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STATE
BUDGET UPDATE: Low and Moderate-Income Taxpayers Get Dumped on Again?
Like last week, this week the legislature ended with the full Appropriations
Chairs (the "Big Chairs") negotiating a final budget deal
in room 612 of the Legislative Office Building and announcements from
leadership on the floor of the House that the budget bill will be voted
on Tuesday and Wednesday of next week. We will see. The sticking point
continues to be how to raise enough money to fill at least half the
budget deficit. House and Senate members agree on raising several fees,
delaying certain tax breaks for families, and closing about $90 million
in tax loopholes. After that it is unclear.
There is much debate among House Democrats whether to include the lottery
in the budget and if it can pass. This came under new scrutiny when
several anti-lottery Democrats won their primaries - sometimes against
pro-lottery opponents. Several were known by their constituents to be
anti-lottery and so would publicly have to change their position to
vote for a budget that includes a lottery. At least five House Democrats
have declared they are firmly anti-lottery even if it means voting against
the budget.
The next issue is about whether to raise the sales tax. Local Governments,
whom everyone seemed to want to help a month ago, are now fighting to
get any new money to fill the hole made in their budgets when the Governor
and soon the legislature withhold state funds that have been going to
counties. The Senate would keep the half-cent state sales tax (added
last year) and let counties add another have cent if they want to fill
in their own deficits, making the sales tax 7 cents (or 7 1/2 in Mecklenburg).
The House passed a plan that phased out the state half-cent at the same
time it gave counties the option to raise a half-cent. This meant, at
the most the sales tax would not go over 6 1/2 cents, except in Mecklenburg.
The House has a small group of Democrats who continue to refuse to allow
the sales tax to increase another half-cent, to seven cents total, and
when combined with anti-tax Republicans they can defeat the Senate proposal.
The result is that so far there is not agreement between the House and
Senate on how to fund the budget and raise enough money to give to counties.
Without some new funding source from the state, most counties will be
forced to raise property taxes, which are low but very unpopular in
NC, or cut school funding.
It is time to bite the bullet, do the right thing, and pass a progressive
tax plan that generates reliable revenues that will naturally grow with
the state's growing population and needs. Some examples of this include
raising the corporate income tax, taxing services, and raising individual's
income tax. Ideally, some legislators in leadership and the Governor
would put forward such a plan - and there are plenty of good revenue
bills entered in the House to choose from - and then lobby it as hard
as the Governor has lobbied for the lottery.
The Big Chairs continue to try to finalize the spending plan - assuming
leadership can come to an agreement on how to raise money. It is not
yet clear where things stand. When we last saw a public meeting of the
Education subcommittee or the Health and Human Services subcommittee
neither had made enough cuts to reach their budget targets and some
items had not yet been resolved. They are still working hard and rumor
has it that House leaders have labored hard to maintain Health and Human
Services programs and funding. Both House and Senate leaders are working
to maintain education funding, it appeared.
Kim Cartron and Elaine Mejia of the NC Budget and Tax Center have written
a Budget Brief explaning in more detail the impact of these revenue
options. The found that the Governor has told legislators not to use
$281 million in funding options they found for the budget. To fill this
new hole in their budget process, budget negotiators (called conferees)
have turned to the lottery and adding another half-cent sales tax.
The North Carolina Budget and Tax Center in conjunction with the Institute
for Taxation and Economic Policy looked at who would pay for the proposed
lottery tax and sales tax increases (annualized) in North Carolina and
found the following:
•
The poorest fifth of taxpayers
(earning an average income of $8,900) would pay 17 times more as a
share of their income than the richest 1% of taxpayers.
•
The poorest fifth of taxpayers,
on average, will pay an additional $85 annually for the lottery and
sales tax increases. This would be approximately 1% of the income
for a taxpayer earning $8,900.
•
The middle fifth of taxpayers
(earning an average income of $31,000) would pay 6 times more as a
share of their income than the richest 1% of taxpayers.
•
The middle fifth of taxpayers,
on average, will pay an additional $115 annually for the lottery and
sales tax increases.
The proposed
tax increases are only filling the hole created when the governor took
certain revenues off the table. Through these two tax increases alone,
the conference budget will not be able to make significant improvements
over the House budget. Almost all of the $1 billion in cuts will still
stand, with sizeable cuts in Health and Human Services and Education.
In other words, this conference report does restore funding to programs
that serve the same struggling families that will shoulder the heaviest
burden for these tax increases.
Click this link to get the complete NC
Budget and Tax Center Budget Brief.
THERE IS STILL TIME TO CONTACT YOUR STATE REPRESENTATIVES AND ASK
THEM TO:
1)
RAISE ENOUGH REVENUE TO PROPERLY RUN STATE
GOVERNMENT;
2) RAISE PROGRESSIVE REVENUES
THAT REQUIRE ALL CORPORATIONS AND INDIVIDUALS TO STEP UP TO THE PLATE
AND HELP PAY FOR CRITICAL STATE SERVICES, DON'T JUST RELY ON MIDDLE
AND LOW INCOME INDIVIDUALS TO FILL IN THE BUDGET HOLE;
3) FUND CRITICAL HEALTH AND HUMAN
RESOURCES, HOUSING, EDUCATION AND OTHER PROGRAMS THAT ARE ESSENTIAL
FOR THE RESIDENTS OF THE STATE.
Go to the
Covenant
with NC’s Children website and send an e-mail message or letter
to every member of the Committee with a few clicks of your mouse. Use
the suggested text or compose your own message.
It
’s easy and quick.
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FIFTY
US SENATORS ASK DASCHLE FOR DEBATE ON RENEWING WELFARE LAW
Below are Excerpts from the above titled article by Robert Pear
New York Times
September 12, 2002
WASHINGTON, Sept. 11 - More than half the Senate, including many Democrats,
called on the majority leader today to schedule a debate on reauthorizing
the welfare program created by an innovative 1996 law that expires in
three weeks. In a letter to the majority leader, Senator Tom Daschle,
Democrat of South Dakota, the senators said the program should be extended
for five years, with more money for child care.
Senator Blanche Lincoln, Democrat of Arkansas, wrote the letter, with
Senator Olympia J. Snowe, Republican of Maine. "The bipartisan
bill reported out of the Finance Committee is a sensible bill to bring
to the floor," it says. "It provides some new resources and
broadened flexibility for states so that they can continue to improve
upon existing programs to help families make a successful transition
from welfare to work."
The letter was signed by 40 Democrats, 9 Republicans and one independent,
Senator James M. Jeffords of Vermont. Senator John Edwards of North
Carolina signed onto this letter. Several senators have sent separate
letters to Mr. Daschle urging him to take up welfare legislation as
soon as possible. In an interview, Mrs. Lincoln said: "We've made
a great investment of time
and energy in this bill. I'd hate to see it die."
Ranit Schmelzer, a spokeswoman for the majority leader, said welfare
was "on the list of things he wants to get done this year."
But the list is long, and time is short. So Mr. Daschle would probably
not call up the bill unless Democrats and Republicans agreed in advance
to limit the time for debate. In the Finance Committee, Mr. Daschle
was the lone Democrat who voted against the bill. His vote was widely
taken as a signal that he wanted to provide more money for child care.
Congress could pass a stopgap bill to continue spending at current levels
under existing rules for a few months or for a year. But such an approach
would have many complications. House Republicans, especially members
of the Ways and Means Committee, have indicated that they may object
to any spending that they have not authorized.
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