Without a budget, teachers are waiting on much needed raises and low-income North Carolinians are still waiting on Medicaid expansion.
Even the legislature gets to take a summer vacation, but most North Carolina lawmakers are now in their third week away from the office. They have a heck of a to-do list waiting for them when they get back.
Just weeks before kids go back to school and a few months before municipal elections, there are still pending votes on bills that could slash public school funding and upend the voting process. The lack of a state budget agreement, however, is perhaps the most urgent unfinished business.
The new fiscal year started on June 30, and though Republicans hold a supermajority in both the North Carolina House and Senate, they’ve not been able to agree on a budget, a crucial document that sets the state’s tax revenue and expenses, and ensures it can pay for essential services.
Without a budget, North Carolina’s teachers and state employees are waiting on much-needed raises. State agencies have no idea what they’ll be able to pay for in the coming months. And Republicans tied Medicaid expansion to the passage of the final budget, so 600,000 low-income North Carolinians are still waiting for health insurance.
Lawmakers may have missed the last couple of weeks because of vacations, but this week many state Republicans are attending a major national conference in Florida whose mission statement would seem to celebrate this disruption of tax-payer-funded government.
The American Legislative Exchange Council (ALEC) is holding its annual conference in Orlando through Friday. The event is intended to celebrate lawmakers who want to eliminate most taxes – which fund public services – and “reduce the size, reach and cost of government.”
So what is the American Legislative Exchange Council and why does it matter to North Carolina?
Let’s take a look.
ALEC Is No Fan of Taxes
ALEC was founded in 1973 as a proponent of limited government and nearly unchecked markets.
Though the group describes itself as “nonpartisan,” it is a major player in conservative politics, and has helped Republican-controlled legislatures across the country write their legislation. Many corporate leaders and national Republicans are among its members, and Gov. Ron DeSantis of Florida opened the ALEC conference on Wednesday.
While ALEC has written position papers on lots of issues, including some with bipartisan support, one of its primary goals is to “protect hardworking taxpayers.”
Its main method for protecting these taxpayers is eliminating most taxes, especially corporate taxes. It also wants to significantly reduce the money a state spends, regardless of the importance of a given expense.
The group’s State Budget Reform Toolkit pledges to help legislators “more efficiently [deliver] core government services through advancing Jeffersonian principles of free markets, limited government, federalism, and individual liberty.”
North Carolina lawmakers seem to have relied on this guidance.
NC’s Tax Proposals Favor the Wealthy
Despite the differences between House and Senate Republican budgets, they both aim to reduce corporate and personal income taxes to the bare minimum.
The benefits of those cuts would “go overwhelmingly to the richest 20 percent of North Carolinians,” according to an analysis from the North Carolina Budget & Tax Center, a nonpartisan group that aims to fight poverty and create a more equal economy.
“Two-thirds of the total tax cut will go to the richest people in our state, while the bottom 80 percent will get just one-third,” the NCBT analysis showed.
This discrepancy is not new.
The state’s top earners already pay a lower total tax rate than low-income North Carolinians. In fact, the less money you have in the state, the higher rate you pay overall.
While the highest earners currently pay the largest income tax rate, they pay lower property tax, sales and excise tax rates.
According to the Institute of Taxation and Economic Policy, the top 1% of earners in North Carolina pay 6.4% in total state and local taxes; the top 4% pay 7.7%; the top 15% pays 8.3% and so on. The lowest income group in the state pays 9.5% in total taxes.
For this tax structure, ALEC ranked North Carolina number 2 in the nation for its economic outlook.
Among the other metrics the ALEC ranking celebrates? North Carolina’s $7.25 minimum wage, which is the lowest allowed by federal law and is less than half of what’s considered a living wage for a single North Carolinian with no kids.
What Do Taxes Pay For?
Lots of things people take for granted.
While ultra low taxes and unregulated markets sound great in conservative conferences and among a state’s highest earners, they don’t do much for those who depend on the services taxes pay for.
Taxes are also a state’s primary source of revenue. Huge tax cuts deprive the state of the money it needs to pay teachers and other state employees, provide healthcare, maintain roads, and offer lots of other essential services. Less tax revenue means less school funding, which means fewer resources, staffing and support for students.
North Carolina’s public schools already face severe teacher and staff shortages because of decades of underfunding, and staff shortages in public entities are creating huge backlogs.
The delay in the budget process risks making these problems worse.
Every day without a formal budget means educators and state agencies have to make plans for schools, roads, healthcare, transit, parks, environmental protections, state police and lots of other things without knowing how much money they’ll have to implement them.
There are differences in how the House and Senate budget’s fund these collected programs, but like with taxes, they both share the philosophy reflected across ALEC’s many policy papers: State expenditures are a violation of individual liberty.
The budget proposed by Gov. Cooper designates far more money to public education and raises for state workers. But since Republicans have a supermajority, they can override any veto.
And Then There’s Medicaid
The legislature passed a bipartisan bill to expand Medicaid in March, opening healthcare access to some 600,000 low-income North Carolinians. Gov. Cooper signed the bill right away.
Those 600,000 people are still waiting.
ALEC has long opposed the federal programs that pay for the bulk of Medicaid expansion. It has also worked with pharmaceutical companies to lobby against the kinds of caps on prescription drug costs that come with Medicaid.
Studies show that Medicaid expansion prevents premature deaths for older adults. Expansion also increases the chances that cancer, heart disease, and other life-threatening diseases are caught early in patients covered by the insurance.
“Medicaid expansion could save as many lives as seatbelts,” Down Home NC, an organization that helped drive the push for expansion, said in its pitch to lawmakers.
Those benefits will have to wait.
“Since the first door we knocked on in 2017, rural North Carolinians have been ringing the alarm about health care in our state,” Down Home said in a news release after the bill was signed.
“Too many poor and working people can’t go to the doctor when they are sick. They either lack coverage or can’t pay the copays or simply don’t have a doctor in their town. It’s unfair. It’s unjust.”