North Carolina's budget should be much better

Published July 14, 2022

By Rob Schofield

North Carolina has a new budget for the state fiscal year that began July 1. At the very end of the 10-day period allotted to him by the state constitution, Gov. Roy Cooper affixed his signature to a 193-page bill drafted mostly behind closed doors by Republican legislative leaders that amends the two-year budget enacted last year.

Cooper’s decision to sign the measure was, one gathers, an act he viewed as an exercise in political pragmatism. While he clearly grasps that the bill has numerous deep flaws, Cooper could also do the math and understood that the prospects for sustaining a veto were tiny given that several Democratic lawmakers had found a variety of reasons (like locally targeted pork spending and simple fatigue) to join the “aye” votes.

His statement of yesterday afternoon also strongly indicated that other factors — most notably, the ongoing negotiations over Medicaid expansion that he still hopes to push across the finish line — played a significant role in the final outcome as well.

At this point, though, whatever the politics behind the situation, there should be no mistaking the fact that the budget now in effect comes up woefully short in several important ways.

First and foremost is that it is simply way too small. Thanks to repeated regressive tax cuts enacted over the last decade-plus, the state continues to appropriate funds for core public structures and services at levels more than 20% below the 45-year average.

And while it’s true that the new budget does not, as had been threatened, put in place still more regressive revenue cuts to make the situation even worse, such cuts were already in the pipeline because of past decisions.

Gov. Roy Cooper

As the N.C. Budget and Tax Center reported earlier this month, the budget approved in 2021 put in place cuts to personal and corporate income tax rates that will phase in automatically over the next decade, with the corporate income tax actually being eliminated in 2030. Indeed, the BTC notes that: “In 2023, the budget will be reduced by $1.5 billion due to the tax changes passed last year. This is roughly equivalent to the entire budget for the NC Community College System.”

And it’s hard to overstate what an enormous impact these kinds of sustained disinvestments have had (and continue to have) in numerous areas: the state’s torn and threadbare social safety net, its perpetually inadequate and frequently broken mental health and corrections systems, and its tepid and inadequate response to the ongoing crisis that plagues our fragile natural environment.

As an aside, it should also be noted that there is a significant measure of hypocrisy in lawmakers taking advantage of enormous surpluses made possible by an unprecedented national economic recovery and massive infusions of federal COVID aid – both of which are directly attributable to the vision and leadership of the Biden administration – while, at the same time, firing relentless broadsides at Biden for his supposed “fiscal irresponsibility.”

All that said, the most visible shortcoming in the new budget is to be found in the ongoing failure to adequately fund public education.

Republican legislators and their apologists love to brag about the supposedly princely sums they’ve allocated for public schools, but in truth, the latest budget only allots about half of the new appropriations experts in the Leandro education funding lawsuit have found to be necessary to merely provide the state’s schoolchildren with access to a sound basic education. And our state still lags most of the nation in education spending – especially when one factors spending “effort.”

Take teacher pay. As veteran education budget analyst Kris Nordstrom of the North Carolina Justice Center (parent organization to NC Policy Watch) explained last week, while it’s true that the new budget bill provides modest teacher pay hikes, when one accounts for inflation, most teachers will actually see a pay cut in the new year of as much as 3.9%.

Compare this, Nordstrom says, to of all places, Alabama. Under that state’s new pay schedule, beginning teachers earn 17% more than their North Carolina counterparts, while those with the most experience earn 23% more. Alabama teachers also get bigger supplements for obtaining advanced degrees.

Not surprisingly, unlike in North Carolina, teacher retirements and turnover there are way down.

Of course, as Nordstrom also points out, North Carolina is a much wealthier state than Alabama and could easily match or exceed what it does for teachers.

The bottom line: North Carolina has a new budget, but it could and should be much, much better. Unfortunately, the ideologues leading our cheapskate legislature continue to prioritize tax cuts for the rich and big corporations over doing their duty in this vitally important area.

One can only hope Gov. Cooper’s apparent decision to hold his nose and go along with this approach in order to, at last, make Medicaid expansion a reality is a strategy that bears fruit very soon.