Fiscal Responsibility: 2017 Budget

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The Process

Every odd-numbered years (for example – this year – 2017); the North Carolina General Assembly (NCGA) enacts a biennium budget by June 30th (the end of the fiscal year). In the even-numbered years (next year – 2018), the NCGA convenes in a “short session” to make the necessary budget adjustments depending on revenues and the overall economy.

The Claim

Governor Roy Cooper called our conservative budget, “the most fiscally irresponsible budget” he had ever seen. Such baseless political rhetoric by the Governor asking for common ground is the most irresponsible aspect of the budget process.

The Facts

Roy Cooper simply has the wrong priorities, because the Republican budgets written by the NC House & Senate leader contained the following:

  • Tax Relief for middle-class families
  • 9.6% pay raise for teachers
  • Raises for state employees and retirees
  • Saving $363 Million for a rainy day
  • $100 Million for Hurricane Matthew Relief
  • $10 Million in opioid crisis funding
  • 3,535 new Pre-K slots.

The Republicans’ budget prioritizes the following, which has received acclamations (here, here, and here) as the very definition of fiscal responsibility.

Fiscally Responsible 

Thirty-three states faced budget shortfalls in 2017, while 23 made mid-year budget reductions due to stagnant revenue collections, according to a ‘Fiscal Survey of States’ by the National Association of State Budget Officers (NASBO). Illinois could soon become the first state with a ‘junk’ credit rating. North Carolina, by contrast, has paid off $2 billion in debt since 2011 and saved a record $1.8 billion in reserves – a $4 billion swing – under Republican leadership. Moody’s Investor Service recently praised North Carolina’s fiscal responsibility and rainy day fund requirement as “credit positive” commitments. The nonpartisan Tax Foundation has moved North Carolina from 44th worst to 11th best in its State Business Tax Climate Index since the General Assembly lowered the sales tax rate, the income tax rate and the corporate tax rate statewide since 2011. The General Assembly has passed dozens of pro-growth regulatory reforms since 2011 that made a major impact on the state’s positive economic and fiscal outlook.

Tax Relief for All North Carolinians

The General Assembly’s tax relief removes 95,000 low-income North Carolinians from any income tax liability. The General Assembly plan increases the percent of total tax liability for those making more than $100,000 and lowers the percent of total tax liability for those making less than $100,000. The Republican-led plan saves earners making less than $50,000 a higher percentage of their earnings than those making over $100,000, according to the legislature’s Fiscal Research Division. The General Assembly has tripled the zero-tax bracket for married families since 2013, helping those who earn the least, the most and saving the middle class a higher percentage of their income tax liability than those making over $100,000. Republican tax relief has consistently produced record savings and budget surpluses this decade, contrasting the deficits and debt that resulted from four sales tax increases by Democrats last decade.

Investing in Teachers and Our Children's Education

North Carolina has had the fastest rising teacher pay in the nation since 2014, according to PolitiFactNC and National Education Association data. The 2017 state budget is the fourth consecutive teacher pay raise delivered to North Carolina educators by the Republican-led state legislature, which also increased total educating spending by hundreds of millions of dollars every budget cycle since 2012. The General Assembly also provides supplement incentive programs for North Carolina educators including Teach for America, Salary Supplements for Highly Qualified Graduates, the Teacher Assistant Tuition Reimbursement Program and the N.C. Teaching Fellows. UNC System President Margaret Spellings supports the General Assembly budget, saying it “signals a greater investment in and strong support for the University,” furthering “accessibility, affordability and efficiency, and student success.” The 2017 state budget increases public education spending over $700 million from the previous biennium.

Saving for a Rainy Day

The General Assembly budget saves a record ‘rainy day fund’ of $1.8 billion, the highest amount and percentage of the state budget in state history. Cooper’s proposed budget had only a 2% difference with the General Assembly’s total spending, his average teacher raise had less than half-a-percent difference, and the legislature funded the same amount of Hurricane Matthew relief he requested at $100 million. The state budget drew bipartisan support in both the House and Senate.


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