A pretty good session: Local legislative update

North Carolina’s state legislators did a pretty good job for their lower-income citizens in 2007, according to analysts at a legislative briefing sponsored by United Way of Asheville-Buncombe County on Nov. 21 at A-B Tech’s Enka campus.

Finding ways to “create strong communities for working families” was the framework for the analysis, explained North Carolina United Way Executive Director Jill Cox, who reviewed legislation affecting children’s health and education, and family stability and financial wellbeing.

“One in six low-income families does not have a bank account,” Cox said. “One in five—18.8 percent—are ‘asset poor.’ And North Carolina ranks 25th in median net worth.”

That made the addition of a state Earned Income Tax Credit and a solid increase to the Housing Trust Fund highlights of the session for the budget watchers on the program, all of whom are associated with the N.C. Justice Center, a nonprofit antipoverty group in Raleigh that works to promote economic security.

The state’s poverty rate went down this year, noted Elaine Mejia, who directs the center’s N.C. Budget and Tax Center program. The unemployment rate is only 4.7 percent, but underneath that lies a long-term (more than six months) unemployment rate of 19.3 percent, which Mejia characterized as a “seemingly permanent factor now in North Carolina.”

Against that background, initiatives that affect working families and taxpayers in the state include the planned three-year state takeover of counties’ share of Medicaid costs. (That action is projected to save Buncombe County an estimated $783,000 this fiscal year, $2.4 million in FY 2009 and $5.9 million in FY 2010, according to Diane Masologites, budget officer for Buncombe County.)

Approval of a 3.5 percent refundable Earned Income Tax Credit promises some relief to the state’s lowest-paid workers—the bottom 20 percent with incomes below $18,000—by offsetting income taxes owed and lessening the impact of sales and property taxes, according to Mejia. The EITC should affect more than 800,000 low- and moderate-income families, which are currently paying some 10.9 percent of their income in state and local taxes while the wealthiest 1 percent pay only 6.3 percent of theirs. A break for those wealthiest taxpayers, Mejia added, eliminated an 8 percent income-tax rate for the top 2 percent of taxpayers—a revenue loss of almost $94 million.

Mejia praised the increase in the state’s Rainy Day Fund from $175 million to $800 million—a move also lauded by Rep. Ray Rapp from Madison County. “When we had the floods in ‘94, $247 million had to be appropriated separately,” Rapp said. “We need to make certain we have that.”

Rapp and Rep. Bruce Goforth of Buncombe County, who also attended the briefing, sponsored another legislative success—the $5 million increase in the annual appropriation to the N.C. Housing Trust Fund, bringing the total to $8 million. Another one-time appropriation of $7.5 million was set aside for housing for people with disabilities. But the fund still remains far short of the center’s projected $50 million need.

Louisa Warren, senior policy advocate for the Justice Center, reported on expansions in access to health care, including the establishment of a high-risk insurance pool for the chronically ill. Other gains she noted included mortgage-foreclosure prevention, a new rating system for adult-care facilities and the addition of benefits for foster children to extend Medicaid to 18- to 20-year-olds and provide scholarships for higher education.

“A pretty good session,” Warren concluded.


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