NC budget should prioritize needs of a state recovering from COVID-19 above income tax cuts for the wealthy

RALEIGH, NC (July 28, 2021) — As some legislative leaders leave Raleigh to attend the annual American Legislative Exchange Council (ALEC) conference in Salt Lake City that starts today, the state budget is still being developed without a process for collecting public input and reflecting on hardship across the state.

As recent Prosperity Watch analysis found, one in four households can’t afford usual expenses and one in six households is behind on rent.

The North Carolina Justice Center delivered a letter last week to North Carolina House members, urging them to reject the state Senate’s budget proposal and focus on driving available state and federal dollars toward systemic needs in health care, education, housing, and criminal justice.

ALEC has been a force behind anti-government, anti-tax agendas in states, including North Carolina, by advancing policies built on the flawed notion that low taxes will boost economies. Legislative leaders have embraced these ideas in their approach to the state budget — putting forward proposals in 2013 to outright eliminate income taxes and moving forward that process in successive policy proposals.

The latest proposal from the NC Senate would eliminate the tax on corporate profits by 2028 and continue phasing down the flat personal income tax to zero by reducing the rate to 3.99 percent. This would deliver the greatest tax cut to the richest North Carolinians and reduce future capacity to meet ongoing needs.

“North Carolina leaders can afford to make progress on key priorities that people across the state have identified and put future generations on sounder financial footing so that the next crisis isn’t as damaging and doesn’t grow inequality,” said Alexandra Sirota, Director, Budget & Tax Center, a project of the NC Justice Center. “The NC General Assembly should commit to working with all elected leaders in the state as well as the people they represent in order to understand and solve the challenges we all are facing.”

New polling data from State Innovation Exchange shows that North Carolinians are opposed to this path forward and don’t want to see the elimination of corporate income taxes in a final budget. Instead, North Carolinians want to see investments in health care, education, and housing — the foundations of strong communities and family well-being. The poll found that North Carolina voters prefer investment over austerity by more than a two-to-one margin. 

“The North Carolina budget is a moral document, and our legislators have a responsibility to be accountable to the people they serve,” said Nida Allam, the North Carolina State Director for State Innovation Exchange. “Polling clearly shows that the people of North Carolina — across the political spectrum — overwhelmingly want investment in infrastructure, education, and healthcare, not tax cuts for corporations.”

Policy ideas and public investments that the NC House budget should pursue include investment in a sound, basic education for every child; a commitment to accessible affordable early education; a comprehensive effort to close the Medicaid coverage gap and drive available federal dollars to achieve equitable health outcomes; and a down payment on the construction of much needed affordable housing units to keep people in stable, healthy housing.

“North Carolina has the ability, the obligation, and the opportunity to finally comply with our state constitution by providing access to a sound basic education to every child,” said Sarah Montgomery, Senior Policy Advocate with the NC Justice Center’s Education & Law Project and organizer with the Every Child NC coalition. “To not do so sends a clear signal to parents, students, and school staff across our state that public education is not a priority for this General Assembly.”

Health care advocates also called on state lawmakers to prioritize Medicaid expansion.

“Make no mistake, every week someone dies from lack of medical care, care that could be accessible if it were for expansion of Medicaid, something 39 other states have done, something we have to do here in North Carolina,” said Nicole Dozier, director of the Health Advocacy Project at the NC Justice Center.

In addition to health care and education, the needs of North Carolinians reentering their communities must also be prioritized.

“Public safety means that all NC residents have access to their essential needs, such as meaningful employment and affordable housing,” said Laura Holland, director of the Fair Chance Criminal Justice Project. “This is especially true for people returning to their communities after a period of incarceration. Our state must adequately fund local reentry councils and community-based reentry programs.”

Additional resources and analysis for state budget coverage can be found here: 

2021 budget analysis from the Budget & Tax Center

Nine Ways the Senate Budget Falls Well Short of What North Carolina Needs — NC Policy Watch

Five Takeaways from the Senate’s Budget Proposal — NC Policy Watch

Choosing Tax Cuts Today Blocks North Carolina from a Resilient Future