North Carolina is the only state in the country that doesn’t have a budget for the current fiscal year, and local governments continue to feel the pressure.
Earlier this week, local leaders held an informal discussion at the downtown Durham County library about the impact that the lack of a budget (legislators haven’t passed one since 2023) is having on local governments like Durham County that rely on state funding for vital functions like public health and education.
“I think we need to be really clear that no state budget means that they’ve given an across the board cut to every program and service in North Carolina,” said Alexandra Forter Sirota, executive director of the NC Budget and Tax Center, who joined state Rep. Marcia Morey, Durham County Commission chair Mike Lee, and Durham school board vice chair Millicent Rogers for the Monday town hall. “They have failed to allow funding to keep up with rising costs.”
Compared to the City of Durham, Durham County receives a larger share of its funding from the state government, but both bodies are grappling with budget shortfalls.
“The experience in Durham is multiplied by 100,” Forter Sirota said. “There are 100 counties across the state that are dealing with this exact same situation.”
Education funding is Durham County’s largest expenditure, making up roughly 35% of the general fund operating budget. The county is typically on the hook for funding capital improvements and one-time projects like new schools or replacing HVAC equipment, but the last several years, Durham’s county commissioners also have been asked to supplement operational costs, historically a state expenditure.
School districts across the Triangle are making tough decisions about where to cut spending. Rogers said 15 positions were cut at the beginning of the school year, and 220 positions could be in jeopardy next year.
“Everybody is expecting our student outcomes to improve, expecting test scores to go up, expecting us to provide assistance in ways and making sure the whole child is healthy and present to be educated, and we are doing our best,” Rogers said. “But it’s uncomfortable for our students.”
Last year, the county funded a $10.35 million increase in funding for Durham Public Schools over the previous year, when the school district received an historic $26 million bump in funding compared to the year before that, much of which went to employee salaries.
“If the state is not providing their part, and we want to continue those programs, we have to find some way to fund them,” said Lee, who served on the DPS School Board from 2014 to 2022 before joining the county commission. “There’s not unlimited money, so if we have to push more money in one direction, that means it’s coming from somewhere else. And that hurts, and those are really tough decisions because all the programs are in need.”
Public schools are just one of the departments suffering from a stalled budget. Lee also said the Durham County Department of Social Services reduced the number of Medicaid and Medicare providers it offers residents by 3% to 10% as part of cost-cutting measures. Governor Josh Stein signed a bill on April 30 to fill a $319 million Medicaid funding gap, but critics like Morey, one of two House Democrats who voted against the bill, said certain “poison pill” provisions could put vulnerable residents in danger of not having access to much-needed healthcare.
“The poison pills were too poisonous for me to vote for,” Morey said at the town hall. “Instantly, about 27,000 women and children will be taken off any type of health care assistance with Medicaid automatically. These are people legally in this country. They’re green card holders, they’re seeking asylum. They have the legal right to be here, but they will be removed for receiving any Medicaid benefits.”
Forter Sirota said policies and funding cuts at the federal level are also affecting programs North Carolina residents rely on, which creates additional pressure for local governments to fill the gap.
Inflation has caused a spike in costs for families on essential goods and services like food, housing, child care, and transportation due to rising fuel prices. The increased cost-of-living is compounded by declining investment in supportive services from the state and federal governments.
“It’s made worse by the federal chaos,” Forter Sirota said. “The federal shutdown last fall really made everyone hyper-aware of just how precarious, how uncertain the availability of so many of the services and programs that make our lives better are.”
In November, a temporary federal government shutdown caused a delay in the release of federal SNAP benefits, further straining food assistance programs. Durham officials collaborated with local nonprofits to fill the gap and provide food for thousands of residents until those benefits were restored.
At a time when local governments are already being squeezed by the lack of state funding, a Republican-led committee in the state House is pushing to include a constitutional amendment on the ballot this November to set a statewide limit on local property tax increases, restricting the primary source of revenue for cities and counties in North Carolina.
Capping property taxes is part of a larger strategy by NC Republicans to chip away at the overall tax burden on residents. In the past several years, the Republican-led legislature has reduced the state’s income tax rate. The decision is presented as a relief to residents facing tough financial times, but Forter Sirota said it’s having the opposite effect.
“This is part of a long agenda that has been in place across our country to advance the idea that if we eliminate income taxes, that we will see growth, that we will see expanded opportunity. But the math is coming home now,” Forter Sirota said.
Cuts to the state income tax have largely benefitted North Carolina’s wealthiest residents and major corporations, Forter Sirota said, and eliminated $18 billion in revenue from the state budget. But many North Carolinians are still struggling to provide basic necessities to their families as supportive services dwindle.
In Durham, the city and county economic development offices have developed comprehensive corporate benefit agreements that ensure new businesses are investing in the Durham community, Lee said. Those agreements include job opportunities for local residents as well as investments in education at the K-12 and collegiate levels.
But counties can’t rely solely on the private sector to make up for budget contraction at the state level. With a continued reduction in income tax revenue, and a potential limit on property taxes, the state legislature would make it nearly impossible for local governments to provide important services to their citizens. Morey told the crowd at Monday’s town hall that’s part of the plan, and that voting in new leadership is an important step towards shifting the status quo.
“I think [Republicans] come in with the most simplistic terms; let’s cut our taxes. ‘Let’s put more money in your pocket, yes or no.’ … if they said, ‘if we do this, you’ll have an X percent cut to your public safety and your firefighters and your teachers and your sanitation workers. Are you still for it?’ You know, quality of life matters, but that’s not going to be on the ballot.”
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