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Thursday, February 17, 2011

Gov's budget splits the education baby

Posted by on Thu, Feb 17, 2011 at 6:24 PM

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Progressive groups were worried that Gov. Bev Perdue actually meant it when she said in December that extending the "temporary" '09 tax increases into 2011-12 wasn't on her radar screen. How else to explain that when Perdue's $19.9 billion budget was unveiled today, with just a partial continuation of those temp. taxes — and only the regressive (sales tax) part at that — and with $777 million taken out of education budgets, the progressive groups cheered?

Cheered that state aid to schools would be slashed, UNC and community college tuitions hiked, and 3,000 actual state jobs lost (of the advertised 10,000 "positions" eliminated), meaning 3,000 folks who were deemed necessary to the proper functioning of state government yesterday were reclassified as disposable today?

But apparently, this qualified as good news to progressives who, let's face it, have given up hoping for the best. "No draconian cuts," the Together NC coalition said with relief. Just "extremely painful" ones. Well, thank you and may I have another?

With Republicans in charge in the General Assembly, though, the expectations for Perdue weren't high, leaving the coalition to wring its hands that she could've ... should've ... but really we didn't think she would:

The better path would be to include more reform-minded revenue options that could have protected other key public investments in jobs, health services and more and protected us in future economic downturns.

But now, it’s up to the General Assembly to stand up for North Carolina. Any more cuts would increase job losses, cut off health care to our state’s children, and imperil education.

Any more cuts? Count on the Republicans to start where Perdue left off —

(The full Together NC statement is copied below the fold.)

***

Interesting that the $300 million a year in corporate income tax cuts that Perdue proposed, plus the $65 million she wants to cut from small business taxes, plus the $300 million she's losing by only asking that 3/4ths of the temp. 1% sales tax increase be continued, plus the $250 million lost by not asking that the income-tax surcharge on top-bracket earners be continued, adds up to more than Perdue is proposing to slash from the K-12 budget, the UNC budget and community college budgets.

In other words, the money to avoid more education cuts on top of the cuts already exacted over the past two years, was there to be had, or at least to be fought for.

Why not put the money in your budget and let the Republicans in the General Assembly take it out ... and take the heat for the damage done?

But instead, Perdue chose to cut education funding in order to cut business taxes. That's a solid idea if you're a Republican. If you're a Democrat, it's par for the course of always compromising before you ever say what you were supposedly for in the first place.

According to the Office of State Budget and Management, Perdue's proposed education cuts are:

* K-12: $389 million

* UNC System: $284 million

* Community colleges: $104 million

The total is $777 million.

The total of Perdue's tax cuts: More than $900 million.

***

Perdue made a point of saying that her budget protects every teachers' job and every teacher assistants' job, though it cuts state aid to schools in other categories.

According to budget office chief Charlie Perusse, Gov. Perdue looked at a budget with no temp-tax continuations at all — in other words, one that fulfilled her pledge two years ago that the temp taxes, if enacted, would expire this year cross her heart.

But without the extra $824 million that 3/4ths of the temp-sales tax increases provides, Perusse said, the next things taken from the budget would've been 3.500 teachers jobs and 9,000 teacher assistants — saving some $500 million. Community mental health services would've been chopped as well, he said.

Perdue decided that was unacceptable. So she split the baby, protecting education sort-of ... while sort-of keeping and sort-of breaking her tax pledge.

But if she sort-of expected partial credit from the Republican leadership, she didn't get any. Those guys play for keeps.

Gov. Bev Perdue did well to protect public education, community colleges, and critical health services from draconian cuts, including:

keeping state-supported K-12 teachers and teacher assistants in the classrooms
bolstering funding for critical mental health services through the NC Mental Health Trust Fund
fully funding enrollment growth in community colleges and universities
maintain open enrollment in NC Health Choice, the state’s low-income kids health insurance program, to all children who are eligible.

She did so by taking a forward-looking approach to the state budget that included revenue options and she should be commended for her leadership. A cuts-only approach would have cut out North Carolina’s economic heart.

However, it’s important to acknowledge that the cuts proposed in the Governor’s budget will still be extremely painful. Thousands of people will lose their jobs, including those who support our K-12 classrooms. Our world-class university system will take a heavy blow.

For these reasons, we must note that Gov. Perdue’s budget missed an opportunity to fundamentally address our antiquated revenue system and update it for the future. Her decision to cut the corporate income tax rate, which will cost the state over $400 million per year when fully implemented, was an illusory quick fix that will do little to boost the economy or create jobs.

The better path would be to include more reform-minded revenue options that could have protected other key public investments in jobs, health services and more and protected us in future economic downturns.

But now, it’s up to the General Assembly to stand up for North Carolina. Any more cuts would increase job losses, cut off health care to our state’s children, and imperil education.

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