Education, Higher Ed, NC Budget and Tax Center

North Carolina’s cuts to higher education are shortchanging future generations

North Carolina’s inadequate public investment in higher education over the last decade has contributed to rising tuition prices, often leaving students with little choice but to take on more debt or give up on their dreams of going to college. The problem is especially serious for Black, Latinx, and low-income students.

North Carolina is one of 45 states that spent less per student in the 2018 school year than in 2008 – even as the economy and state budgets have returned to pre-recession levels, according to Unkept Promises: State Cuts to Higher Education Threaten Access and Equity, a new report from the Center on Budget and Policy Priorities (CBPP).

2008 – 2018 Cuts to Higher Education Funding (adjusted for inflation):

  • North Carolina Average: 18.6 percent per student or $2,357 per student
  • S. Average: 16 percent per student or $1,502 per student

Cuts to higher education have helped drive up the cost of attending public colleges and universities. Between 2008 and 2018, the average tuition at public four-year institutions in North Carolina grew by 45% or $2,293– outpacing the national average growth of 36 percent.

Americans’ slow income growth has worsened the situation. While the average tuition bill increased by 36 percent between 2008 and 2018, median incomes grew by just over 2 percent. Nationally, the average tuition at a four-year public college accounted for 16.5 percent of median household income in 2017, up from 14 percent in 2008.

In North Carolina, the costs of a college education represents 14 percent of median household income for all North Carolina families, 19 percent of median household income for Black North Carolina families and 18 percent of median household income for Latinx North Carolina families. Read more

NC Budget and Tax Center

The growth of income inequality in N.C. and how not to make it worse

North Carolina’s top 1 percent are doing quite well, according to research by the Economic Policy Institute that provides a unique view of income inequality by comparing the incomes of the top 1 percent to the bottom 99 percent in states and counties across the country.

Since the recovery began in 2009 until the last available data in 2015, the top 1 percent in North Carolina have captured more than all of the income growth.  How is such a thing possible?  When the income of the bottom 99 percent of North Carolinians declines over the same period.  Those two staggering facts should be enough to give us pause that something is truly wrong with how our economy works.

But there is more data from the Economic Policy Institute for a shorter time period (2010 to 2015) due to data availability at the county level that shows that income growth for the top 1 percent maps to geographic inequities in North Carolina.  In the state’s urban counties, the top 1 percent have incomes that are 23 times that of the bottom 99 percent, whereas in the state’s rural counties that ratio is 14 times.  Twelve counties saw the income of the bottom 99 percent of North Carolinians in those communities decline.  For these communities, the stabilizing force of people spending locally and building assets is weakened and, with it, the potential for the community to thrive.

It doesn’t have to be this way.  North Carolina’s recent history shows that income growth for the top 1 percent doesn’t have to be out of balance with what is happening nationally nor does it have to so significantly outpace that of their neighbors in the bottom 99 percent.

Read more

Education, NC Budget and Tax Center

Income tax rate cap amendment would cement N.C.’s missed opportunity in education

Imposing an arbitrary income tax rate cap in the North Carolina Constitution could fundamentally compromise our state’s ability to fund our schools, ensure the educational preparation of young children, and boost the educational attainment of our workforce.

Such a cementing of a missed opportunity in education could happen as the tax load shifts even further onto middle- and low-income taxpayers, while the state’s highest income taxpayers, the top 1 percent, continue to benefit from recent tax changes since 2013.

In the Budget & Tax Center’s report on the costs of a proposal to lower the maximum tax rate allowed on incomes, we find that by cutting off the potential for top brackets on high-income earners, North Carolina will not have $2.4 billion available to meet unmet needs.

These needs are real in classrooms across the state and for families with children in every community.

  • Per pupil spending remains below pre-Recession levels – 25 percent lower than South Carolina.
  • The teacher pay penalty in N.C. is second worst in the nation, behind only Arizona.
  • Students are learning in buildings with mold and leaking roofs.
  • Students are lacking access to the tools that support their learning — technology and textbooks — and their well-being — school nurses, counselors and food.

With $2.4 billion, North Carolina could address these needs and help every child reach their full potential.  Failing to do so puts at risk our constitutional commitment to public education.

Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center. 

NC Budget and Tax Center

3 things we learned from the Elon poll about the income tax amendment

At this stage in the election cycle and in a state where so many changes to the state Constitution are being proposed at once, it’s not surprising that voters don’t have all the information they need to make an informed decision on ballot measures.

That may be the headline of news coverage of the recent Elon poll, but here are three key findings on the income tax rate cap amendment that should be capturing more attention.

  1. Voters don’t support this amendment when they hear the official explanation of what it is. The opposition to the change in the proposed income tax rate moves from 15 percent to 27 percent after hearing the details of what the amendment will do.   Support falls below the majority needed to change the state constitution.
  2. Voters aren’t going to the polls because the income tax cap rate cap is on the ballot. One of the theories discussed during the legislative process was that legislative leaders felt that this measure needed to be on there to turn out voters.  Fifty-seven percent of those polled said this proposed change doesn’t motivate them to go to the polls.
  3. Voters understand that it won’t affect their tax rate. The language of the amendment was changed in the last days of the legislature to include in the ballot question language that the amendment “reduces taxes,” even though the effect of the proposal would only be to cap the maximum allowable rate in the state constitution ABOVE where it currently is.

The takeaway from the Elon poll should certainly be that more education and information is needed to ensure voters can make an informed choice at the ballot.

It should also be clear that North Carolina voters aren’t fooled by tricks from legislative leaders.  They won’t be tricked into going to the polls. They won’t be tricked by language that obscures the benefits to the wealthy and the harm to their communities. They won’t be tricked into thinking that they will benefit.

As we detail in our recent analysis of the proposal to cap the income tax rate at a lower maximum rate, this is a costly measure for North Carolina taxpayers and communities.

Uncategorized

Statement on the Passage of the Income Tax Cap Proposal

The passage of Senate Bill 75, proposing a Constitutional amendment capping the income tax rate to lock in recent legislative decisions to reduce rates, is fiscally irresponsible and unnecessary.

In order to keep funding vital public services such as schools and public safety, lawmakers will likely have to raise the sales tax or fees, which will eat into middle class families’ paychecks and financially hurt those who are already struggling to get by.

Lawmakers are not trying to bring greater democracy to the budget process; they are trying to take choices away from future generations of North Carolinians.  Voters in November should reject this effort to limit the tools available to future policymakers and the will of future voters.

Constitutions should be flexible and enduring frameworks for governing, not the place to impose the arbitrary whims of the moment on future generations.

The vote shows just how arbitrary the rate is that legislators choose to enshrine in the state Constitution. The bottom line is that this is about further locking in low tax rates that primarily benefit the wealthy, cutting public investments that serve the common good, and shifting the costs for our state’s needs to local governments and the middle class.

In the end, the results of this unnecessary amendment will be costly for us all.