May 10, 2011
BUDGET BLUNDERS: Devastating cuts to education, Medicaid
They did it. Despite outrage from all corners of the state, the NC House passed a budget that makes severe cuts to education at all levels, programs that support working families, and services that protect the state's most vulnerable citizens.
Under this proposal, the UNC system and K-12 schools would suffer budget cuts of $447 million and $759 million, respectively. Medicaid, which has been a lifeline for working families hit by the recession, will lose more than $2 billion in state and federal funds over the next two years. North Carolina’s award-winning early childhood programs, More at Four and Smart Start, would be deeply cut—to the tune of more than $100 million—and restructured in way that undermines the core missions of each program.
Despite House Speaker Tillis’ refrain that all options are on the table during the budget process, it’s clear that all options have not been considered. For example, if legislators had decided to simply continue the tax package passed in 2009 (a one-cent sales tax increase and a small income tax surcharge for high earners and corporations), they could have maintained current funding levels for K-12 education, the UNC system, community colleges, More at Four and Smart Start. Instead, North Carolina is heading down a path that favors ideology at the expense of pragmatism and progress.
Fortunately, the process isn’t over. Hopefully, the Senate will reconsider these drastic and unnecessary budget cuts.
37,000 FACES: Unemployed workers suffer as legislation drags on
Christy Zemcik of Charlotte called up legislators last week and begged them to restore the unemployment benefits that she and thousands of others depend on. In between calls, the 41-year-old former teacher packed her belongings into boxes. She’s being evicted, and she doesn’t know where she’ll end up.
North Carolina is now in its fourth week of a stalemate over the federally funded benefits for 37,000 jobless North Carolinians. In April, the state legislature passed a measure that would have allowed federal dollars to flow through to people facing long-term unemployment. But the bill included a rider that would have forced Gov. Perdue to make deeper cuts to the state spending if a new budget wasn’t in place by June 30. Perdue vetoed that bill but said she would sign a clean bill. So far, the legislature hasn’t passed such a bill.
So weeks of political sparring have left Zemcik teetering on the edge of financial ruin and frustrated with the inaction in Raleigh. “My life is not a game,” she said.
Read more about Christy Zemcik’s struggles on NC Policy Watch.
NEW HEALTH INSURANCE MARKET: Vote approaches on HB 115
Today, the House Insurance Committee will hear the bill that would establish a new health insurance market in North Carolina that includes no consumer protections. The market is supposed to serve as a consumer-focused insurance marketplace and watchdog, but this legislation would severely undermine the market's ability to serve and protect consumers.
House Bill 115, the baby of Davidson Republican Rep. Jerry Dockham, would give Blue Cross considerable power in the new health exchange, but the bill's detriments do not end there:
- The funding is both damaging and insufficient. Individuals and small businesses would be charged a new health care tax to cover the cost of the exchange.
- The exchange is allowed to "collect and use advertising fees." Insurance companies could pay to have their plans listed prominently in the exchange, undermining the goal of promoting competition and creating an unbiased source of information for consumers.
- It is not accessible enough. House Bill 115 does not account for a technical advisory committee that would focus on reaching hard-to-reach populations and ensure that the exchange works with the ombudsman program at the NC Department of Insurance.
The flaws are many and must be addressed before the legislature passes a health exchange bill. This doesn't need to happen during this session—lawmakers should take the time to improve on these damaging elements of House Bill 115.
DEFENDERS OF JUSTICE: Buy tickets and become a sponsor today
The Justice Center will present its annual Defender of Justice Awards on May 19 to honor individuals and organizations that have made significant contributions in the fight against poverty in areas that reflect the scope of the Justice Centers work.
Join us on May 19 to celebrate the great work of this year's award recipients. Buy tickets online today.
You can also help support the Awards celebration and the ongoing work of the Justice Center by becoming a sponsor of the event. Click here for information about sponsorship options.
The NC Justice Center's
2011 Defenders of Justice Honorees
RECEPTION AND AWARDS DINNER
Thursday, May 19, 6 pm - 9 pm
American Tobacco Campus, Bay 7, Durham, NC
State Senator Josh Stein of Wake County for his commitment to expanding protections for homeowners, consumers and low-income families throughout North Carolina
State Representative Angela Bryant of Nash County for her work to improve NC's systems of civil, criminal and juvenile justice, fight poverty, promote economic development and affordable housing, and secure equal rights for women and people of color
Democracy North Carolina for fighting to protect voting rights, increase voter participation and reduce the influence of big money in politics
The law firm of Elliot, Pishko and Morgan of Winston-Salem for two decades of effective and passionate advocacy for workers' rights and civil rights
Coalición de Organizaciones Latino-Americanas (COLA) of Asheville for their work improving the lives of workers and families in Latino communities in western North Carolina
Community Success Initiative for empowering and giving hope to people released from incarceration and helping them access the services and opportunities they need to build new lives
TICKETS ARE NOW AVAILABLE ONLINE.
INDIGENT DEFENSE: Cuts would harm public defenders, defendants
More than ten years ago, the General Assembly established the Office of Indigent Defense Services and charged its staff to provide legal representation to defendants who were "financially unable to secure legal representation and to provide all other necessary expenses of representation in an action or proceeding." Since then, the IDS has ensured that hundreds of North Carolinians have had rightful access to justice, providing representation through Public Defenders or Private Assigned Counsel.
Yet the current House Budget proposes a devastating cut from IDS—an $11.3 million reduction from the continuation budget for the upcoming fiscal year, on top of a shortfall in funding that will leave an estimated $13 million in unpaid fees due to previous reductions by the General Assembly. In total, IDS would face underfunding of $32 million.
Indigent Defense Services is a critical part of fair and equal access to justice under the law, and ultimately it saves the state millions. Failing to invest in these vital services would only increase long-term costs to the state, as well as reduce the availability of effective representation. Raising revenue to assure funding for IDS would protect the fairness of North Carolina's justice system and be a financially sound move.
OVERSELLING TAX CUTS: Model overestimates impact on jobs
State legislative leaders are now promoting a dramatically misleading study on the impact tax cuts would have on job growth.
The study, performed by UNC’s Center for Competitive Economies, overstates the economic impact of these cuts by using “multipliers” that are as much as five times higher than widely accepted standards. But even more egregious is the fact that this analysis completely ignores the economic impact of the spending cuts that will be needed to pay for these tax cuts—as if thousands of teachers, services providers and other public workers don’t matter, and as if the jobs those workers create when they spend their paychecks at local businesses are irrelevant.
In fact, it is these public investments and services that are critical to building a skilled, healthy workforce capable of competing in a global economy, and they comprise the vast majority of state spending. Preserving these investments leads to job creation in the short term and promotes shared economic prosperity in the long term.
MILLIONAIRES' TAX: New bracket would raise $90 million in revenue
House Bill 879 proposes adding a new top bracket to North Carolina’s personal income tax with a marginal rate of 8.5 percent. The bracket would apply only to married couples with annual taxable income of more than $1 million per year and singles with taxable income of more than $600,000.
Staff at the General Assembly’s Fiscal Research Division have estimated that adding such a millionaires' bracket to North Carolina’s state income tax would raise $90 million in additional revenue in the coming fiscal year. The legislature could use that money to avoid some of the most damaging cuts in the House budget, such as cuts to early childhood education, K-12 education, and Medicaid.
Research shows that increasing taxes on upper-income earners doesn't cause them to flee to other states. That’s probably because even with a millionaires' tax in place, the rich would still pay less of their income in state and local taxes than low- and middle-income families.
NC'S TOBACCO WORKERS: Report finds dangerous, unfair practices
Hundreds of workers arrive in North Carolina each summer to harvest the state’s tobacco crop, a critical support of the state economy. Yet a new study by Oxfam America and the Farm Labor Organizing Committee, AFL-CIO (FLOC) shows that severe human rights abuses persist in certain NC tobacco fields.
Researchers conducted more than 100 interviews with farm workers, growers, tobacco manufacturers, and governmental and nongovernmental agencies and discovered that tobacco workers often face dangerous conditions in the fields and inhumane living conditions, and they receive sub-minimum wages. The report says that 25 percent of workers are paid less than the federal minimum of $7.25 per hour, and nearly all of the interviewees said they lived in inadequate housing.
The report urges manufacturers and industry leaders to pursue solutions to this issue, including a council of manufacturers, growers, workers, experts, and representatives to protect the rights of the tobacco workers. Tobacco behemoth Reynolds American Inc. has already responded in kind, pledging to create a council of stakeholders, tobacco manufacturers, growers, farm workers, and experts. This is a key first step, but other leaders must follow if the rights, health and livelihoods of tobacco workers are to be protected.
CRUCIAL CONVERSATION: Events address education cuts, revenue
NC Policy Watch will host two Crucial Conversation luncheons this month to address two key issues: education cuts and revenue modernization.
The first event will address the current debate over North Carolina’s university system budget. As state lawmakers contemplate a new and vastly reduced state budget for the upcoming biennium, the UNC system faces the greatest threat to its health and well-being in decades. What can and should average North Carolinians do and say about the matter? Join NC Policy Watch and UNC President Tom Ross as they discuss these questions at a Crucial Conversation luncheon at noon on Tuesday, May 17 at Marbles Kids Museum in downtown Raleigh. Register here for the event.
On Monday, May 23, NC Policy Watch will join forces with the NC Budget & Tax Center to host Matt Gardner, from the Institute on Taxation and Economic Policy. Together, they’ll discuss how North Carolina can modernize its revenue system to support public structures and economic recovery. The event will also be held at noon, at the Marble Kids Museum in Raleigh. More information to follow.