When you lower the bar enough for what’s possible, you create a new normal in which an inch forward can be falsely sold as leaps and bounds. The austerity budgeting that has defined nearly a decade of North Carolina policymakers’ approach to serving their communities has been driven by an insatiable appetite among House and Senate leadership for costly tax cuts. This approach has ushered in a new normal in which expectations have been lowered for what our state can and should be.
The new two-year budget that Gov. Cooper vetoed was overridden and approved by lawmakers and will be implemented over the next two years. Proponents point to particular aspects of the budget and laud them as leaps and bounds forward for North Carolina. However, proper context easily cuts the supposed leaps and bounds rhetoric down to inches at best.
Before highlighting how lawmakers fall short of raising the bar for North Carolina with the new budget, we cannot make light of the fact that the budget includes $900 million in annual tax cuts – however, only $528 million shows up in the budget due to how lawmakers phase in the tax cuts. So the issue is not whether we can afford to invest in the things we say we care about, it’s about our priorities and choices. It is the choice to once again cut taxes that will make providing current levels of public services in the future increasingly difficult, according to the NC General Assembly’s non-partisan Fiscal Research Division.
Consider the expected $580 million in revenue collections above state officials’ initial projection. Contrary to proponents’ claim that this is a result of tax cuts in recent years, the additional revenue is in part a result of tax cuts creating uncertainty about how much revenue the new tax code would raise. State officials have been off the mark with their projections – which is to be expected when significant changes are made to the state’s tax system. Income tax cuts since 2013 have lowered the amount of revenue raised under the new tax code compared to the tax code that was in place prior to the tax changes in 2013. Accordingly, the $580 million in revenue simply indicates that state officials continue to work to understand and accurately project revenue collections in the wake of major tax changes since 2013.
Proponents of the new budget tout the additional state funding included in the budget for public schools as a commitment to ensuring that students receive the tools needed to succeed. However, when excluding funding provided for teacher and school personnel pay increases, net new spending for public schools is a mere 1.2 percent above prior year spending for the 2018 fiscal year. For the second year of the budget, year-over-year spending for public school decreases when excluding additional funding for pay raises and benefits. Furthermore, under the new budget, state spending per student is only 1.8 percent above pre-recession spending when adjusted for inflation and excluding funding provided for pay increases.
Eroding state support for public schools is reflected in the new budget by the absence of any of the estimated $293 million needed by schools to meet state-mandated class size reduction requirements, creating an unfunded mandate that passes the buck down to local communities. Funding for classroom supplies and materials is around half its peak 2009 investment level and funding for textbooks and digital learning materials is at nearly half of peak 2010 spending, when adjusted for inflation. Lawmakers provide no additional state funding for school nurses to get the school nurse-to-students ratio closer to the national standard of 1 nurse per 750 students. The list goes on regarding eroding state support for public schools.
Lawmakers’ commitment to privatizing public education is on full display in the budget, however. An additional $30 million for private vouchers is tucked into the base budget (which represents annual ongoing costs that are typically funded before any new spending) of the two-year budget. In the years ahead, more than $134 million in annual state dollars will be available for the private voucher program. Another $450,000 of state funding is included in the budget to create an Education Savings Account (ESA) program, which will provide scholarship grants for education services to eligible children with disabilities. State funding for private vouchers and ESAs are dollars that otherwise would be available for traditional public schools.
Lawmakers fall well short of making a postsecondary education more affordable and accessible for most North Carolina students. For fiscal year 2018, state funding for public four-year universities remains at prior year spending when excluding state funding for pay increases for state employees. A $7 million state funding cut to the operating budget of the UNC System in the second year of the budget builds onto similar cuts in recent years that total more than $660 million since 2010. Lawmakers do nothing to reduce credit hour tuition cost at community colleges, which has increased by 81 percent since 2009.
The budget fails to provide adequate funding needed to eliminate the existing Pre-K waitlist and to ensure that a Pre-K slot is available to all eligible 4-year-olds not on the waitlist. Furthermore, two-thirds of the additional dollars that are included in the budget for additional Pre-K slots are federal block grant dollars, which are in jeopardy of being cut at the federal level and threatens the number of 4-year-olds served by the Pre-K program.
Lawmakers allocate $105 million in lottery funds in the two-budget to assist economically-struggling, rural counties with critical building needs. However, back in 2013 lawmakers eliminated a portion of corporate income tax (CIT) revenue that was allocated to the Public School Building Capital Fund – one of the few state supports that help with school capital funding. At least $335 million of school capital funding has not been available to schools since 2013 due to the elimination of this funding source. The CIT funding was recurring dollars available to schools whereas the lottery dollars are one-time funding that will require an ongoing commitment each year from future lawmakers to sustain this funding in future budgets for helping meet school building needs.
These highlights of eroded state support and lowered expectations for public education are just one mirror we can hold up to assess the state budget. Similar narratives exist in other areas of the budget – health and human services, justice and public safety, and natural & environmental resources, for example. We must not allow lawmakers who support budgets passed in recent years to sell us false claims that North Carolina is making leaps and bounds forward, when the reality is that we find ourselves in a precarious position as a state. Continued state erosion in support for core public investments does not bid well for ensuring that opportunity and prosperity is broadly shared across the state. This is a goal that will drive our state forward and create a better Tar Heel State.
Cedric Johnson is a Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.