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On K-12 funding and business tax giveaways

Speaker Tillis and President Pro Tem Berger held a joint press conference this morning where they indicated a few changes to the K-12 budget might be forthcoming, even though it’s already been delivered to the governor’s desk. Notably, Sen. Berger said that there may be a technical change that would grant LEAs flexibility in how they actually spend the $85 million salary increase for school employees that was included in the budget. This would lessen the effective cut to K-12 schools from $190 to $105 million. However, it would still fall short of holding schools harmless from cuts in the upcoming year. At the same press conference, they also defended the $336 million business tax giveaway included in the 2011 budget – a tax expenditure that is costly, available to large businesses as well as small ones, unlikely to create jobs, and frankly not worth enough to improve a struggling business’s bottom line.

As it was passed in the budget, schools can only use that money to increase employee pay by 1.2% – a very modest raise, given that it would mean $47 more per month for a teacher earning the average salary of $46,791 in North Carolina’s public schools. However, with federal recovery money running out, superintendents of education from across the state have clearly stated that they are far more concerned about having to lay off more staff than raising pay for those they can keep.

Berger and Tillis also said that in their meeting with Governor Perdue, she had requested that they put approximately $100 million more into the budget, primarily for education. They rejected this idea because, they say, there’s no money to do it. Under existing conditions, that’s true – but they fail to mention the money they could recoup by scaling back or eliminating the $336 business tax giveaway they included in last year’s budget. Businesses of any size or scale are now allowed to exempt their first $50,000 in non-passive business income from state taxation. Sen. Berger referred to this “job-creating tax deduction” as “really kicking in” this year – which is hard to understand given that North Carolina’s perpetually high unemployment rate is not improving, and most businesses receiving this deduction are not in a position to hire. If this pointless tax giveaway was rescinded, North Carolina public schools wouldn’t have to be in such a bind.

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