved a $20.6 billion General Fund budget for fiscal year (FY) 2013-14 and a $21.0 billion budget for FY2014-15.

Analysts say the budget’s spending would fall far short of what is needed to maintain current service levels in several important areas, including the K-12 and higher education systems. These investments form the foundation of North Carolina’s economic future.

“With North Carolina slowly easing into economic recovery, this budget falls far short of what is needed to support growth,” said report author Tazra Mitchell, a public policy fellow with NC Budget & Tax Center. “Services that support children, families and communities across North Carolina would suffer.”

The budget is particular stingy when compared to pre-recession budgets: the FY2014 budget would spend 8.5 percent less than the last state budget approved before the onset of the Great Recession (FY2007-08) when adjusted for inflation.

Worse, the budget fails to reinvest in revenue growth. Instead, budget plans set the stage for a tax reform effort that would cut taxes for the wealthy and profitable businesses—according to a preliminary analysis—and would dramatically reduce resources to pay for vital services.

The Senate could have lessened this gap, Mitchell writes, by fully reinvesting the slight uptick in revenue collections into their budget. Instead, they chose to include a tax plan that would cause a $770.2 million loss over the biennium—and  an additional $229.8 million in the fiscal year following the biennium—in broadly shared public investments that create economic opportunity for all North Carolinians.

“The budget is doubly hard on working families,” said Alexandra Forter Sirota, director of the NC Budget & Tax Center. “First, it slashes funds for services they rely on, like education and health care. Also, by cutting taxes on the rich, it sets in motion a tax shift which will cause working families to pay more in taxes.” 

FOR MORE INFORMATION, CONTACT: Tazra Mitchell, NC Budget & Tax Center,, 919.861.1451; Jeff Shaw, Director of Communications, 503.551.3615.