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The Devil’s in the Details: Senate Budget Cuts vs. Revenues

By: Staff - June 6, 2011 2:30 pm

The Devil's in the Details

The final legislative budget, which was approved by both the Senate and House this past weekend, is currently on Governor Perdue’s desk for consideration. The failure of the new leadership to address the state’s fiscal challenges with a balanced approach that includes revenue will impede North Carolina’s fragile recovery, placing additional pressure on local governments and communities. Throughout the budget process, the North Carolina Budget and Tax Center has contrasted budget cut options identified by NC General Assembly joint appropriations subcommittees with revenue options that would preserve decades of public investment in the economic and social advancement of North Carolina. The analysis of the final legislative budget demonstrates the significant opportunity to secure North Carolina’s future that is foregone when revenue is not part of the approach.

The NC Senate budget includes the following cuts …	… but instead of making cuts, they could:
Public Education
$133 million Require LEAs to make tough decisions about public school budget cuts rather than the General Assembly, AND eliminate Drop-Out Prevention Grants	$131.6 million Don’t cut business taxes — it doesn’t create jobs
$32 million Slash appropriations and remove lottery fund support for More at Four program	$43 million Retain 2% personal income tax surcharge on households with joint taxable income between $100,000 and $250,000 ($60,000 to $150,000 single)
Community Colleges
$47.7 million Increase tuition by $10 per credit hour	$45 million Revert to traditional apportionment of corporate income and capital stock for multi-state corporations, with equal weights for sales, payroll, & property
UNC System
$347 million Cut UNC System budget by 12%	$275.5 million Keep 1/4 cent of the State sales tax
$23 million Cut the UNC Hospitals subsidy that offsets the cost of health care for low-income patients	$29 million Retain the 3% surcharge on corporate income taxes
Health & Human Services
$225.4 million Cut Medicaid spending excluding real savings, resulting in fewer services available to vulnerable North Carolinians and lower payments to medical providers who care for them	$275.5 million Keep 1/4 cent of the State sales tax
$37.6 million Cut Smart Start by 20%	$37 million Eliminate tax subsidy for film and television productions in the state and other business subsidies eliminated in 2009 Senate revenue plan
$57.6 million Raid tobacco lawsuit settlement funds intended for rural economic development and public health	$79 million Retain 3% personal income tax surcharge on households with joint taxable income above $250,000 (above $150,000 for single filers)
Justice & Public Safety
$61.8 million Increase court fees	$56 million Eliminate sales tax breaks on expensive boats and private aircraft; vending machine items; and prepared food sold in university dining rooms
$4 million Eliminate family court and dispute resolution programs	$4 million Repeal sales tax exemption for artisanal bakery products
$10.7 million Cut funds for private assigned legal counsel to represent indigent clients in court	$10.1 million Eliminate the cap on sales tax paid on jet fuel by interstate passenger air carriers and the franchise tax credit for piped natural gas
$2.1 million Eliminate Sentencing Services program	$2.6 million Eliminate sales tax refund on professional motor racing vehicle parts
Total Cuts: $981.9 million	Total Revenue: $988.3 million

The NC Senate budget includes
the following cuts …

… but instead of making cuts,
they could:

Public Education

$133 million

Require LEAs to make tough decisions about public school budget cuts rather than the General Assembly, AND eliminate Drop-Out Prevention Grants

$131.6 million

Don’t cut business taxes — it doesn’t create jobs

$32 million

Slash appropriations and remove lottery fund support for More at Four program

$43 million

Retain 2% personal income tax surcharge on households with joint taxable income between $100,000 and $250,000 ($60,000 to $150,000 single)

Community Colleges

$47.7 million

Increase tuition by $10 per credit hour

$45 million

Revert to traditional apportionment of corporate income and capital stock for multi-state corporations, with equal weights for sales, payroll, & property

UNC System

$347 million

Cut UNC System budget by 12%

$275.5 million

Keep 1/4 cent of the State sales tax

$23 million

Cut the UNC Hospitals subsidy that offsets the cost of health care for low-income patients

$29 million

Retain the 3% surcharge on corporate income taxes

Health & Human Services

$225.4 million

Cut Medicaid spending excluding real savings, resulting in fewer services available to vulnerable North Carolinians and lower payments to medical providers who care for them

$275.5 million

Keep 1/4 cent of the State sales tax

$37.6 million

Cut Smart Start by 20%

$37 million

Eliminate tax subsidy for film and television productions in the state and other business subsidies eliminated in 2009 Senate revenue plan

$57.6 million

Raid tobacco lawsuit settlement funds intended for rural economic development and public health

$79 million

Retain 3% personal income tax surcharge on households with joint taxable income above $250,000 (above $150,000 for single filers)

Justice & Public Safety

$61.8 million

Increase court fees

$56 million

Eliminate sales tax breaks on expensive boats and private aircraft; vending machine items; and prepared food sold in university dining rooms

$4 million

Eliminate family court and dispute resolution programs

$4 million

Repeal sales tax exemption for artisanal bakery products

$10.7 million

Cut funds for private assigned legal counsel to represent indigent clients in court

$10.1 million

Eliminate the cap on sales tax paid on jet fuel by interstate passenger air carriers and the franchise tax credit for piped natural gas

$2.1 million

Eliminate Sentencing Services program

$2.6 million

Eliminate sales tax refund on professional motor racing vehicle parts

Total Cuts: $981.9 million

Total Revenue: $988.3 million

—Text: Alexandra Sirota, Director, NC Budget and Tax Center; Chart: Brenna Burch and Edwin McLenaghan, Public Policy Analysts, NC Budget and Tax Center

Sources:

Spending cuts are based on NC Budget & Tax Center calculations and data provided by the NCGA Fiscal Research Division’s Senate Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets available at http://www.ncga.state.nc.us/fiscalresearch/budget_legislation/budget_legislation_pdfs/2011-05-31_MoneyReport_Final.pdf

Revenue options are based on NC Budget & Tax Center calculations, data provided by the Institute on Taxation and Economic Policy (ITEP), and the NC Department of Revenue’s Biennial Tax Expenditure Report available at http://www.dornc.com/publications/nc_tax_expenditure_report_09.pdf

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