This article is part of a series contrasting budget cut options identified by NC General Assembly joint appropriations subcommittees with revenue options that would preserve decades of public investment in the economic and social advancement of North Carolina. Click here for other articles in the series so far.
Legislative leaders announced their intent to cut $1.4 billion from the state’s education budget next year, which is $763 million more than all cuts proposed in the Governor’s budget. To put the legislature’s proposal in perspective, only $1.1 billion of the state’s $11.9 billion education budget is spent on the community college system. If the General Assembly cut all financial support for the state’s community colleges, they would still have to identify $300 million in additional cuts from other education budgets in order to meet their declared spending target.
The spending cuts below[1] represent a selection of “options” under legislative consideration, which are presented to illustrate the severity of a “cuts-only” approach to balancing the North Carolina budget. A balanced approach to the budget shortfall would include raising revenue[2], which would make it possible to continue providing North Carolinians with affordable education and skills training and entrepreneurship opportunities, and businesses with a trained workforce.
| The legislature is considering the following budget cuts … |
… but instead of making cuts, they could: |
|---|---|
| $46.0 million Increase community college tuition by $10 per credit hour, or a maximum of $320 per year |
$45.0 million Revert to traditional apportionment of corporate income and capital stock for multi-state corporations, with equal weights for sales, payroll, & property |
| $12.1 million Reduce basic skills funding by the maximum allowed under federal maintenance-of-effort guidelines |
$15.2 million Eliminate exemption of treasury stock, real estate investment trusts, and regulated investment corporations in calculating a company’s franchise tax liability |
| $18.0 million Eliminate funding transferred from instruction to student services as a result of the requirement that all schools offer federal student loans |
$15.0 million Disallow corporate deduction for capital losses beyond those allowed under the federal corporate income tax |
| $2.4 million Eliminate child care subsidies that enable low-income students with children to attend community college ($1.8 million) AND Reduce funding to small business and entrepreneurship development and support programs including Small Business Development Centers, NC Military Business Center, and NC REAL ($600,000) |
$2.6 million Eliminate sales tax refund on professional motor racing vehicle parts |
| $900,000 Eliminate funding for minority male mentoring |
$1.2 million Eliminate the tax break for electric power holding companies for untaxed dividend expenses based on annual expense adjustments |
| $3.8 million Consolidate three community colleges and reduce institutional support |
$3.5 million Eliminate the franchise tax credit for piped natural gas |
| Total Cuts: $83.2 million | Total Revenue: $82.5 million |
— Brenna Burch and Edwin McLenaghan, Public Policy Analysts, NC Budget and Tax Center
References:
[1] Joint Appropriations Subcommittee budget cut options for the Justice & Public Safety budget are available at http://www.ncleg.net/documentsites/committees/JointAppropriationsJPS2011/March%2024,%202011%20Meeting/Joint_JPS_Reduction_Options_2011-03-23.pdf
[2] Revenue options are based on NC Budget & Tax Center calculations, data provided by the Institute on Taxation and Economic Policy (ITEP), and the NC Department of Revenue’s Biennial Tax Expenditure Report available at http://www.dornc.com/publications/nc_tax_expenditure_report_09.pdf