NC Budget and Tax Center

Where is the money? The tax plan makes education plans impossible

Note:  Based on more detailed data available regarding teacher pay schedules, it is possible that the Governor’s plan could cost $312 million.  By including all university personnel in the state employee figure, the cost would grow to $334 million. See the table provided below with explanation.

The key question that the Governor had to answer today went unanswered.  How will he pay for the critical investments he proposes in teachers and the classroom?

With revenues coming in under projections in the current fiscal year (and next fiscal year as well) and with the increasing likelihood that costs of the tax plan are actually even greater than revised projections suggest, the Governor has just proposed either to make the structural budget deficit in the state much bigger or to slash other critical services to fund public education.

Here is the basic math.

  • The Governor has proposed to make investments in teacher pay and classrooms that total roughly $280 million.  These are recurring expenses and will impact the state budget in future years.
  • The Governor has suggested in the past that there is $600 million available for this investment.  However, there is no sustainable revenue source available given what we know about revenue collections now and in the future.  This suggests that there would need to be cuts to other areas of the budget to make these investments, a move that would  not allow the state to achieve its goals.  After all children need to be healthy to learn, and need to have safe neighborhoods to thrive, and need to have the opportunity to continue their learning at the state’s institution of higher learning whether they choose community colleges or a public university.
  • There could be some money from reversions or other one-time sources but these would not provide the sustained revenue to support this kind of investment.

The Governor said that these investments will be a priority above all other new spending or tax cuts in 2016.  But what about tax cuts in 2015?  There could be $300 million available if the proposed rate reductions to the personal income tax and corporate income tax don’t go into effect as scheduled.

It, of course, also seems the fiscally responsible thing to do to assess the entire tax plan including the elimination of the graduated rate structure for the personal income tax and the corporate income tax rate cut that occurred without closing a significant number of loopholes.

Putting forward a proposal that costs $280 million should require a careful accounting of whether the funds will be there to sustain that investment in the current year and future years.  It appears, however, that fiscal responsibility is not the path North Carolina policymakers have chosen to tread.

BTC - No Revenue For Gov Education Plan

9 Comments

  1. Tim Peck

    May 7, 2014 at 1:57 pm

    You will be hearing about the new consensus revenue numbers for the state’s budget — the current trend indicates a net decrease in anticipated revenues of $445 million for the current fiscal year and a net lowering of the revenue estimates for 2014-15 of $191 million.

    What you may not hear is that the General Assembly kept $250 million on the bottom line this year and a total of $355 million on the bottom line for 2014-15.

    In addition, no reversions or over collections were budgeted for 2014-2015.

    The combination of funds left on the bottom line and with the anticipated reversions and over collections, the General Assembly expects to fully meet its obligations for the current year.

    The impact for 2014-15 means we will have a tight budget year which will require reductions to the 2014-15 budget; however, they expect following through on the commitment they made to raise starting teacher salaries and to provide a general raise for all teachers and state employees.

    A tight year, but manageable because, unlike Democrat budgets of the past, this Republican-led General Assembly had the discipline to not spend every last dime in our pocket.

    Bravo.

  2. James

    May 7, 2014 at 4:11 pm

    Still, we are left with the lowest paid teachers in the nation and a growing shortage of teachers at all experience levels. Whatever illusions of fiscal responsibility one thinks the Republican politicos have, they are just that: illusions. McCrory can’t fund the plan he’s proposed until 2018, if then. And that’s a very big “if”.

    How many teachers will we lose in the meantime?

    What we’re looking at is the swirling flush of North Carolina’s public education system and government down the toilet of Republican mediocrity.

  3. Tim Peck

    May 7, 2014 at 6:28 pm

    Is that what happened when Democrats cut education funding?

  4. James

    May 7, 2014 at 7:58 pm

    I don’t know or care what happened in the past.

    The “they did it too” meme is the most offensive and cowardly posture a person can take in politics, giving rise to the idea that anything is acceptable if someone did it previously.

    Stay focused, Mr. Peck. We are here and this is now.

  5. Michael Anderson

    May 7, 2014 at 9:27 pm

    This plan is an effort to take some pressure off the GOP in the upcoming elections. The hope is, that come August, when students go back to school, there will be enough teachers to fill the classrooms. Throw some teachers a bone and they might just stay. No major problems in August and, just maybe, parents won’t show their displeasure at the polls. After all, the governor is giving all these “raises” to get and keep good teachers.

    At my school, one veteran teacher has left mid-year and another has announced that he is leaving at the end of the year. These are not retiring teachers and are excellent teachers. Teachers tend to stay at my school until retirement. We were hiring good teachers and, because of the support of the school and community, they tended to stay until retirement. That support and the bone the governor is throwing us won’t keep them or others that have not yet announced that they are leaving. I am sure the rural schools will really be hurting.

    Some of my GOP teacher colleagues are a bit optimistic about this plan. When this plan fails, you will more than likely see it after the election. Republicans will say they tried, but …. I guess they can figure a way to blame it on Obama. The “plan” is too vague to be credible.

    I would hate to be a NC school district human resources director trying to recruit teachers this summer.

  6. Alan

    May 7, 2014 at 9:29 pm

    Democrats weren’t on a warpath to destroy public education, unlike our current GOP led administration. I wonder who Tim really represents?

  7. Sandi

    May 7, 2014 at 10:55 pm

    Each side has screwed up. As an educator caught in the middle, I say stop defending your GOP/Demo political agendas and find the funding to follow through with what is right. The first step….overturn the proposed corporate and estate tax reductions. As a member of the middle class, I am sick of not getting my piece of the pie!

  8. ML

    May 8, 2014 at 9:26 am

    The funny thing about the education cuts the dems made DURING THE GREAT RECESSION is that not only were repubs pushing for them as well but they were pushing for more and greater cuts. Then this last year they tore straight through education and teachers.

  9. LayintheSmakDown

    May 10, 2014 at 7:42 am

    The dems were cutting education well before that. I have been in the state for 40+ years and the drumbeat has pretty much ALWAYS been that teachers are underpaid. So yes, there has been a pattern of teacher oppression by the corrupt democrat party here.