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taborThe latest warning about the proposed Taxpayer Bill of Rights comes from the editorial board of the Fayetteville Observer.

Editors warn in Friday’s paper that the proposed constitutional amendment (that must still pass the House) might sound alluring, but would have many unintended consequences:

The concept is a lot like mandatory sentencing, which took away judges’ discretion, resulted in overcrowded jails and took away opportunities to rehabilitate offenders before they became career criminals. The concept ignored unintended consequences, which have been costly.

There is similar naivete at work in the Taxpayer Bill of Rights. State Treasurer Janet Cowell says the measure could imperil North Carolina’s triple-A bond rating and boost the cost of borrowing.

But the fallout could be much worse than that. For hints, we can look at Colorado, whose voters approved a similar amendment more than two decades ago.

An official of the Colorado Fiscal Institute says his state has found the bill of rights to be “a complete and unmitigated disaster.” Tim Hoover told the Public News Service that “The only good news to come out of it is that Colorado has served as an example of what not to do.” One of the biggest problems there has been with education funding. The tax-increase limits have led to a decrease in per-pupil spending in education and dropped the state to 50th in spending on higher education. Doesn’t North Carolina already have enough problems with education funding?

Like many across-the-board spending limits (federal budget sequestration comes to mind), the formula in the bill of rights is simplistic and inflexible. It considers average population growth, but doesn’t consider growth in segments of the population, like children or the elderly, that might have more costly needs.

What we really need to do is let our lawmakers do the jobs we pay them to do – to run the state effectively and efficiently, and to appropriate what it takes to get it done. They stand for a performance review every two years and that’s where we should make decisions about their spending plans.

The full editorial can be read here.

Commentary

A one-time, $750 “bonus.” That’s what most North Carolina state employees will get as a “pay increase” as a result of the new budget deal at the General Assembly. That’s about $10 per week after taxes.

Not much, we know, but if the state Senate has its way, such a “raise” may soon seem downright extravagant. That’s because the new constitutional amendments the Senate has proposed to place on the state ballot next year would actually make such a “raise” all but impossible.

As this morning’s lead editorial in Raleigh’s News & Observer explains thoroughly, the so-called “Taxpayer Bill of Rights” or “TABOR” would all but end state government’s ability to address the needs of the citizenry — much less provide meaningful raises to public employees. Indeed, even with this year’s pathetic pay bonus, spending will actually exceed the limits that TABOR would put permanently in place.

As the N&O editorial  puts it:

“It’s absolutely astonishing that despite the failure of TABOR in Colorado, stubborn state Senate Republicans have pushed on with it, almost defiantly ignoring common sense and the business community. Why have many other states considered it and then reconsidered it? Because, after that first flush of thinking it’s a great conservative idea and run-on issue, cooler heads realize it hasn’t worked.”

Let’s hope the cooler heads emerge and take charge here in North Carolina very soon.
NC Budget and Tax Center

State lawmakers would like to amend North Carolina’s state constitution in ways that would undermine our ability to adequately meet the needs of a growing and changing state and impede our ability to build today for a strong economy for the future. These amendments would reduce annual state revenue by nearly $2 billion if implemented in 2015, meaning state funding cuts to important public investments that drive the state forward – our public schools, affordable higher education, safe and healthy communities, and modern infrastructure.

Colorado, which enacted TABOR in 1992, serves as a cautionary tale regarding the perils of taking such a path. The state suspended the law for five years in 2005 in response to a sharp decline in public services. As a result of TABOR, Colorado went from the middle of the pack to the bottom among states in regards to state support for public education and initiatives that serve children. Regarding Colorado, an updated 2015 report by the Center on Budget and Policy Priorities highlights:

  • Colorado fell from 35th to 49th in the nation in K-12 spending as a percentage of personal income.
  • College and university funding as a share of personal income declined from 35th in the nation to 48th.
  • Colorado fell to near the bottom of national rankings in providing children with full, on-time vaccinations.
  • The share of low-income children in the state who lacked health insurance doubled, making Colorado the worst in the nation by this measure

North Carolina has ALREADY experienced erosion in state support for public schools, higher education and early childhood programs in recent years and currently ranks near the bottom among states in many areas. The implementation of these constitutional amendments would all but guarantee a last place finish in every race, every year.

  • North Carolina already ranks 43rd in average pay for our teachers.
  • North Carolina had the largest decline among states in average teacher salaries from 2003-04 to 2013-14.
  • North Carolina ranks 41st in change in state spending per student at 4-yr public universities since 2008

TABOR would make sure that we are unable to boost investments in early childhood initiatives, public schools, and public colleges and universities at a time when doing so is important to North Carolina becoming a more competitive and attractive state.

Contrary to the saying that if you’re at the bottom the only way to go is up, if TABOR comes to North Carolina, the only fate for the Tar Heel State is a permanent place at the bottom in regards to our commitment to public education.

Commentary

In case you missed it the other day, the Charlotte Observer ran one of the best essays yet on the disastrous consequences that North Carolina can expect if the ALEC-inspired “Taxpayer Bill of Rights” becomes embedded in the state constitution and what we ought to do instead.

Leslie WinnerIncrease teacher pay without TABOR

By Leslie Winner

I was talking to the superintendent of a small school system last fall, and she mournfully told me about losing her best high school math teacher to South Carolina, where he would earn $10,000 more per year for doing the same job. We all know young adults who would be good teachers, who would like to teach in North Carolina, and who won’t go into teaching, or who are leaving or won’t come to North Carolina, because we do not pay enough for a teacher’s family to live on. We all know of schools that will open this month without a qualified teacher in each classroom, that are facing a shortage of math, science, and foreign language teachers, because those schools cannot find enough qualified teachers to hire.

Almost all of us in North Carolina deeply believe that our public schools should prepare each child for a meaningful and productive life. Kids are different from each other, and each child deserves to get a year’s worth of growth for a year’s worth of school. Parents also deserve to be confident that their children will finish school prepared for the future. We know that to accomplish this, schools must have good teachers in each classroom and enough up-to-date textbooks and technology.

Since North Carolina is currently significantly behind in providing enough funding for teachers, textbooks, and technology, I was surprised to read that talk of TABOR, the so called “tax-payer bill of rights,” has resurfaced in the legislature. This proposed amendment to the state’s Constitution would both cap North Carolina’s income tax at 5%, helping those with higher incomes, and cost the state $1.5 billion a year in revenue. It would also limit increases in state spending, based on inflation and population growth, limiting North Carolina, effectively, to the amount we are spending now, with no room for improving public schools even in prosperous times.

We are fortunate to have thousands of effective, dedicated teachers in our schools. To keep them, and to attract new ones, we need to recruit smart young adults into the profession, provide the best with prestigious teacher scholarships, prepare them well, respect and support them as teachers, and pay them enough so they can support their families while they work as teachers. Currently, about half our teachers quit in their first five years. If we invested in recruiting, preparing, supporting, and paying them well, more would stay longer, reducing the number we need to hire each year, and allowing us to invest more into recruiting, preparing and supporting the next round of new teachers. Read More

NC Budget and Tax Center

After enacting huge, costly income tax cuts in recent years that largely benefited the state’s wealthiest people and biggest, most profitable corporations, pursuing more tax cuts would threaten North Carolina’s economy – and yet it appears state lawmakers are doing just that.

Questions remain about what will or won’t be in the budget the Legislature passes. What is known, though, is that the spending target agreed upon by the House and Senate is $230 million less than what the state is projected to take in over the year from tax revenue.

If that turns out to mean a tax-cut proposal, it will come in the face of strong evidence that such a strategy doesn’t deliver widespread economic benefits.  North Carolina is experiencing a very uneven economic recovery. Many people still can’t find jobs and many who are working are being paid less than what it takes to make ends meet. Tax cuts aren’t going to create the jobs North Carolina needs and they take resources away from what the state should invest in to promote real growth – quality public schools, affordable higher education, modern infrastructure, and safe and healthy communities, for example.

A continued pursuit of failed trickle-down economics policies would occur as investments in those public services and others are still below pre-recession levels and insufficient to meet growing needs.

State lawmakers are pursuing two paths to usher in more income tax cuts.

One path builds more tax cuts into the state budget. Budgets passed by both the House and the Senate lower the corporate income tax rate to 3 percent from 5 percent over the next two years. These tax cuts will result in more than $450 million less available to the state for public services over the next two years. As we’ve highlighted previously, cutting corporate income taxes won’t boost North Carolina’s economy; taxes are but a fraction of a business’s costs. Furthermore, the Senate’s budget changes how corporations apportion their income for state income tax purposes and reduces the corporate franchise tax rate. In total, tax changes included in the Senate’s budget would result in nearly $1 billion in less state revenue over the next two years.

The second path, Senate Bill 607, would amend the state constitution to arbitrarily cap the state income tax rate at 5 percent. This would reduce annual state revenue for public investments by around $1.5 billion. The result would mean more erosion of vital services and probably other tax increases – most likely the state sales tax. In combination with other proposed changes to the state constitution, this path would hamstring state lawmakers in the years ahead from meeting the priorities of North Carolinians by restricting the overall level of investment in our public schools, public colleges and universities, and other important areas.

These two paths that state lawmakers are pursuing are troublesome, particularly at a time when investing in North Carolina’s future is important to the state’s economic prospects. Consequently, the continued pursuit of trickle-down economics fails to promote broadly shared prosperity and prevents the entire state from moving forward together.