Grim forecast overshadows WNC budget briefing

Armed with grim statistics on a cloudy day in Western North Carolina, Alexandra Sirota of the N.C. Budget and Tax Center introduced herself on Tuesday morning, Dec. 6, by saying, “Hopefully by the end, we won’t leave you with too much discouragement.”

Sirota, whose organization is a project of the anti-poverty nonprofit N.C. Justice Center, was addressing a record crowd at the annual legislative review sponsored by United Way of Asheville, as noted by UW’s Ron Katz. Approximately 150 residents of Buncombe and surrounding counties, with a sprinkle of politicians included, gathered at 8:30 a.m. on A-B Tech’s Enka campus for a briefing on the current state economy and budget, and the impacts on local communities.

Starting with the larger trends in the state, Sirota discussed the significant loss of jobs during the recent recession, augmented by the state’s change from manufacturing to low-wage service jobs. “We haven’t seen job growth in the past 24 months,” she said — since the official “recovery” began in the U.S. economy in 2009. Most counties continue to experience employment declines, and even economists do not expect the state to return to pre-recession peak employment numbers before 2015, Sirota said. Further, if employment moves at the slow rate of growth measured in the past year, that projection jumps to the year 2062, with the loss of public sector jobs holding down growth in the private sector.

“What kind of economy do we want to rebuild?” Sirota then asked, suggesting that public investments could pay a critical role in helping businesses to prosper. Jobs projected to grow at the fastest rate include home health ($9.73 an hour projected wage), food service ($8.27), retail sales ($11.11), and office clerk ($12.53), according to her numbers. Thus lower-wage jobs would be increasing at a time when the living wage for a one-adult, two-child household is clocked at $20.15 an hour. That trend of lower wages, Sirota warned, is compounded by a trend towards contract labor (lower wages and no benefits) instead of standard employment situations.

The rate of the increase in poverty across the state is “unprecedented,” said Sirota. In 2010, 17.5 percent of the state lived at or below poverty level (in Buncombe County that rate was 16.8 percent, which increased in 2011). One in four children around the state are living in poverty, which impacts success in school and curtails future lifetime earnings.

Against that background, the state faced a $2.5 billion budget shortfall when the 2011-2012 budget was passed by the current Legislature. And instead of offsetting revenue increases, the Legislature opted instead for budgetary cuts (the most concentrated being in health and human services), as well as for diverting trust funds and relying on accounting maneuvers. “The result,” Sirota said, is that the state is now “spending at the lowest level in almost 40 years.”

“All of this was quite challenging,” Sirota said, and over the next two years she expects to see any economic recovery stalled with high lost industry output, lower wages for workers, and further cuts in health care — especially for children. “Western North Carolina will lose around 5,000 public and private sector jobs,” she predicted.

Picking up on that theme, Louisa Warren, policy advocate for the center, then outlined economic and budgetary impacts on health and human services across the state. “The need is rising,” she said, while the “growth is far behind.” The discrepancy is evident in such things as cuts in health care and childcare (with a projected loss of 30,000 jobs); the state’s currently highest-ever (55,000) waiting list for children in need of child-care subsidies; and the elimination of services such as drug treatment and indigent defense in the justice realm.

United Way’s Jill Cox, statewide government relations and communications director, then outlined cuts in education spending that dropped North Carolina from ranking 26th to near the bottom of the 50 states for per pupil expenditure. Eliminations have included the Teaching Fellows program, professional development, and dropout-prevention grants, with a reduction of 46 percent for instructional supplies.

On a different note, Cox explained that the state’s elimination of its CARE-LINE, a toll-free information and referral service formerly offered through the Department of Health and Human Services, has resulted in United Way’s expansion of its 2-1-1 community service line, a free referral service offered to speakers of all languages here in WNC and some other areas of the state. The system is expanding through a partnership with DHHS, with the goal of offering statewide service.

The program was then turned over to attendees, who compiled their own highlights of what was working well in their communities regarding public safety, health and education; what needs should be addressed; and how those needs could be met without spending money. A final report on that public input will be made available through United Way in the future.

Republican Rep. Chuck McGrady of Henderson County then spoke briefly to conclude the program, saying that as a freshman legislator, “I arrived in Raleigh at the worst of all times. [Regarding] the budget, there was no decision we were asked to make that I went home happy about.”

McGrady cautioned the audience to remember that “elections have consequences,” explaining that most of his colleagues ran on a promise not to renew the temporary sales tax and not to allow “anything else to happen” involving raising taxes. “So it shouldn’t surprise you that those cuts were made,” he said, speaking of the foregoing budget analysis. But he then pointed out that the current state income is ahead of projections, and there is anticipation that Medicaid cuts could be restored and some education cuts could be reversed.

But there are other issues lurking, McGrady noted, that are long-term — not short-term. And the answer, in his opinion, lies in tax reform. The sales tax is as “riddled with holes as Swiss cheese,” he commented, yet he finds that “much more solid” than the state’s overall tax structure. “You’ve got to frame these issues,” McGrady said. “Long-term, we’ve got to [change].”

by Nelda Holder, contributing editor

(Disclosure: Nelda Holder currently serves as secretary of the non-partisan League of Women Voters of Asheville-Buncombe County, which was a local cosponsor of the United Way’s WNC program.)