Document Sample

                        October 2008

                        9 Innovative Ideas that Won’t
                        Bust the Budget
                        Just because North Carolina is facing a budget crunch
    Timely,             doesn't mean state lawmakers' hands are tied. With
                        fresh ideas, state government can create a better future
                        for working families without substantial new spending.
  and credible
                        The NC Budget & Tax Center (BTC) has compiled Working Concepts, a list of innovative initiatives
  analysis of           to improve the lives of North Carolinians at little to no cost. In certain cases, these policies would
state and local         actually increase revenue while enhancing quality of life.
budget and tax          Common threads run through each of the initiatives. They will help state and local governments
                        spend each dollar more efficiently, assist workers by creating high-quality jobs and more effective
     issues             transportation solutions, and empower political leaders with forward-thinking tools to help low- and
                        moderate-income families.
                        At a time when the state is facing massive demographic changes and growth, meeting the
                        challenges of a new era requires new approaches. The following recommendations from the BTC,
                        a project of the NC Justice Center, will address some of North Carolina's most critical and pressing
                        concerns -- without busting the budget.
                           • Modernize the State's Transportation Finance System - Closing a loophole in the state's
                              vehicle sales tax, enacting some reasonable increases in the Highway Use Tax, and
                              reforming vehicle registration fees could raise considerable revenues. These funds increase
                              the state's debt capacity enough to pay for a large transportation bond. This would enable
                              North Carolina to fix its deteriorating transportation infrastructure, invest in public
                              transportation, and fund refundable tax credits for low-income households to offset the tax
                              and fee increases.
  P.O. Box 28068           • Fund Metropolitan Transportation Based on Road Use - The current transportation
     Raleigh, NC              funding system is not coping with rapidly increasing costs and spiraling transportation
     27611-8068               demand, including calls for more public transportation. Unfortunately, taxing road use using
 Editor: Elaine Mejia
                              GPS technology is still many years away. What can be done now is assessing fees on real
                              property based on the amount of traffic the property generates. Such a property-based traffic            fee is an ideal metropolitan area revenue source for both public transportation and road
                              construction or maintenance that could also supplement existing taxation sources.
                           • Grow a "Green" Workforce - To realize the environmental and economic benefits of the
                              emerging "green" economy, North Carolina must develop a workforce skilled in vital
                              technical fields. Building such a workforce requires the state to reinvigorate the community
                              college system's technical training programs and help to create the market for appropriately
                              skilled workers.
• Guarantee Paid Sick Days - Working families are struggling to meet the competing
  demands of work and family. Giving every worker the opportunity to earn a reasonable
  amount of paid sick time will benefit families and their employers, who will have more
  reliable, healthier workers who are less likely to leave. Paid sick days will also improve public
  health by reducing the spread of illnesses.
• Integrate Economic Development and Workforce Education - Growing industries
  across North Carolina are struggling to find workers with the technical skills taught at the
  state's community colleges. Additionally, North Carolina has thousands of low-wage workers
  who, with appropriate education, could fill their needs. Integrating economic development
  and workforce education through "sectoral partnerships" could ensure the supply of skilled
  workers demanded by industries.
• Link Business Subsidies to Adequate Wages - North Carolina spends more than $100
  million a year subsidizing businesses that all too often don't pay their employees enough to
  sustain a family. Business subsidies should be viewed as an investment in the state's economy,
  and state leaders must make sure taxpayers are getting good-paying jobs for their money.
• Maximize Investments in the Unemployment Insurance System - Financing the state's
  unemployment insurance system in more adequate and equitable ways would allow the
  system to better assist jobless workers and distressed local communities. Ensuring that all
  employers pay a fair share and that the system is funded for the long-term would maximize
  the system's ability to mitigate the effects of economic downturns.
• Empower Local Elected Officials to Make Revenue and Spending Decisions - North
  Carolina's counties are facing new challenges, like greater demand for schools, deteriorating
  infrastructure and increased responsibility for road maintenance and construction. Yet, the
  state legislature has failed to provide local leaders with sufficient authority to raise new
  revenue. Local leaders in all 100 counties should be given the authority to enact a slate of
  progressive revenue options and the flexibility to spend the revenue in a way that works best
  for meeting the needs of their communities.
• Equip Lawmakers to Make Better Informed Tax Policy Decisions - North Carolina's
  lawmakers do not have the tools nor are they required to properly evaluate the impact of tax
  policy proposals that come across their desks. The result is ill-informed tax policy debates that
  do not take into consideration the effect proposed changes would have on their constituents.
  The state should build the capacity to analyze the impact each proposed tax change would
  have on North Carolinians, divided by income groups, and then require this information to be
  attached to every revenue bill introduced. This "tax incidence analysis" would lead to
  improved policy-making.