Contrary to the article in the Washington Post this week, North Carolina has been nationally recognized for leading in the area of tax reform.
To their credit, Washington Post did mention North Carolina was recently named by Forbes as the best state to do business in for 2017. Last year North Carolina was number 2 and earlier in 2017 Forbes said NC was the ‘model for the nation‘ on tax reform.
Most of article was a bad joke and at yet the same time, by choosing to go with apocalyptic, emotion driven narratives over vetted facts, makes it a good example of why people increasingly distrust media.
North Carolina’s reforms are working and that’s bad news for democrats. To put it in perspective, look at this Washington Post article as a mini-version of the truly unhinged meltdown by democrats and liberals that the nation is witnessing over the tax plan currently in Congress.
North Carolina’s Governor, Roy Cooper, piled on and used the Washington Post’s article as a fundraising vehicle the same day the article came out.
Cooper, who was confused on taxes and suck on social issues during the campaign is just as confused and stuck on social issues as Governor. It was truly embarrassing then and it’s more so now.
— A.P. Dillon (@APDillon_) October 19, 2016
If you want to read a barn burner take-down of Roy Cooper and his Occupy Wall Street themed talking points, go read Rep. David Lewis’ response to Cooper over at Medium. This is also a good time to remind Governor Cooper of his hypocrisy given that he has already flip-flopped on his position on corporate tax breaks.
Tax Reform in North Carolina is a model for the Country
As previously outlined at American Lens, North Carolina tax reform has included consecutive cuts to the personal state rate, which was changed from a progressive tax to a flat tax.
In 2012, NC had the 5th highest unemployment rates in the country, owed $2.8 billion to the federal government, overspent $500 million on Medicaid.
By the beginning of 2017, the state had created a $500 million dollar surplus. North Carolina also had added over 500,000 jobs since 2012. Unemployment has plummeted over the last four years from 8.1% to 4.1%
In addition to the 2013-14 tax reforms, the legislature made the first $17,500 of family income exempt for the next two years in the 2016 budget.
The standard deductions have been increased for three years running and the child tax credit was altered. The child tax credit used to be $125 but was modified to a decreasing per-child deduction based on income level. For example, a married couples filing jointly and earning under $40,000 can deduct $2,500 and the amount drops in increments down to zero for those making over $120,000.
North Carolina’s old personal tax rate spanned between 6 and 7.5%. The legislature’s reforms set a flat rate of 5.8% in 2014 and that rate decreased to 5.499% in 2017.
Tax reform in the state wasn’t just about rates, the standard deduction has nearly tripled since 2013. Prior to 2014, depending on filing status, the standard deduction for most people was $3,000, $6,000, or $4,400. After 2014, those deductions increased to $7,500, $15,000, and $12,000 and continued to increase in the years following.
In 2014, North Carolina had one of the highest corporate rates in the Southeast prior to the reforms at 6.9%. The corporate rate dropped to 5% in 2015 and 4% in 2016.
In 2017, the rate is scheduled to drop to 3%. Those reductions, according to the Tax Foundation, took North Carolina from 44th to 11th in the nation in terms of business friendly tax climates.
In addition to praised tax reforms, tourism is booming. In 2016, North Carolina tourism saw record visitor spending totaling $22.9 billion. That’s up over 4% from the prior year.
Lowering corporate taxes draws businesses and more jobs. More jobs means more workers, which increases the pool of the number of tax payers and in turn, raises tax revenues.
Washington Post Education Claims Unvetted?
The Washington Post’s article also took a swipe at education, by citing Alamance-Burlington Public Schools superintendent Bill Harrison.
The school system serving Burlington is struggling, said Alamance-Burlington Schools superintendent Bill Harrison.
Anyone claiming schools are better off after the tax cuts is “using smoke and mirrors,” Harrison said.
Harrison rattled off a string of numbers to make his point. Funding for school supplies has dropped 20 percent, he said. His schools get 33 percent less money for textbooks now than a decade ago.
“I heard it every year: Why doesn’t my child have a textbook?” Harrison said. (Washington Post)
Washington Post did not do their homework in their choice of source to quote.
Mr. Harrison ranks in the top ten highest paid superintendents in the state. In fact, he is the highest paid superintendent in the state, with a salary topping over $330,000. Around $85,000 of that salary comes from ‘donations’ and funds from Elon University.
For what it’s worth, that $330,00 salary is the equivalent of 6.6 teachers making an average of $50,000 a year. Alamance-Burlington taxpayers might want to ask the board of education why these ‘donations’ being added to an already large salary (close to $250,000) instead of going into classrooms for what Harrison is complaining about – supplies and books?
According to the quote in the Washington Post, supplies and books are Harrison’s big gripe? Setting aside that Harrison is a member of the district’s school board and knows that board is responsible for distribution of both state and local supply funding, let’s look at textbooks.
In the current budget, the state has $11.285 million set aside for textbooks and digital resources. In addition, $2.42 million in recurring funding was added for the digital learning plan for both years of the budget.
Mr. Harrison also is well aware that the state is undergoing a transition to digital and online resources. In fact, around $143 million was allocated in 2015 to make the transition by 2017-18 to digital resources and add internet connectivity to all state schools.
Prior to the GOP taking control of the General Assembly, the Democrat majority held legislature slashed textbook funding. Democrats took a $111 million textbook allotment down to $2.5 million. Textbook funding has had to play catch up ever since. Funding for textbooks been increased since 2012 by the Republican held legislature from $23 million to $72 million per year.
Let’s look at Harrison’s district and see why he’s complaining.
It’s important to note that according to the NC Department of Public Instruction (NC DPI), the 2016-17 County Appropriations and Supplemental taxes (local money) amount in Alamance-Burlington district stood at $38,264,189. The per pupil spending allotment of that was $1,695 and their state rank was 53rd out of 115.
NC DPI statistical figures show that the 2016-17 daily membership for Alamance-Burlington is 22,571 students. That’s a rank of 16th out of 115 in the state. The per pupil spending ratio is $8,588.
In terms of capital outlay and rank of per pupil expenditures, that lands the district ranked near the very bottom at the state level, landing at 101 out of 115.
If one is looking at a breakdown of the per pupil expenditure ranking of Alamance-Burlington including child nutrition on the local level funds, the district comes in 66th.
The state level of per pupil spending, as calculated using average daily membership of 1,428,051 students, falls at $9,172 (child nutrition included). Alamance-Burlington is spending $584 less per pupil than the state average.
This isn’t an issue of funding from the legislature or the impact of “tax cuts.” Education funding at the state level has steadily increased. This is an issue of how the Alamance-Burlington district is spending the money given to it both from the state and from local sources.
The complaint paraded around about per pupil spending is that it is ‘lower than 2008 pre-recession levels when you adjust for inflation’. Another arm of this argument is ‘we have more students now than we did then’.
Let’s take the inflation claim first.
The inflation cannard implies that less than 10 years later, NC should be spending the same amount it did when the country was on an economic high. That’s dishonest crazy talk.
Why is that dishonest and crazy? Because in 2008, inflation adjusted per pupil spending was at a historical high in North Carolina. Want more details on NC per pupil spending? Read this article from the Civitas Institute and you’ll comprehend the ‘inflation’ talking point is about fooling the public and perpetuating a ‘war on education’ narrative.
Despite the ‘inflation rate’ argument, North Carolina’s per pupil spending has been steadily increasing and likely will continue to do so. As a point of fact, per pupil spending in the state has increased each year for the last six years.
As for the ‘more students’ claim, it’s kind of pointless as the numbers have not dramatically shifted. Using the ‘pre-recession’ year of 2008 as a start date, NC showed enrollment of 1,456,558 public school students.
Since 2008, that number has fluctuated around the 1.4 million level and reaching a peak in 2015-16 at 1,493,809. In 2017 the number has dropped to 1,486,448 students. NC’s robust school choice alternatives to public school have likely played a role in tempering enrollment figures. The history behind these numbers when broken down by race can be found at NC DPI for those interested.
More on the NC Education Budget
The latest NC budget had a $700 million increase over the previous year’s education budget. $9,046,403,622 and $9,425,109,426 for FY 2017-2018 and FY 2018-2019 respectively will go to the Department of Public Instruction (DPI). The bulk of those funds will go towards salaries and benefits.
The Community College system was given $ 1,121,815,001 and the UNC Board of Governors received $2,893,775,349 for FY 2017-2018. In all, education spending in the appropriations for 2017 was over $13 billion – the lion’s share of North Carolina’s budget.
The budget included a K-12 teacher pay raise of 9.6% over the two-year budget with an estimated average increase over the previous budget is 3.3% in FY 2017-18 and 9.6% in FY 2018-19. $100 million was added to the first year of the education budget for raising teacher pay.
For those interested in facts vs media narratives, there is much, much more in my article, Unpacking the NC Education Budget.