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Tillis_McCrory_Berger-400It seems like a long time ago, but it was just the beginning of last year that North Carolina’s newly-elected governor promised state “tax reform” that would be “revenue neutral.” In other words, while the Guv was promising tax cuts, he was also calling for tax modernization that would enhance revenues in other areas — thus assuring that government would have the money it needed to fund core services in a fast-growing state. So, while it was always clear that a McCrory plan would enact regressive changes that favored the well-off, there was at least some hope that the state could at least avoid going backwards in the provision of basic services that undergird the middle class

We all know what happened next. Legislative leaders deep-sixed McCrory’s revenue neutrality idea in a New York minute and, instead, quickly acted to make big tax cuts for the wealthy and profitable corporations a vehicle for slashing core services like education, environmental protection and the courts system.

Now, less than a year since the Tillis-Berger tax package went into effect (with full McCrory approval), the chickens are coming home to roost. As this Public News Service story highlights this morning, 2015 is almost certain to bring North Carolina yet another damaging and wholly unnecessary budget crisis: Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

Despite the fact that almost three-quarters of North Carolina voters support expanding NC Pre-K and Smart Start, state lawmakers continued a pattern of underinvestment in key early childhood education services in the state budget they passed this year. NC Pre-K is a proven program which helps prepare children for later success in life, yet lawmakers failed to keep up with the needs of young children in the budget. They provided a one-time $5 million increase for NC Pre-K, but these are not recurring dollars and most of the money goes to increase teacher salaries. While improving teacher pay is critical, there is little left over to provide additional Pre-K slots. This education program currently is not able to serve thousands of children on a waiting list and thousands more who would otherwise be eligible. This is just one example of the many trade-offs state legislators made due to their choice to prioritize tax cuts primarily for those at the top over needed investments in our children, families and workforce.

Child care subsidies, another effective program which helps lower income families afford quality child care and serves as a work support, also took a hit in this year’s budget. Like NC Pre-K, the child care subsidy program helps make sure young children have access to quality early education, and it also has a waiting list of thousands. Lawmakers did little to address the shortage of services and actually made it harder for some low-income families to access this support. They lowered the income eligibility requirements for children under five years old to 200 percent of the federal poverty level (about $39,000 for a family of three). The program used to be available to young children in families earning up to 75 percent of the state median income (about $42,000 for a family of three). The changes were even worse for school-age children using subsidies for after school care. One positive change lawmakers made in this year’s budget was to how much child care providers are reimbursed for serving children who get subsidies, bringing the cost per child closer to the market rate and helping providers recoup more of their expenses. However, providers still are not paid the full market rate, making it hard for many child care settings to accept children who receive subsidies.

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2015 Fiscal Year State Budget, Falling Behind in NC, NC Budget and Tax Center

This week the Budget & Tax Center released a new report on North Carolina’s 2015 fiscal year budget. While other states across the country are beginning to reverse the worst cuts made during the Great Recession, North Carolina continues to underfund crucial public investments in order to pay for tax cuts that took effect this year. Lawmakers failed to provide a high-quality education for all children, protect natural resources, support community-based economic development, or provide adequate health and human services to North Carolina residents.

Under the final budget, state investments are 6.6 percent below pre-recession levels five years into the official economic recovery. The new budget for the 2015 fiscal year is the 7th budget enacted since the Great Recession hit, and North Carolina has yet to bounce back to its pre-recession investment level. This is in contrast to spending during previous economic recoveries – spending did not dip after the 1981 and 2001 recoveries and state lawmakers restored investments to the levels that were in place when the 1990 recession hit within three years. Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

The final budget for fiscal year 2015 – which runs from July 2014 through June 2015 – includes a pay raise for public school teachers for the first time in several years. What the pay raise translates into regarding additional dollars in teachers’ paychecks is unclear based on differing comments by the governor and state lawmakers. Whereas Governor McCrory proclaims an average pay increase of 5.5 percent for teachers, state lawmakers tout a 7 percent average pay raise.

Beyond the on average presentation of the teacher pay raise by state policymakers, the amount of additional money teachers will see in their paychecks varies greatly – particularly among early-career teachers compared to more experienced teachers.

Not all teachers are provided a long-awaited, meaningful pay increase under the new teacher pay structure. The new six-step pay structure for teachers included in the final budget replaces the existing 36-step pay scale – these steps are based on years of teaching experience and determine when a teacher gets a pay increase. Reducing 36 steps down to six entailed much maneuvering by state lawmakers, resulting in some teachers getting a boost in pay at the expense of other teachers.

Under the new pay scale, the starting pay for early-career teachers jumps to at least $33,000 from $30,800 under the old pay schedule—a 7.1 percent increase. However, salary increases for more experienced educators are much lower. In fact, some teacher would actually earn less under the new pay scale compared to the old pay scale; these teachers will continue to earn salaries based on the old pay scale for the 2013-14 school year along with a flat annual $1,000 bonus. Read More

Back to School Series, NC Budget and Tax Center

This is part of a Back to School blog series that highlight various issues to be aware of as the 2014-15 school year kicks off. (See Part 1 and Part 2)

This week, more than 1.5 million North Carolina’s students headed back to school to underfunded classrooms. For yet another school year, teachers will do their best to prepare today’s students to grow into critical thinkers and succeed as workers in a demanding 21st century economy with too few resources available. Legislative leadership and the Governor approved a budget that fails to make up lost ground in public education, keeping spending below the last budget that was in place before the Great Recession.

In fact, when the pay raises for teachers are properly placed in the salaries and reserves section of the General Fund budget and not the public education section—a practice that has long been in place—public education spending in the new budget is below last year’s spending levels (see graphic below). This certainly is not progress, but rather sliding backwards with a budget trick used as cover.

Five years into the recovery from the worst economic downturn since the 1930s, catching up and keeping up with the needs of North Carolina’s students is stalled due to the fact that lawmakers chose to enact a tax plan last year that keeps the state from replacing the most damaging cuts to public investments. The 2013 tax plan is draining available resources—$5.4 billion over five years—that is needed to regain lost ground and reinvest in the building blocks of a strong economy. The tax plan’s impact is evident throughout the final budget for fiscal year 2015. Read More