Summary:
- Governor Josh Stein has released his proposal for the state budget
- With a veto that Democrats can now uphold, the Governor has influence on state spending
- North Carolina can make needed investments without increasing taxes
The central priority of the North Carolina General Assembly’s long session is the completion of the state budget.
While North Carolina’s executive branch is notoriously weak under the state constitution, Governor Josh Stein’s recommended budget is an opportunity for the state’s chief executive to showcase his priorities, set an agenda, and influence the legislative process. Governor Stein faces a Republican majority in the State House and a supermajority in the Senate, so despite being the only statewide elected official with a role in the budget process, his budget is unlikely to hold much sway. That said, the Governor’s veto power – narrow though it may be – gives him leverage that Governor Cooper lacked in his last two years in office.
In addition to the hard power of the veto, a strong, popular budget proposal gives the governor soft power in these negotiations. The points in his budget that Gov. Stein chooses to highlight are good opportunities to highlight his policy priorities.
What’s in the Governor’s recommended budget?
According to the “North Carolina Strong” budget, Governor Stein’s primary goals are:
- Improving Public Education
- Putting Money in Working Families’ Pockets
- Building a Strong Workforce
- Keeping North Carolinians Safe
- Increasing Access to Health Care
- Maintaining Fiscal Soundness and Promoting Operational Excellence
Under each of these headings, the budget features a variety of cuts, incentives, and programs to achieve its overall goal of strengthening North Carolina from the ground up.
First, under “Improving Public Education,” Stein’s budget features an increase for teacher salaries, free breakfast for all students, a $4 billion bond to address construction and repair needs, $100 million per year for student devices and learning materials, $6 million per year in funds for tutoring, funding for over 300 more school health personnel, and funding for teaching pipeline programs.
Education funding is arguably the best long-term human capital investment a state government can make. Though measurements vary, the research is clear that improved education decreases crime and increases an individual’s earnings over their lifetime. Ensuring we have safe, clean, modern schools with well-paid teachers and well-fed students will have a positive impact for years to come. Especially in a state that historically has struggled with teacher pay and retention, raising our starting teacher salary to be the highest in the Southeast would be a massive win.
Next come proposals for working families. Stein’s budget would use three refundable tax credits: a Working Families Tax Credit (which we’ve written about before), a Child & Dependent Care Tax Credit, and a Child Tax Credit. Refundable tax credits can contribute to an individual’s tax refund, so having all three credits be refundable is a massive step towards supporting working families that could use the extra help. The total for these credits would be more than $530 million per year.
The working families’ childcare proposals dovetail nicely with the education proposals: $88 million for subsidizing childcare, over $75 million across the two years for pre-k funding, and a sales tax holiday for back-to-school shopping.
For the workforce, over $40 million per year is allocated to the Propel NC program, a revolutionary initiative to help NC community colleges supply workers for in-demand sectors. There are also various credential and skill-building programs, including for disabled workers and justice-impacted persons. All this is combined with increased unemployment benefits.
This is all possible without any increase in individual taxes. To ensure fiscal soundness, the budget maintains current individual and corporate tax rates while eliminating tax triggers that would have resulted in automatic reductions. And these aren’t the only proposals; the budget also makes housing policy and healthcare recommendations.
If Stein’s budget were to pass, it would be a boon for the state of North Carolina. It strikes a balance between making long-term investments in the people and communities of our state without increasing the tax burden. It addresses traditionally problematic areas of our state’s finances while encouraging future-oriented, pro-growth policies.
In a different political environment, a sensible budget like this one would have obvious bipartisan appeal. Beyond the highlights that appeal to Democrats, it also recommends increased funding for school resource officers, correctional officers, and law enforcement officers on state pay plans. It even features a strong emphasis on improving government efficiency, with some goals that sound like they were taken directly from a GOP campaign ad, like $20 million for an “Innovation and Modernization for Performance, Accountability, and Cost Effective-Transformation” (IMPACT) Center, intended to “ eliminate waste, fraud, and abuse while maintaining or improving service quality.”
Unfortunately, Republicans have already signaled that they intend to ignore the Governor’s budget recommendations. Instead, Republican leaders intend to pursue yet more tax cuts, paired with additional spending on the private school voucher scheme. Republicans have also referred to the school bond funding as “dead on arrival.”
Nevertheless, Governor Stein’s budget has sent a clear message: the Governor intends to have a role to play in crafting the budget, and he believes that his veto pen is sustainable. Understandably, Republicans may not like that message; but after Governor Stein’s landslide margin of victory, he just as understandably feels that he has political capital to spend.
