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New budget with old agenda falls short

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Image: Adobe Stock

[Editor’s note: This morning, Governor Cooper announced his veto of the proposed budget [2] bill sent to him by state lawmakers last week. In this essay – first published last Thursday –veteran Raleigh political observer Steve Ford explains why that action was warranted.]

By now the strategy is familiar – the strategy used by the N.C. General Assembly’s Republican chiefs to try to make a fundamentally flawed state budget appear, well, not that bad. Or at least tolerable. Or better than it could have been and perhaps even worth supporting.

Here’s how it works: The Senate proposes a budget that, it almost should go without saying, carries on the Republican campaign to cut taxes. Economic growth allows for some slight spending increases, but on the whole spending is held tightly in check.

Meanwhile, budget-writers go out of their way to pick fights with a few highly vocal constituencies, generating the predictable weeping, wailing and gnashing of teeth.

When the House takes its turn, it drafts a budget not much different from the Senate’s in its overall approach. But it puts salve on some of the sore spots that have drawn the most attention and brought the most protests.

Then, the two competing budget versions go to a conference committee – which in a great show of magnanimity concedes in effect that the mean old Senate went too darn far. So the final budget “compromise” – while in the main just as short-sighted and wrong-headed as ever – is greeted with sighs of relief, high-fives and maybe even some dancing in the streets.

Extra credit?

From this year’s budget, which barreled along greased skids to its foreordained launch, consider the saga of the Governor’s School.

This venerable summer program for ambitious and talented high-school students would have been whacked by the Senate, which preferred to shift most of the requisite $800,000 to a new Legislative School for Leadership and Public Service.

It’s easy to imagine Republican senators, locked in a power struggle with Democratic Gov. Roy Cooper, muttering there was no way they would continue to fund a program that might, because of its name, seem to reflect some kind of credit on their adversary. (The Governor’s School goes back 50-plus years to the tenure of sainted Gov. Terry Sanford, sainted to Democrats, at least – not a pedigree that counts for much these days.)

If there’s credit to be claimed for training future Tar Heel leaders, senators may well have figured, they’d claim it themselves.

But the Governor’s School has a loyal corps of alumni and supportive family members who raised a chorus of objections to the pending shut-down.

By the time the House on June 2 approved its doctored-up version of the budget bill that had been sent over from the Senate, the Legislative School for Leadership and Public Service was nowhere to be found and the $800,000 transfer from the Governor’s School likewise was dropped.

The House prevailed in conference committee negotiations between the two chambers. So the compromise bill [3] that sped through the Senate on June 21 and was due to clear the House the following day appears to keep the program up and running while legislators bask in the applause from its fans.

STEM lessons

Here’s another example – not a huge item in the overall scheme of things, but again showing how those in charge of the budget process turned outrage into gratitude.

Democratic senators objected to a marathon session that stretched into the early morning hours of May 12, when the chamber’s leaders wanted their budget put to a final vote. The Democrats offered a slew of amendments to highlight their own positions on spending and tax policies.

The amendments all were doomed, of course, and finally the Republican chiefs lost patience. They put up their own amendment [4] to punish the stubborn Democrats. Notable among their changes was cancellation of a special residential program in so-called STEM education (science, technology, engineering and math) for students in the Roanoke Rapids-Weldon area.

That area’s Democratic senator, Erica Smith-Ingram, was justifiably upset at the pending loss of a program that could help her some of her constituents overcome long-standing disadvantages of poverty, poor schools and race discrimination. The Republicans’ 3 a.m. hissy fit marked a low point in this year’s budget follies.

Again, the House came to the rescue. It dropped the Senate’s vengeful amendment and stood firm in conference. So when the compromise bill came to a Senate vote [5], guess who was among the four Democrats who joined all the Republicans in supporting it – Erica Smith-Ingram!

Yes, she was in an awkward spot. Having been so outspoken in defense of the STEM program and critical of those who wanted to scrap it and the tactics they used, it would have been hard to vote against a bill that restored the program.

But those senators who voted no had good reasons.

Start with the fact that the budget does nothing to reverse a five-year crusade to reduce taxes — perhaps a worthy goal on its face, but not if it chiefly benefits the affluent and the profitable, and not if the loss of revenue hurts programs and services that benefit all North Carolinians, including and in some cases especially the underprivileged.

Tax shrinkage

Since the tax-cutting spree began, the state’s personal income tax has been lowered and flattened.

So the folks among us with the fat six-figure salaries, of whom there’s no shortage in our high-tech and high-finance clusters, get off the hook for part of what could be called their dues to society. Factoring in lower corporate taxes and other changes, the state is missing out on more than $2 billion a year in revenue.

With the final budget in mind, perhaps some legislators are saying, “Well, at least we tapped the brakes.” And in fact, the budget postpones for a year a further cut in the income tax rate that had been slated for 2018. But the anti-tax drive remains strong.

Conservatives like to think that lower taxes promote economic growth, meaning more and better jobs. Maybe in some cases they do. Yet they also deprive the state of funds that could be plowed into schools, skills training, child care, health care, and all the other areas of investment that strengthen our communities and make them more attractive to residents and employers alike.

North Carolina’s economy has rebounded from the Great Recession, in line with national trends, but the rebound has been uneven. How much help have lower taxes been to our struggling rural counties, which continue to lose population and where good jobs remain scarce? It’s a fair bet that ventures such as expanded STEM education in places such as those represented by Sen. Smith-Ingram – ventures that cost money – over time will return higher dividends than courting companies whose work can be done by the poorly schooled and poorly paid.

A broader sales tax, with people now having to pay sales taxes on services such as car repairs, has helped offset some of the income tax losses. And with a post-recession drop in the jobless rate, there’s enough money arriving in state coffers to permit the budget’s 3 percent increase in overall spending. Outlays for the fiscal year beginning July 1 are pegged at $23.0 billion.

More for teachers, but…

Having had to face the fact that the state’s skimpy teacher salaries were making us a national joke, legislators have made stabs at bringing them up to respectability – not only because of pride, but also because the state’s public schools absolutely must have an ample supply of well-qualified, experienced classroom leaders.

The new budget includes $204 million to raise teachers’ pay, especially for people in mid-career. That will help North Carolina move up in the national rankings – not long ago it had sunk close to the bottom — and become more competitive in its hiring.

Yet a one-time $11 million expenditure for more textbooks and digital resources leaves funding well below what it was before the recession. Taxes are supplanted by revenues from the lottery – in reality, a tax on the poor – for several kinds of education outlays. And the “opportunity scholarship” voucher program, which uses public funds to subsidize private schools, gets a nice boost.

All in all, the budget’s public education side hardly meets the needs of a state where so many young people are desperate for opportunities to improve their lives.

If the budget has one genuinely bright spot, it could be the plan to cut the number of children on a waiting list for the state’s subsidized pre-kindergarten program. Legislators envision being able to accommodate another 3,525 kids from lower-income families in the program over the next two years, using both federal and state funds. That would reduce the waiting list by some 75 percent.

Still, the state expense over those two years to achieve the reduction will be a mere $9.1 million. It evidently wouldn’t cost that much more to eliminate the wait list entirely, and to do it in the coming fiscal year. Why not do that? Oh, right – those tax cuts mean some kids remain at risk of being left behind at the starting gate.

Cooper’s critique

Gov. Cooper hasn’t had much nice to say about the budget – he ripped it as “the most fiscally irresponsible budget I’ve ever seen.” He noted that the conference committee’s version would spend more than either the Senate or House had recommended, while actually dialing back on teacher pay. The final budget, rushed through to passage with little public input, does indeed represent somewhat of a parliamentary train wreck, pulling in a range of provisions and requirements that hadn’t been properly vetted in either chamber. It’s full of score-settling on one hand and favoritism on the other.

One late change that surely got the governor’s attention: An 8 percent cut in funds to run his office, set to practically double the next year. Why? Legislators must think the less money they provide, the less of a nuisance he can be.

Cooper can express his disdain for the budget by vetoing it. Whether that would do any good, given Republican supermajorities in both chambers and a few Democrats who have gone along with the bill, probably involves symbolism and principle more than pragmatism.

But the governor is in a fine spot to explain why this budget – and indeed the Republican agenda for taxation and spending writ large – fails to measure up to what North Carolina needs if the state and its residents are to reach their potential.

The budget is not as bad as it could have been. Cooper clearly sees that it’s bad enough. He won’t disappoint if he brings that vision to bear.

Steve Ford, former editorial page editor at Raleigh’s News & Observer, is now a Volunteer Program Associate at the North Carolina Council of Churches [6].