Veteran journalist explains North Carolina’s new, “limited vision” budget

Veteran Raleigh journalist and political observer Steve Ford is out with a new and convincing look at the new state budget (i.e. the one the Governor said he’d sign before he actually got around to the business of reading it). It’s a full-length read but, as is always the case with Steve’s takes, definitely worth a few minutes of your time. Check it out below:

Revenue-starved budget rattles and rolls
By Steve Ford

The debate is familiar: State government is too big. No, it’s too small.

People in the too-big camp typically think government – the state agencies and institutions that North Carolinians support with their taxes — is too expensive. That it tries to do too much in the way of regulating business. That it saps individual initiative with aid to folks who should be working harder to help themselves and makes everyone else pay.

Across the philosophical fence are those who view robust regulation, robust social programs – including public education – and a fair tax structure generating a steady stream of revenues as cornerstones of a government that properly serves the public interest.

In the real world, of course the divide is not always so stark. But the contentious process by which the N.C. General Assembly has settled upon a new state budget highlights the opposing viewpoints. The budget now before Gov. Pat McCrory, who has said he will sign it into law, is one that could be accompanied by the slogan, “We did the least we thought we could get away with.”

Even though it calls for raising and spending $21.1 billion during the current July-to-June fiscal year, this is another small-government budget, relatively speaking — in keeping with the preferences of the conservatives who control the House and Senate and their Republican ally in the governor’s office.

Legislative leaders, notably House Speaker Thom Tillis and Senate President Pro Tem Phil Berger, point to the budget’s signature feature – pay raises for the state’s public school teachers that advocates describe as averaging 7 percent.

The raises are long overdue. Teachers’ salaries basically have been frozen, except for one piddling increase, for the last half-dozen years. Over that period, the salary average here plummeted to 46th in the nation, putting North Carolina in a bind as it tries to recruit and retain teachers who can succeed at their demanding jobs.

Sweeter at the start

There was enormous political pressure to give teachers some relief, and Tillis, Berger and McCrory all made higher teacher pay a top priority. Tillis, in particular — hoping to defeat incumbent Democratic U.S. Sen. Kay Hagan in November – could not afford to be seen as ignoring the concerns of public school supporters, many of whom turned out for the Moral Monday protests that drew national attention to North Carolina government’s rightward turn.

So there would be raises for teachers. The beginning salary would increase from $30,000 to $33,000, and the salary schedule for all newer teachers would be boosted.

But as for classroom veterans – loyal, dedicated, with skills tempered and honed by experience — the raises amount to a kind of mirage. That’s because the annual longevity payments that long-term teachers, like non-teaching state employees, have enjoyed were rolled into the teacher salary schedule.

The Democratic leader in the House, Rep. Larry Hall of Durham, put it this way: “You can’t take their longevity pay and give it back to them and say it’s a raise.” And the N.C. Association of Educators is similarly critical of what it calls a regressive pay plan.

The bottom line: Legislators with the power to write the budget as they wished – and who thus can be held accountable for the budget’s strengths and weaknesses – recognized that the issue of teacher pay could no longer be kicked down the road. They saw that paltry pay for teachers risked eroding the quality of the state’s public schools. And they understood that voters would not look kindly on their failure to respond.

But in the end, their response was modest at best. Oh, they described it as historic – but it amounted to less than met the eye. It was, frankly, the least they could get away with.

Sticker shock

What held them back? Naturally enough, it was the price tag. As approved, the raises will cost $282 million a year. Finding a big chunk of additional money had to be a struggle – especially with legislators already desperate to plug budget holes stemming from last year’s sweeping income tax cuts. Meanwhile, they couldn’t have been thrilled to learn that the tax cuts are likely to deprive the state of even more revenue than anticipated.

The upshot is that the budget continues to squeeze other areas of education and also human services – the state’s two largest spending categories. (Here’s a summary of key budget provisions, as reported by The News & Observer of Raleigh.)

The education outlook has some bright spots. For example, enough new teachers would be hired to reduce the size of kindergarten and first-grade classes by one student per class. That’s a $42 million expense.

The Senate’s ill-conceived move to lay off all the teacher assistants who help manage second- and third-grade classrooms, saving $233 million, was blocked by resistance from the House and Gov. McCrory. But to help pay for keeping the assistants, the budget earmarks $113 million from the state lottery. That flouts what was meant to be a basic rule for the use of lottery funds, in the absence of which the lottery might well not have been approved a decade ago.

The lottery, which can reasonably be described as an unfair tax on the poor, was supposed to generate additional money for education, not supplant appropriations that otherwise would be financed out of conventional tax revenue. That principle sadly now looks to have been tossed out the window.

The budget maintains a pay bump for teachers with graduate degrees, but only for those who already have such degrees or who have started their coursework. So down the road, an incentive for teachers to dig more deeply into their fields and to develop their professional expertise will be eliminated.

How does that help North Carolina in the competition with other states to attract the cream of the teaching crop? How does it encourage bright, ambitious young people to join the teaching ranks? Ditto for the legislature’s shortsighted decision to scrap the well-regarded Teaching Fellows program, a valuable recruiting tool.

While the Department of Public Instruction would see a 10 percent budget cut, on top of other recent cuts that have ravaged the department’s workforce, funding for the new “opportunity scholarship” program that essentially provides private schools with taxpayer-funded vouchers would be enhanced.

Democratic Sen. Josh Stein of Raleigh asserted during his chamber’s budget debate that under the new spending plan, North Carolina’s outlays for K-12 education would be less per student and less in absolute dollars than they were in 2008-09. He noted the state’s dismal per-pupil spending rank – 48th in the country. Even with the extra money going toward teacher pay, that ranking isn’t likely to see much improvement. Talk about a turn-off for families and companies looking at this state as a possible place to settle.

Tax-cut consequences

It was to enhance the state’s appeal to business leaders and the affluent that legislators cut personal income taxes and did away with the brackets under which high-income people paid at higher rates. Corporate income taxes also have been cut. Republicans such as Sen. Berger point to job growth in the state as proving they were on the right track.

Whether or not that’s the case, and the picture is far from clear, what’s certain is that the tax cuts now are projected to mean the loss of some $5.3 billion in revenues over the next five years – up from the already worrisome $4.4 billion loss expected when the cuts were approved.

The effect is to make it that much harder for state government to meet the needs of its growing population, especially those people for whom the recent recession proved to be an unmitigated disaster. Education is the ultimate cure for joblessness and indeed is the most powerful tool with which to attack the roots of poverty. But budget-writers had to pull their punches with regard to education at all levels, just as they did in health care and in child-care assistance for the working poor. The money simply wasn’t there.

The budget sent to McCrory does avoid stripping thousands of low-income old, blind or disabled residents off the Medicaid rolls, as the Senate had voted to do, keeping them eligible for health care financed mostly by federal taxpayers. But it does nothing to extend health coverage to many more thousands whose income is above the Medicaid threshold, yet not high enough to qualify for subsidized insurance under the federal Affordable Care Act. It tightens the financial screws on smaller hospitals such as those serving the state’s rural counties, an ominous pattern that already has meant lost hospital jobs and service cutbacks in some areas.

Vision deficit

There were many disagreements between Senate Republicans and their House counterparts as the budget was drafted and negotiated, a process that extended a full month into the new fiscal year. (Minority Democrats were forced to be mere bystanders.)

That legislative leaders finally bridged their differences, and that they did find a way to make at least a down-payment on competitive salaries for the state’s teachers, showed political skill and a sensitivity to some of the public’s concerns. The Council of Churches, for example, in its advocacy for the vulnerable would have found much not to like if some of our neediest neighbors had lost their Medicaid coverage.

Still, this is a limited-vision budget held together with legislative bubble gum and baling wire, and it comes with an assortment of creaks and rattles. It gives its backers political cover in finding more money for teachers, but it does so by letting many other needs languish. It seems to dismiss the forecasts of revenues declining even more steeply than expected.
That concern, as it happens, was not exclusive to Democrats. None other than the House’s top tax person, Rep. Julia Howard of Mocksville, chair of the Finance Committee, was among four Republicans who voted against the budget. Her explanation: Weighing revenues against growing demands, she had “grave concerns” that the budget – required under the state constitution to be balanced – is unsustainable. In other words, out of whack.

Budgeting is the paramount exercise in legislative priority-setting, and thus in determining what state government can do to make North Carolina a place where opportunities for prosperity and success are maximized for each and every resident.
What we are left with now is a budget that, if the legislature’s small-government zealots had always had their way, would have been significantly worse. But the document that Gov. McCrory soon will sign is also notable for the opportunities it fails to seize.


  1. Alan

    August 5, 2014 at 10:50 pm

    What? Nothing from the Civitas/JLF employees on this topic? I’m surprised….

  2. Pertains!

    August 6, 2014 at 8:01 am

    I did check out the teacher pay scale on NC teachers association website and it looks like the pay increases are bottom heavy for the least experienced.
    It appears teachers with a masters and national certification will make a little less due to compounding the 10% and 12% raises.
    It is still very confusing and I would have thought all the pay scales being available for employees to view would have helped explain what they were doing.
    It is a shame to cap the pay scAle at $50,000 when the most qualified and experienced can make double that amount in other states. Mccrory has staff members who answer his phone that probably make more than that.
    Has the governor read it yet so he can give his signature of approval?

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