Few pieces of legislation have more impact on our kids and communities than the state budget. The Senate passed its budget proposal on June 25th. Make no mistake, there are some strong provisions that mean good news for North Carolina kids and families. But there are three vital areas that House members need to address, to ensure that North Carolina doesn’t short-change our kids. As we come together to struggle out of the pandemic, we need our legislators use historic revenues to make sure our state, and our kids in particular, can weather future storms.
The House of Representatives is working on their version of the budget now. Here are our recommended fixes to put North Carolina back on the right track for our kids and families:
1. Axe the corporate tax cuts.
Because the state has a revenue surplus, the Senate has proposed slashing both personal income taxes and corporate taxes over the next five years. But North Carolina already has one of the lowest corporate tax rates in the nation. The dramatic tax rate cuts proposed in the Senate budget will cut state revenues by billions of dollars per year over the next five years, hamstringing the state’s ability to fund education, public safety, health, transportation, and more.
Tax relief should be carefully targeted to those for whom it would make the greatest difference. The NC General Assembly could target tax relief by restoring the Earned Income Tax Credit, increasing the state’s Child Tax Credit, and reinstating the state’s child and dependent care tax credit for lower-income earners. Instead, the Senate’s budget proposal would mean a reduced tax rate for everyone, and zero corporate taxes paid by the likes of Apple, Amazon, FedEx, Food Lion, Bank of America, and Lowe’s. That’s not the relief North Carolina taxpayers need.
2. Don’t let one-time funding starve out sustainable investments in kids and families.
The historic level of funding from the American Rescue Plan, coupled with a huge revenue balance, meant Senators had the chance to fund many long-standing needs, such as infrastructure and capital improvement projects, with one-time dollars. Those are important investments.
But all that one-time spending seemed to make Senators shy about actually using the state’s recurring funds for North Carolina’s most important resource – its people. Early education, K-12, mental health, funding for critical human infrastructure like teachers and public employees got minimal to no increases in recurring funding in the Senate budget – with the promise of huge cuts to come if the tax cuts are enacted.
3. Post-pandemic, invest in resilience, not just recovery.
The pandemic has been disastrous for many families, and especially for children, who are only at the beginning of coping with the mental health impacts inflicted by financial distress, isolation, grief and loss.
One-time expenditures don’t fund the people and programs kids need to thrive in the wake of such a devastating year. The state’s mental health system is in chaos. Hundreds of thousands of parents have no health coverage. School nurses are stretched across multiple schools every day. Teachers are having to serve as de facto health aides and therapists. Children in the foster care system have even been sleeping on DSS office floors. Children with special needs have been left on the sidelines as their families struggle to make impossible choices.
We have the funding we need to deal with all of these issues, and to build back a state that can weather the next emergency without sacrificing our kids’ well-being. But we can’t do it if state legislators choose corporate tax cuts over our families.
No budget is perfect, and we expect to see negotiations and compromises as the Senate, House, and Governor try to come to an agreement for state spending over the coming fiscal year. The good news is, there’s plenty of time for the House of Representatives to make these fixes, and work out a budget that makes North Carolina stronger for the long haul.