A bad decision by lawmakers that's looking even worse now

by Chris Fitzsimon, NC Policy Watch and NC SPIN panelist, October 21, 2014.

Here’s something that you haven’t heard enough about through the overwhelming din of the attack ads during this election season.

Just three months into the new fiscal year, North Carolina has a revenue shortfall of just over $60 million and it may balloon to ten times that much before next June.

There isn’t any question about the cause of the problem. It’s the massive tax cuts for corporations and the wealthy that state lawmakers passed in 2013.

And the numbers aren’t political spin. The current shortfall figures come from the Fiscal Research Division of the General Assembly. The estimate of how large the shortfall could become is from the nonpartisan Institute on Taxation and Economic Policy using the latest state taxpayer data.

The Institute says the cost of the Robin Hood in reverse tax cut could reach $1.1 billion this year.  Governor Pat McCrory pledged in his State of the State speech to the General Assembly in 2013 that any tax reform would be revenue neutral.

The budget he signed included the tax breaks for the wealthy that were a long way from neutral—they cost $513 million. At least that is what they told us.

This year they revised that projection and said the tax plan would cost $704 million instead, a difference of $191 million. As the N.C. Budget & Tax Center points out, that would have more than paid for the $109 million funding for classroom teacher assistants that lawmakers slashed this summer.

And now even that $704 million figure seems suspect. Revenue collections are running behind, lending credence to the Institute’s projection of a massive shortfall when lawmakers return to Raleigh next year to put the 2015-2016 budget together.

That makes all those promises on the campaign trial about higher teacher raises next year and giving schools enough money so students can have the textbooks they need ring a little hollow.

It is also a reminder of why the excuses for this year’s uneven teacher raise and budget cuts to education don’t make sense.

Lawmakers keep defending their plan to give some teachers significant pay hikes while all but ignoring others by saying there just wasn’t enough money to do more, to give every teacher a decent raise.

That’s the same line they use when confronted with questions about why teacher assistants were cut or why class size was increased. No money they keep saying, they did the best they could and more help is on the way next year.

Some of them blame Medicaid too, as do most of the right-wing think tanks in town. Overall Medicaid costs have increased some, but the increase hasn’t been out of line with other states.

And the program is expected to cost more during a recession and in the beginning years of an economic recovery. It is a safety net after all, and more people need help when times are tough.

Medicaid is not the reason for the education cuts or the confusing and inadequate teacher raises.  A budget is simply a list of priorities and state lawmakers decided that cutting taxes on corporations and the wealthy was more important than paying all teachers more or providing students with textbooks or keeping teacher assistants in early grade classrooms.

And they thought they were making a decision that would cost $500 million that could have been used for teachers and schools. Now we know their choice cost at least $700 million and may wind up costing more than a billion dollars a year.

The majority of the tax cut went to the richest one percent of North Carolina taxpayers, who earn an average of $940,000 a year. They each received a break of roughly $10,000.

That would have made a nice raise for every teacher.  But this General Assembly had different ideas and different people they wanted to help.

That decision was wrong when it was made. It looks much worse now.

http://www.ncpolicywatch.com/2014/10/21/a-bad-decision-by-lawmakers-thats-looking-even-worse/