Gov. McCrory and state leaders have signaled intentions to include a pay raise for North Carolina teachers in their respective proposed budgets for the upcoming fiscal year that begins July 1, 2016. The specifics of what a pay raise will entail remains unclear. However, what is clear is that providing educators a meaningful raise conflicts with tax policy decisions in recent years. The priority placed on cutting income taxes for the wealthy and profitable corporations mean that movement to the national average for North Carolina’s teachers will be next to impossible and that progress on teacher pay could come at the cost of other classroom investments critical to students’ success.
The Governor’s proposed teacher pay raise will cost around $250 million but would not get average teacher pay to the national average and would fall short of even leading the southeast region. In addition, because of other priorities highlighted by the Governor – additional funding for broadband connection for schools and more funding to support students with disabilities, among other initiatives – a sustainable way to fund all of these critical investments in classrooms is unlikely. Accordingly, the Governor providing a way to pay for these proposals is critical to ensuring that they can be sustained. And that means revisiting the planned phase-in of reductions to the personal and corporate income tax rates in future years.
Tax cuts enacted since 2013 that largely benefit the well off and profitable corporations will reduce annual revenue by more than $2 billion once all tax changes are fully phased in. These are dollars that otherwise would be available to get average teacher pay for North Carolina teachers to the national average, boost investments in the state’s education pipeline (e.g. eliminate Pre-K waitlists, funding for classroom textbooks, etc.) and other public services. The constrained revenue picture as a result of costly tax cuts in recent years makes such opportunities merely wishful desires. And despite recent news of expected better-than-projected revenue for this current fiscal year, this does not mean we have adequate revenue to meet the needs and priorities of a growing state.
State leaders have expressed a desire to pursue more tax cuts that will further reduce available revenue and that will further make providing teachers a meaningful pay raise impossible – unless significant funding cuts are made to other areas of the state budget. The reality is that tax policy decisions in recent years and a desire to continue this tax-cut approach makes providing North Carolina teachers a meaningful pay raise fiscally unsustainable and unlikely to happen.