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Voices of concern are growing louder as more and more individuals and institutions directly impacted by the new state budget signed by Gov. McCrory yesterday come to grasp what is actually in the 260 page document. As reported in the post immediately below and in this story by Sarah Ovaska on Wednesday, the list of changes buried in the fine print is long and full of significant policy decisions.

And as this story in today’s Charlotte Observer details, one of the most important and worrisome changes involves how the state funds public education:

A provision of the state budget that changes how schools are funded will put Charlotte-Mecklenburg Schools at a disadvantage in recruiting talented teachers and make planning much more difficult, Superintendent Heath Morrison said.

As part of the budget signed by Gov. Pat McCrory on Thursday, the state legislature will no longer automatically fund growth in public school enrollment. Districts had long used that assumption to plan their staffing ahead of the North Carolina budget debate each summer. Now, they will have to wait until after the legislature adjourns, or later, to learn how much money they’ll receive.

“We view it as a very radical change,” Morrison said Thursday.

Charlotte-Meck isn’t the only system worried. This is from Sarah Ovaska’s story: Read More

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TeachersHeadline-hunting legislative leaders got what they wanted and needed (for now) with yesterday’s latest budget announcement. They wanted the story to be first and foremost about big teacher raises and it appears pretty clear that they got that. Media outlets around the state are reporting that central component of the proposed budget agreement this morning and millions of North Carolinians are waking up to the news — even if it’s frequently tinged with skepticism.

The problem with this story, of course is that, by all indications, the pay raise is being purchased at an enormous price — i.e. big cuts everywhere else –including education — along with tiny and inadequate pay raises for other public employees (including education personnel).

In short, though many details remain to be seen, the central and disastrous driving force behind this year’s budget — last year’s regressive and backward-looking tax cuts remain in full force. As budget analyst Tazra Mitchell wrote here yesterday:

There are better choices available that will put North Carolina on a stronger path to recovery for children, families, and communities across the Tarheel state. For starters, lawmakers need to face the reality that we can’t afford further tax cuts and stop the income tax cuts that are scheduled to go into effect next January. Doing so will save approximately $100 million in the current fiscal year and $300 million in the 2015 calendar year. These revenues would go a long way towards reversing the most damaging cuts that were enacted in the aftermath of the Great Recession. That’s a short-term fix.  A longer term fix requires restoring the progressive personal income tax structure so that revenues are stable and more adequate.

The only saving grace of the budget is this: the message it sends to progressives. As dreadful as the budget is — both for the near and long term — it does serve to remind progressives of the power of advocacy. Read More

NC Budget and Tax Center

Budget writers announced over the weekend that the Senate and House leadership agreed to a basic framework for a final budget deal. That framework includes a pay raise for teachers averaging roughly 7 percent and further cuts to the Medicaid program that provides health insurance and long-term care to children and adults who are poor, disabled, and elderly. There is no question that other vital programs and services will be cut due to a lack of adequate funding, resulting from lawmakers’ choice to make room for unaffordable tax cuts for the wealthy and profitable businesses in 2013.

While the full details of the final budget deal will not be released until this afternoon at 1:30pm, below are five things we expect to be true in the final budget deal: Read More

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ICYMI, the editorial page of the Greensboro News & Record pulled no punches this weekend in an editorial excoriating state senators for their last minute proposal to hamstring local governments when it comes to use of the sales tax for public services and structures at the local level. Here’s an excerpt from “Oddest idea yet”:

Republican state senators canceled a floor vote on a confusing sales-tax bill Thursday until they could get their stories straight. Which means it might not return.

Of all the heavy-handed directives the legislature has pushed down on local governments in the past couple of years — airport and water system takeovers, de-annexations, local redistrictings, elimination of privilege licenses — this one might be the most illogical.

The measure, which originated in the Senate Finance Committee without notice Wednesday, was presented as a means of giving counties additional tax flexibility. With voters’ approval, they could add to the local sales tax, designating revenue to schools or transportation projects.

But the strings attached tied everything in knots.

The legislation put restrictions on how new revenue could be spent — for education or for transportation, but not for both. It put a cap on the local sales-tax rate. And, perhaps most baffling, it required that if a county raised the sales-tax rate, it would have to raise it all the way to the cap….

The half-baked sales-tax bill, which also includes unrelated provisions boosting economic development efforts, was yanked from the calendar before the Senate adjourned for the weekend. Senators will return to Raleigh Monday, but the wacky sales-tax proposals ought to vanish as quickly as they appeared.

For more information on the proposal in question, click here for succinct summary.

NC Budget and Tax Center

Plans to finance both public education and transit at the local level would be stopped in their tracks under HB 1224 that passed the state Senate Finance Committee yesterday. The bill not only places a hard cap on the local sales tax rate at 2.5 percent but also only allows counties to levy a sales tax increase for either education or transit—not both.  This bill joins a slate of other bills that would restrict local control. The full Senate is scheduled to vote on the bill Monday night.

In effect, the bill restricts local governments’ authority to meet local needs and balance their budgets. Importantly, the bill is aimed at shifting the responsibility of funding public education away from the state and towards local governments. The state clearly cannot afford last year’s tax plan and now legislators are proposing budgets that would make serious cuts to public education as a result. Those cuts would have to be absorbed by children in the classroom or addressed at the local level, putting local governments in a tough spot having to choose whether or not to make up the difference via a local tax.

Local governments are dealing with the fallout from last year’s tax plan in other ways too. They no longer have access to the school Capital Building Fund, which received a portion of revenue generated from the state corporate income tax. Schools used this fund to help them meet their education obligations, as my colleague explained last month. The result is a $382 million dent over the next five years. This loss is on top of the looming $63 million-annual dent resulting from elimination of the local privilege tax in 2015. Read More