"I'm proud to report the state of North Carolina has come back," exulted Governor McCrory, to the credulous applause of state legislators. "Our economy is improving."
In declaring so, however, Governor McCrory expediently neglects that any observed decrease in the state unemployment rate is primarily due to many North Carolinians no longer actively seeking employment, that the number of North Carolinians no longer actively seeking employment is increasing at a quicker rate than the number of employment opportunities and that the majority of the employment opportunities generated since the Great Recession offer poverty level wages. Indeed, the increase in the average income of the top 1 percent of North Carolinians, or those who earn more than $311,000 annually, has completely accounted for the increase in the average income of North Carolinians observed since the Great Recession.
The misguided belief by Governor McCrory, and the state legislators who applauded him, that "our economy is improving" may be the basis of a biennial budget, and its attendant legislation, which will further undermine the complete realization of an economic recovery for all North Carolinians.
The biennial budget, enacted on September 15th for the 2016 fiscal year, and its attendant legislation, neither progressively account for, nor address, the expected $841.8 million reduction in state revenue attributable to scheduled reductions of the corporate and personal income tax rates from 6 percent and 5.8 percent to 5 percent and 5.75 percent, respectively. Instead, the biennial budget, and its attendant legislation, regressively account for, and address, such a reduction, with an expansion of the sales tax and a reduction in funding for public investments, both of which will disproportionately affect low income earners.
The sales tax, for instance, has been expanded to include previously untaxed services including, but not limited to, the installation, maintenance and repair of air conditioners, motor vehicles, washers and dryers, among other properties. As a result of the recent enactment of House Bill 117, however, the installation, maintenance and repair of such properties under manufacturer warranties are exempt from the revised sales tax--meaning that the onus is upon low income earners, the majority of whom are not owners of property under such warranties, to account for the expected reduction in state revenue.
Furthermore, funding for public investments in education, healthcare and infrastructure, among other amenities, will be 5.9 percent less during the 2016 fiscal year than during the 2008 fiscal year, despite the fact that the need for such investments--especially among low income earners--has increased since the Great Recession.
Funding for public education, for instance, will be $500 less per student during the 2016 fiscal year than during the 2008 fiscal year, thereby further fostering the dismissal of teachers and teacher assistants, increases in community college tuitions, the unavailability of modern classroom materials and textbooks and the undermining of early childhood education initiatives. Tuition at community colleges, for example, continues to rise, with the most recent change from $72 to $76 per credit hour representing an 81 percent increase since the Great Recession.
As a result of a similar reduction in funding for healthcare, the Healthy Corner Store Initiative, an initiative which increases access to affordable, healthy food options for approximately 1.5 million low income earners, has been defunded.
Jeffrey Thompson, of the Political Economy Research Institute, and Joseph Stiglitz and Peter Orszag, of the Center on Budget and Policy Priorities, have observed that increasing public investments in education, healthcare and infrastructure, among other amenities, fosters economic recovery, especially amongst low income earners.
"Now we can work together to implement a common sense vision for our great state," said Governor McCrory upon enacting the biennial budget for the 2016 fiscal year last month.
Such a vision may only be deemed common sense, however, if the majority of North Carolinians similarly neglect that low income earners have yet to benefit from the economic recovery and decide, once again, that their livelihood is irrelevant to policymaking--however unlikely that may be to happen.