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At the Education Appropriations Subcommittee meeting today, the North Carolina House unveiled the education section of their budget bill. While the unfortunate convention of loading the budget with policy changes in the special provisions section is nothing new, the education-related provisions of the House’s budget proposal go exceptionally far.

Most notably, a bill creating a voucher program (HB 944) that would divert $100 million from public to private schools over the next three years is included in its entirety in the House budget’s 97 pages worth of public education special provisions. The controversial and unpopular voucher scheme faced bipartisan opposition when it was narrowly approved by the House Education Committee on May 27th. If this provision remains part of the budget, vouchers could become law in North Carolina without ever being subjected to a standalone vote on the floor of either the House or the Senate.

Here is a sampling of the many education policy changes embedded in the omnibus budget bill:

Students with Disabilities and Limited English Proficient students would be ineligible for North Carolina Pre-Kindergarten:  In spite of the fact that students with disabilities and limited English proficient students benefit most from early educational intervention, both are incomprehensibly removed from the eligibility definition in the Health and Human Services portion of the budget special provisions.  The income eligibility standard that families must meet to participate is also reduced from 75% of the State Median Income (equivalent to about $42,819 for a family of three) to 130% of the federal poverty level ($24,817 for a family of three).

Larger classes, especially in the early grades: Limits on class sizes in grades K-3 are removed, as are overall teaching load limits for teachers in grades 7-12.

No salary increases for teachers with masters degrees: In another hit to North Carolina’s already underpaid teaching force (currently ranked 46th in the nation in teacher compensation and falling fast), new teachers possessing masters degrees would no longer receive any salary supplement.  Currently new teachers receive a supplement of a little over $3,000 if they have a masters, accounting for about a 10% bump in pay.

Older school buses: The House special provisions replace the current law stipulating that school buses must be replaced every 200,000 miles or 20 years with a provision that buses won’t be eligible for replacement until they reach 250,000 miles. Buses operated for less than 150,000 miles are ineligible for replacement regardless of how old they are, and buses less than 15 years old could not be replaced until they reach 300,000 miles.

Despite overwhelming support for the program from judges, voters and former governors, Republicans in the House have stepped in line with the Governor and their colleagues in the Senate and proposed in their budget, released today (at page 12), to eliminate public funding for judicial campaigns. 

Someone is really holding their feet to the fire on this one.

Here’s a quick look at the impact that the House budget (being released in piecemeal fashion) would have on the courts:

Magistrates: Adds 16 magistrates to counties currently with only three, in line with the Governor’s proposal. The Senate proposed restoring 39.5 magistrate positions, to four magistrates per county, at a cost of $1.8 million.

Court reporters: No cuts to state court reporters, in line with the Governor’s budget. The Senate had proposed cutting court reporting funds and positions by half, with the savings to be used for contracts with private vendors.

Administrative Office of the Courts: Reduces the AOC budget by $3 million, in line with the Senate budget.

Funds for interpreters, expert witnesses and jury fees: Appropriates $1 million, in line with the Senate and the Governor.

Special Superior Court Judges: No cuts, in line with the Governor’s budget. The Senate proposed eliminating 12 Special Superior Court judgeships.

Drug Treatment Courts: No funding for Drug Treatment Courts, consistent with the Senate budget. The Governor’s budget appropriates $3.36 million to restore them statewide.

Prisoner Legal Services: Reduces that contract by $231,000 “to reflect decline in number of inmates,” consistent with the Governor’s budget. The Senate had proposed to eliminate the contract completely, using “prison legal terminals” instead.

 

The House is taking a vote on the tax plan that was rushed through committees this week with little time for discussion of the real impact. This new House plan, like all the other plans proposed, will undermine North Carolina’s future by shifting taxes from the wealthy onto everyone else and will leave the state unable to make its most important investments.

Our full analysis of what this will mean for taxpayers can be accessed here. What does this tell us about the vote that House members are moments away from taking?

  • The top five percent will get tax cuts while the bottom 95 percent of taxpayers see their taxes increase, on average. This analysis is the most reliable way to assess what will happen to the population overall under this plan. It doesn’t cherry pick taxpayers with certain filing characteristics but summarizes the diversity of experiences under the House tax plan to tell us what the impact will be for a taxpayer on average in each income group.
  • The largest benefits of this plan overwhelmingly go to the top one percent. Millionaires would receive a tax cut of nearly $9,000. In fact, the small number of millionaires in this state would receive almost 40 percent of the total income tax cut that results from flattening the rate and removing the cap on charitable contributions.
  • The so-called “protections” for low- and middle-income taxpayers are ineffective and poorly targeted at those who are hurt by this tax plan. It will fail to shield those taxpayers from changing sales tax to services. The House tax plan combined with the end of the state’s Earned Income Tax Credit will raise taxes for taxpayers with an average income of $12,000 by 0.7 percent, while cutting taxes for taxpayers with an average income of $940,000 by -1 percent.
  • The House tax plan will cost the state $1.6 billion over five years. That means fewer dollars to invest in the foundations for economic growth—like K-12 and higher education—at a time when spending is already at historic lows.

Tax cuts for the wealthy paired with tax hikes for everyone else will not help North Carolina’s economy. But it will cost us our most important priorities.

Here’s the full story on the House tax plan: It will increase taxes for middle- and low-income households while giving a large tax cut to the wealthy. The bottom ninety-five percent of taxpayers would see their taxes go up, on average, under the bill version that will be heard in House Appropriations today.

Those who focus only on the income tax changes and say this is a tax cut for everyone are ignoring how the sales tax changes – a major part of this tax plan – will hurt average families. Those who are using data from the Fiscal Research division to extrapolate that the majority will see a tax cut are also mistaken. These claims only obscure the harmful impact of this tax plan on the majority of North Carolinians.

The House tax plan does provide an income tax cut to taxpayers across the income spectrum, but that’s not the whole story and still 27% of all taxpayers would see an income tax increase. The greatest cut goes to the top: More than third of the income tax cut goes to the richest 1 percent. But as all North Carolinians know, we don’t just pay income taxes; we also pay sales tax. That’s why we must look at income and sales tax changes in order to evaluate whether the House tax plans are good for our state.

The House tax plan expands the services that are subject to the sales tax. Because they spend a greater share of their income on taxable goods and services to meet their basic needs, middle- and low-income families will pay more of their income in sales taxes than the wealthy. In the House plan, the expansion of the sales tax is, on average, enough to cancel out the income tax cut, on average, for the bottom 95 percent of taxpayers. Read More