We knew it was going to be bad.
All summer long—as the July 1 budget deadline came and went, with Republican lawmakers negotiating in secret—we knew the end result would do little to restore education funding and less to alleviate the state's rising unemployment rate. We knew, too, that it would sacrifice necessary investment at the altar of supply-side economics. And we also knew that something would emerge from left field that would make us bang our heads against the wall in impotent fury.
In other words, we knew we were about to get screwed. It was just a matter of how bad.
All of that happened, but we still somehow breathed a sigh of relief: It could have been worse—and would have been, had the far-right Senate gotten its way. Instead we got a 3.1 percent budget increase and only a modest personal income tax cut. School districts got to keep their teacher assistants and driver's ed funding. New teachers got small raises and state employees got bonuses. Metros were spared the Senate's plans to divert their sales taxes to rural areas and eviscerate their municipal service districts.
So, yes, the $21.7 billion budget could have been worse. But that doesn't make it good. (And keep in mind, this 429-page bill was dropped on senators the day before they had to vote on it). To get you started on this parade of horribles, we've assembled a list of five of the budget's most odious offenses, in no particular order:
Two years ago, the Legislature reduced and flattened the state's income-tax rate, meaning that rich people would pay a lot less. Because the Legislature also rescinded a number of tax exemptions, however, many lower-income people actually saw their taxes go up.
The same dynamic holds true in this budget: While the income tax drops from 5.75 percent to 5.499 percent and the standard deduction rises by $500—if you make $1 million a year, you save $2,500; if you make $50,000 a year, $118—and while the corporate income tax continues to fall and the bank privilege tax is repealed, the sales tax is being expanded to maintenance and repairs of private property (i.e., your oil change will cost 6.75 percent more in Raleigh, 7.5 more percent in Durham). All of that money, projected at $85 million a year, will go to rural counties, no matter where the services are performed.
- Illustration by Skillet Gilmore
Over the next five years, corporate and other tax breaks will cost the state nearly $4 billion. Proposals to restore the state's Earned Income Tax Credit, which primarily benefits the very same poor people the new sales taxes will hit hardest, went nowhere.
The budget's tax cuts will shrink state coffers by $384 million, under the dubious theory that the new jobs created by lower taxes will more than make up the difference, eventually. (Despite lower income taxes, the state's unemployment rate has been climbing this year, to 5.9 percent.) This, of course, is $384 million that can't be used to fund any of the state's very pressing needs, including schools. Under this budget, new teachers will make $35,000 instead of $33,000, and some more experienced teachers will get small raises, too. But per-pupil spending is—adjusting for inflation—still in free fall, down from $5,511 in 2007–08 to $4,634 in 2016–17, according to the Legislature's Fiscal Research Division.
The percentage of the state budget dedicated to public schools has dropped, too, from 52.5 percent in 1970 to just 30.2 percent today. Private-school voucher funding, however, will more than double, to $24.8 million. Meanwhile, the UNC system will take an $18 million hit, and annual tuition at community colleges will increase by $128. While they were at it, the Legislature also yanked funding for Hunt Institute, an education think tank founded by the former Democratic governor.
While the Legislature found $225 million to privatize Medicaid—which is still not being expanded, by the way—it kneecapped the Durham-Orange County light-rail project, and any future light-rail ambitions, for that matter. And maybe we should have seen it coming, even though it was never brought up before the budget's release last week: Did we really expect Republicans to back a transit project in a progressive bastion they'll never hope to win? While the state Board of Transportation had promised GoTriangle $138 million for the 17-mile rail line, the Legislature capped the amount the state would kick in to light-rail projects at $500,000, which is basically nothing. (The limit doesn't apply to the regional rail line Wake County is considering.)
There are legitimate questions about the $1.5 billion light-rail plan—mainly, whether it should be sucking up dollars that could go to needed bus-system improvements, and whether the rail line serves the communities that most need it—but lawmakers' myopic focus on roads and cars, and their willingness to ignore the half-cent sales tax commitments from Durham and Orange counties that, along with federal dollars, would fund 75 percent of the project, doesn't bode well for future transit endeavors.
Given that the Legislature has been rolling back environmental protections all session long, and given the prevailing animus toward all things green, it came as no surprise that this year's budget eliminates the 35 percent renewable energy tax credit that has helped North Carolina's solar industry thrive in recent years. (The Renewable Energy Portfolio Standards, which require utilities to buy an increasing proportion of their power from small, renewable sources, have so far survived.) Those tax credits spurred $645 million in green energy investment between 2010 and 2013, but drained $73 million from state coffers. And the Legislature had other priorities.
Like, for instance, subsidizing natural gas drillers. The budget allows the N.C. Department of Environment and Natural Resources to spend a half-million dollars helping the industry explore shale deposits, which Commerce (and former DENR) Secretary John Skvarla has argued would make the state more attractive to energy companies. Big Oil trumped Big Solar, much to the Civitas Institute's delight. ("More than $200 million in special tax breaks that favored one industry at the expense of NC taxpayers and power customers will expire on Dec. 31," the Art Pope-founded outfit gushed.)
At the same time, the Legislature awarded another $1.5 million to what environmentalists call the "boondoggle" SolarBee project in the polluted Jordan Lake and delayed upstream pollution controls for another three years.
In the wake of propaganda videos from antiabortion radicals suggesting—falsely—that Planned Parenthood gleefully sells fetal body parts for fun and profit, defunding the health care organization has become a cause célèbre in conservative quarters. In Washington, Republicans are talking about shutting down the government if Planned Parenthood funding isn't eliminated. In North Carolina, they just did it.
On page 163 of the budget bill, there's a paragraph that prohibits the state from contracting with "any provider that performs abortions" to provide "family planning services, pregnancy prevention activities, or adolescent parenting programs." (While Planned Parenthood offers abortion services, state money does not pay for abortions.) In Fayetteville and Wilmington, representatives from Planned Parenthood South Atlantic have told the media, that might spell the end of a successful teen-pregnancy prevention program—which could, ironically enough, lead to more abortions.
Additional research by Jane Porter.