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2017 North Carolina Senate Budget - Quick Takeaways

It’s clear from Senate Republicans’ proposed budget that they are determined to follow their same misguided priorities - placing the millionaires and billionaires that fund their campaigns ahead of the needs of everyday North Carolinians. When compared to the governor's budget, this budget falls short in several key ways:

  • Cooper’s plan is a realistic plan to get teacher pay to the national average in five years and raises teacher pay by 5% this year. The Senate plan only raises teacher pay 3.7%.
  • Every teacher gets a raise under the Cooper plan. Under the Senate plan, the most veteran teachers get no raise at all.
  • Cooper’s budget invests $8 million more in textbooks and increases per pupil spending by almost $200 more than the Senate plan.
  • Instead of eliminating the wait list for Pre-K or providing for tuition-free community college as Governor Cooper did, Republicans have chosen to spend another $44 million on private school vouchers.

Instead of investing in schools, the Republican leaders in the Senate are willing to give away hundreds of millions of dollars on tax breaks for billionaires and giant corporations.

This plan would give millionaires a tax cut 60 times the size of what middle class families would receive.  

Since Republicans have taken control of the state legislature they’ve chosen millionaires before the middle class every step of the way. Under the Senate plan, eighty percent of state tax breaks since 2013 went to the wealthiest North Carolinians.

Background

Misguided priorities - placing the millionaires and billionaires ahead of the needs of everyday North Carolinians.

Top 20 percent of earners will get $300 million, or nearly half of tax giveaway. “The top 20 percent of income earners in North Carolina would receive nearly half of tax cuts included in this proposal, relative to current law. That is more than $300 million annually being channeled to the state’s wealthiest taxpayers.” (Budget & Tax Center, March 2017)

Millionaires receive one of the largest tax cuts under the Senate plan, an average of $20,000. “Analysis of the Senate tax proposal using the economic incidence model from the Institute on Taxation and Economic Policy shows that the plan will lavish the biggest tax breaks on the wealthiest North Carolinians. Eighty percent of the net tax cut since 2013 has gone to the top 20 percent of taxpayers. A millionaire in North Carolina receives an average tax cut of $20,000 under the Senate tax plan, while only a third of taxpayers who earn less than $20,000 would get anything. (Budget & Tax Center, March 2017)

Gives corporations a tax cut 60 times the size of what middle class families would receive.

Millionaires get 60 times the tax cut working families would get. “But the measure also includes cuts in the corporate tax rate and changes to S-corp taxes for businesses up to $1 million. Ford Porter, a spokesman for Gov. Roy Cooper, quickly criticized the plan. "Governor Cooper believes tax cuts should be targeted to support middle-class families, not the wealthy and corporations who didn’t even ask for them," Porter said in a statement. "Under the Senate Republican tax plan, millionaires will receive a tax cut 60 times the size of what working families would get. Those are the wrong priorities." (WRAL, 4/4/2017)

Cooper’s plan is a realistic plan to get teacher pay to the national average in five years and raises teacher pay by 5% this year. The Senate plan only raises teacher pay 3.7%.

The Senate budget calls for raising teacher pay only 3.7%. “The [Senate] budget calls for teachers to get a pay raise averaging 3.7 percent, while other state employees would see smaller raises.” (News & Observer, 5/9/17)

Cooper’s budget raises teacher pay 5% in the first year on the way to the national average in five years. “North Carolina Gov. Roy Cooper announced Monday that his budget will call for 5 percent teacher raises on average this year and next – with a goal of raising pay to the national average in five years. Cooper’s teacher pay plan would cost $813 million over two years without raising taxes, he said. During that time teachers would get average raises of 10 percent.” (Charlotte Observer, 2/20/17)

Under Cooper’s budget all teachers get at least a 3% raise this year. “Veteran teachers wouldn’t be left out [under the Cooper plan], as they have been in recent pay hikes, the Democratic governor said. The details weren’t released Monday, but he said all teachers would get approximately 3 percent this year and many would get bigger bumps.” (Charlotte Observer, 2/20/17)

Some teachers get no raise at all in Senate plan - continuing their history of misleading on teacher pay.

Under Senate budget, “starting pay would remain at $35,000 and teachers with 25 years experience or more would not get a raise.”  “Asked whether state retirees would see a cost-of-living adjustment in their pensions, Berger said ‘that is not in my notes.’ Under the teacher salaries proposed by Senate leaders, starting pay would remain at $35,000 and teachers with 25 years experience or more would not get a raise. The biggest raises – up to 4.8 percent – would go to teachers with nine to 14 years of experience. Teachers with one to three years and 20 to 24 years experience would see the smallest raises of less than 2 percent.” (News & Observer, 5/9/17)

  • Republican Priority on Cutting Taxes, Especially for Millionaires “will make it difficult for North Carolina to sustain competitive teacher salaries beyond the election year.” “When the Republicans took control, the economy was picking up. But their priority was not raising teacher salaries – it was cutting income taxes, corporate taxes and inheritance taxes for those with estates of more than $5 million (the only estate taxes still on the books). The legislature may have also been influenced by its hatred of the N.C. Association of Educators. In the last decade, no state had a greater decline in teacher salaries than North Carolina. Tar Heel teachers received no wage increase for three years and a 1.2 percent increase last year… But the tax cuts will make it difficult for North Carolina to sustain competitive teacher salaries beyond the election year.” (News & Observer, editorial, 8/5/14)
  • Teacher Pay Raise Claim “doesn’t hold water.” “That ‘7 percent’ figure also apparently doesn’t hold water. The actual raise is closer to 5.5 percent, with the rest achieved through an accounting maneuver of adding in ‘longevity pay’ that teachers already receive separately.” (Southern Pines Pilot, editorial, 8/5/14)
  • “Largest teacher pay raise” Rhetoric “a stretch.” “‘Tillis and Senate leader Phil Berger announced last week that the legislature was going ‘to provide (the) largest teacher pay raise in North Carolina.’ That seems to be a stretch.” (News & Observer, editorial, 8/5/14)

Cooper’s budget invests $8 million more in textbooks and increases per pupil spending by almost $200 more than the Senate plan.

“North Carolina remains near the bottom of national rankings” in per pupil spending, which “has not returned to its pre-recession level.”  “Sure, appropriations have increased. So has inflation, the student population and the cost of employee benefits. But have the resources for education improved? No. Indeed, the ratio of teachers to students is worse, funds for textbooks and supplies are scarce, the ranks of teaching assistants have been depleted and more charter schools are diverting funds from traditional public schools. In terms of per-pupil funding, the most telling measure of a government’s commitment to public education, North Carolina remains near the bottom of national rankings. Indeed, after six years of Republican control and an improving economy, per-pupil funding in inflation-adjusted dollars has not returned to its pre-recession level. In 2008-09, it was $6,237. Today, it is $5,616.” (News & Observer, Editorial, 8/20/16)

HEADLINE: “Tell the truth on NC school funding.” (News & Observer Editorial, 8/20/16)

“Republican lawmakers are acutely aware of their culpability in this choice, but instead of defending it or apologizing for it, they’re denying it.” “Instead of investing in the state’s children, instead of improving education as a way for poor children to escape poverty and all children to achieve goals, the Republican-led General Assembly has chosen to reduce state taxes, mostly to the benefit of the wealthy and big corporations. Billions of dollars in tax revenue that could have lifted North Carolina’s schools to new heights instead has been diverted into tax cuts that have produced no tangible results. Republican lawmakers are acutely aware of their culpability in this choice, but instead of defending it or apologizing for it, they’re denying it. Even worse, they’re claiming credit for increasing spending on public education. This is duplicity joined with sophistry, and it should stir the smoldering anger over the neglect of public schools into outrage.” (News & Observer Editorial, 8/20/16)

“The tax revenue that could have helped the state restore funding cut during the recession is instead being given back disproportionately to the wealthy and large corporations in the form of tax cuts.”  “A bigger rise in state revenue would have supported salary increases for teachers and state employees, reduced pressure on tuition at UNC campuses and allowed for overdue investments in roads, water and sewer systems and other forms of infrastructure. The tax revenue that could have helped the state restore funding cut during the recession is instead being given back disproportionately to the wealthy and large corporations in the form of tax cuts.  Arthur Laffer’s trickle-down theory has been proven a fairy tale of riches from nothing since the Reagan administration first sold it as fact. But that won’t stop the tax cutters from telling it as true once more.” (News & Observer, Editorial, 1/16/16)

Inflation, student population, cost of employee benefits have increased, but resources for education have not improved.  “Sure, appropriations have increased. So has inflation, the student population and the cost of employee benefits. But have the resources for education improved? No. Indeed, the ratio of teachers to students is worse, funds for textbooks and supplies are scarce, the ranks of teaching assistants have been depleted and more charter schools are diverting funds from traditional public schools. In terms of per-pupil funding, the most telling measure of a government’s commitment to public education, North Carolina remains near the bottom of national rankings. Indeed, after six years of Republican control and an improving economy, per-pupil funding in inflation-adjusted dollars has not returned to its pre-recession level. In 2008-09, it was $6,237. Today, it is $5,616.” (News & Observer, Editorial, 8/20/16)

Instead of eliminating the wait list for Pre-K or providing for tuition-free community college as Governor Cooper did, Republicans have chosen to spend another $44 million on private school vouchers.

The Senate budget pushes controversial private school voucher spending to $44 million in ‘17-’18. “Lawmakers added that they will not back down on controversial plans to expand the state’s annual investment in private school vouchers from about $44 million this year to $144 million by 2027-2028 , a major point of contention for public school advocates who point out the mostly religious schools operate without the same scrutiny or anti-discrimination protections.” (NC Policy Watch, 5/9/17)

Cooper’s budget added pre-k slots to eliminate waitlist and created new scholarship for tuition-free community college. “Cooper also called for adding 4,700 slots over two years to North Carolina Pre-K to eliminate the waiting lists of 4-year-olds whose parents want to get them into the program. His budget would also restore the state's child care tax credit in 2018. For higher education, the budget includes a new lottery-funded scholarship for community college students to help pay for tuition and fees once they have exhausted other sources of financial aid. Another scholarship program is targeted at providing up to $10,000 in tuition and fees to UNC students who agree to teach in public schools.” (WRAL, 3/1/17)

Republicans in the state legislature have chosen millionaires before the middle class every step of the way.

According to NC Budget & Tax Center, eighty percent of net tax cuts since 2013 went to top 20 percent of taxpayers.  “Analysis of the Senate tax proposal using the economic incidence model from the Institute on Taxation and Economic Policy shows that the plan will lavish the biggest tax breaks on the wealthiest North Carolinians. Eighty percent of the net tax cut since 2013 has gone to the top 20 percent of taxpayers. A millionaire in North Carolina receives an average tax cut of $20,000 under the Senate tax plan, while only a third of taxpayers who earn less than $20,000 would get anything.” (Budget & Tax Center, March 2017)

“The wealthy and big corporations are paying less and middle- and low-income earners are paying more” with low-income families and individuals being hit “particularly hard.”  “Growing tax revenue doesn’t mean happy days are here again for most North Carolinians. It means the wealthy and big corporations are paying less and middle- and low-income earners are paying more. Johnson notes, “The regressive sales tax hits low-income families and individuals particularly hard, as they spend a larger share of their income on goods and services subject to the sales tax. Thus, to point to increased revenue as evidence that low- and middle-income North Carolinians are better off is an inaccurate assessment of reality.”  The revenue numbers are not only about a shift in the tax burden. They are also about what’s missing. Had the General Assembly’s tax changes been revenue neutral – as McCrory originally requested – the state would be seeing a much larger revenue increase as the economy recovers.” (News & Observer, Editorial, 1/16/16)