There is now more news that state income tax cuts are forcing local governments to pursue bad deals as they scramble to deliver basic services. While state leaders claim to be looking out for rural North Carolina, it is ever clearer that income tax cuts put many local governments and residents in a bind.
Tax cuts have reduced available state revenue by billions of dollars, resulting in less support for many rural communities. Unfortunately, many rural communities lack the tax base and economic activity needed to make up for lost state funds, forcing them instead to consider alternatives that may ultimately cost rural governments more over the long run. Already, local government’s commitment to public schools through per-pupil spending has already increased significantly since 2008.
Instead of revisiting the choice to slash income taxes, a bill moving through the Senate would give local governments more ways to finance new school buildings at great costs to residents and while putting at risk other classroom investments. The legislation would expedite the process under which lease-purchase agreements move forward and make available state funds for students and teachers to go to private developers. Such a deal is already on the table in Robeson County where the Treasurer’s Office estimates that the increase in debt load for Robesonians will go from $200 to $4,000. Not only could there be job losses as teachers and teaching assistants lose their jobs through consolidation of schools, the prioritization of repayment of this debt above other local government obligations and the allocation of sales tax revenue to private developers would be harmful to many other public services in communities.
And, as Terry Stoops of the John Locke Foundation notes, there is little research to suggest that new facilities will improve educational outcomes, and certainly not when they risk other investments proven to drive student achievement and teacher retention.
Why would local leaders and community members need to seek out such a bad deal for its citizens? Because the backlog for renovating and upgrading schools is just one of the things that has fallen behind as a result of income tax cuts for the wealthy and profitable corporations. In the past, school construction received direct support through allocation of lottery funds and corporate income tax collections. Now, both of these streams have had to be used to patch other holes in the education budget as income tax cuts have sapped the availability of state revenue.
Given that income tax cuts will continue to phase-in, it is unlikely that North Carolinians will stop seeing such costly deals. The only question is when will local communities make sure their leaders make better choices and call for an end to income tax cuts that aren’t helping build stronger communities?