2017 Fiscal Year State Budget, NC Budget and Tax Center

House K-12 education budget reflects impact of prioritizing tax cuts over reinvestment

North Carolina’s education needs are once again going unmet in the public schools budget proposed by House leaders for the upcoming fiscal year because tax cuts for the wealthy and profitable corporations have taken priority over reinvestment. Beyond funding that will likely be included in a final budget for teacher pay increases, the public schools budget includes a paltry 0.15 percent increase in spending over the original budget passed by state lawmakers last year. This modest spending for public schools fails to address ongoing unmet needs such as adequate funding for textbooks, classroom materials and instructional resources, professional development for teachers and school leaders, and schools nurses, among other areas.

State leaders continue to face a self-inflicted constrained revenue landscape that presents false choices regarding state budget decisions. Highlights from the House budget for K-12 public schools include:

  • Provides $46.7 million to account for enrollment growth of more than 5,800 students in public schools.
  • Replaces $57.3 million in General Fund dollars with lottery dollars for non-instructional support personnel. State lawmakers replaced $345 million in General Fund dollars with lottery dollars for this area for the current school year. The proposed change would result in this area of the public education budget being fully supported by lottery funding and continues the trend of a greater reliance on lottery dollars for public education.
  • Provides $5 million in one-time, non-recurring funding for instructional supplies. Under the House budget, state funding for instructional supplies would remain nearly 50 percent below peak 2009 spending when adjusted for inflation.
  • Provides $11.6 million in one-time, non-recurring funding for textbooks and digital materials. Under House budget state funding for this area of the budget would remain 34 percent below pre-recession spending when adjusted for inflation, which results in NC students being limited by out-of-date resources.
  • Provides $25 million for Literacy Coaches to support Read to Achieve initiative, which provides additional educational services to third-grade students who are not reading at grade level by the end of third grade. State lawmakers expanded the initiative to 1st and 2nd graders last year.
  • Cuts state funding for 1st and 2nd grade reading camps in half to $10 million from $20 million. Also changes nature of this funding from recurring to one-time, non-recurring funding.
  • Cuts $26.8 million in state funding for additional 1st grade teaching positions that were supposed to be filled beginning with the upcoming 2016-17 school year. The cut means that these would-be state-funded teacher positions are no longer available.
  • Provides $1.3 million to reinstate state funding for salary supplements to instructional coaches who have earned National Board certification.
  • Changes nature of state funding for Communities in Schools to one-time from recurring funding. Communities in Schools is a local-based dropout prevention initiative dedicated to keeping kids in school and helping them to succeed.
  • Provides $5.8 million to increase funding for Special Education Scholarship grants (vouchers), more than doubling the current budget. The program provides scholarship grants of up to $4,000 per semester for eligible K-12 students.
2017 Fiscal Year State Budget, NC Budget and Tax Center

Justice and public safety budget proposed by House doesn’t address unmet needs

The revised Justice and Public Safety budget proposed by House leadership for the upcoming fiscal year entails a 0.29 percent, or $5.3 million, increase to the original JPS budget passed by state lawmakers last year. Despite many unmet needs in North Carolina such as re-entry services for ex-offenders returning into local communities, this bare-bones budget continues an austerity approach that favors tax cuts over reinvestment.

Additional spending items in the proposed revised budget largely consist on one-time funding for various initiatives, including:

  • Provides $350,000 in one-time dollars to update Alcohol Law Enforcement radios.
  • Provides $507,784 in one-time dollars for the construction and development of first generation School Risk Management Plans for public schools.
  • Provides a one-time $187,070 appropriation to expand the Center for Safe School’s pilot tip-reporting program for middle and high schools.
  • Provides a one-time $1.1 million appropriation and a recurring $301,276 appropriation to equip and operate the new Western Crime Lab in Edneyville, NC.
  • Provides a one-time $640,000 appropriation for equipment at the State Crime Lab.
  • Provides a one-time $2 million appropriation for outsourcing forensic analysis services, including toxicology and DNA, at the State Crime Lab.
  • Provides a one-time $250,000 appropriation to digitize mental health records in the judicial branch.

Two items that are not in this budget proposal:

  • Provides no funding for drug treatment courts, which provides a more cost-effective treatment option for drug offenders and cost a fraction of the cost to keep these individuals in prison. The Governor’s budget included funding for these courts.
  • Provides no additional funding to Indigent Defense Services for counsel assigned to those unable to pay for legal representation.
2017 Fiscal Year State Budget, NC Budget and Tax Center

A stroll down memory lane of recent budgets, tax cuts are the guide rails

Tax changes passed since 2013 have not only significantly reduced revenue available for public investments, but also shifted the tax load to low- and middle- income taxpayers and away from the wealthy and profitable corporations. The tax burden on low income taxpayers increases on average by $30 while it decreases by around $15,000 on average for millionaires once all tax changes are fully in place.

These tax changes mean the amount of revenue raised through the state’s three main tax revenue sources – the personal income tax, the corporate income tax and the sales tax – was reduced by billions of dollars. Simply put, state leaders lowered the bar of possibilities for North Carolina. Thus, better-than-projected revenue of $330 million above projections still means we have less than we would have had and less than we need to build a solid foundation for prosperity for North Carolina.

This reality is reflected in the low spending target agreed to by leaders in the House and Senate – which is below the Governor’s modest budget proposal. There simply aren’t enough dollars to go around to fulfill even the modest stated priorities in an election year. It’s wishful thinking that NC will have enough funds to be able to boost its economy by making smart public investments that prepare every child for success, support every family’s health and well-being and deliver on a vision where every community in the state can thrive.

Here’s a recap of the sequence of tax policies passed in recent years. It is worth repeating that under these changes taxes, once they are fully in place, annual revenue loss will total at least $2 billion – much needed dollars given the growing needs of the state.

In 2013, state leaders included a package of tax changes in their approved state budget that made significant changes to the state’s tax system. These consequential tax changes included:  Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s modest public safety budget

Safe communities and efficient courts contribute to a quality of life in local communities that is attractive for raising a family and operating a business. Revisions to the Governor’s modest budget for Justice and Public Safety largely consist of funding for pay increases for state employees, in which the majority of these dollars represent one-time bonus payments, with modest investments in other areas of the budget.

Here are key items in the Justice & Public Safety budget.

Judicial Branch

  • Funding provided for discretionary one-time bonuses, maximum $3,000, to selected state employees ($9.9 million).
  • Funding provided for permanent experience-based pay raises for clerks and magistrates, and market-based salary adjustment for assistant district attorneys ($7.4 million).
  • Transfers dollars from Department of Health and Human Services for specialty courts that serve special populations such as individuals with mental health and substance abuse issues ($2.5 million).

Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Initial review of Governor’s higher ed budgets that fail to ensure affordable higher education

Here are key highlights from Gov. McCrory’s proposed higher education budgets.

Community College System

Consists of 58 community colleges across the state serving all of North Carolina’s 100 counties.

The community college budget follows a larger trend of failing to boost public investment in the state’s education pipeline, with the exception of some additional funding for one-time bonuses, equipment upgrades, and a locally-driven initiative to promote post-secondary success. After years of steady increases in tuition, the proposed budget does not reverse this trend, failing to make post-secondary training and education at community colleges more affordable.

  • Funding provided for discretionary one-time bonuses, maximum $3,000, to selected state employees at NC community colleges ($29.4 million).
  • Savings recognized due to decline in enrollment ($26.2 million).
  • Funding provided for locally-determined support services to help ensure students earn a credential or degree ($16.6 million).
  • One-time funding provided to upgrade and maintain instructional equipment at NC community colleges ($7.5 million).

UNC System

Consists of 16 four-year public universities across the state serving more than 220,000 students, as well as the NC School of Science and Mathematics. Read more