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Fitzsimon: Tax-cutting frenzy threatens state’s future

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Sunday, March 26, 2017

Two weeks ago a group of state Senate leaders unveiled a plan to raise principal pay in North Carolina and raise funds for school construction in rural areas. Both are good ideas.

Many small and poor counties don’t have the tax base to afford to build new schools and North Carolina ranks 50th in principal compensation.

But the GOP Senators weren’t proposing funding their plan from the state’s General Fund budget. Instead, they want to increase lottery advertising to raise new revenue from low-income communities to pay principals more and build new schools.

This week State Treasurer Dale Folwell proposed that all state employees start paying a premium for their health care coverage and that employees already paying for a more comprehensive plan pay even more.

The state has traditionally paid the entire cost of health care for most state workers since it’s been difficult for the state to pay wages that are competitive with the private sector. State employees have not received a meaningful raise in years.

Now the employees themselves may have to pay premiums while their wages remain well below their private sector counterparts.

Before the legislative session began, state lawmakers promised to raise teacher pay again this year but some warned that they couldn’t also dramatically increase overall investments in education even though the state ranks 44th in the country in per pupil spending.

The funds available are limited lawmakers said.

Then last week Senate leaders held a news conference to unveil a plan to reduce income taxes by a billion dollars over the next two years. That comes on top of the $2 billion in tax cuts passed by the General Assembly since 2013.

And it comes not only as lawmakers are trying to raise pay for teacher and principals but also as they face almost $700 million in immediate needs according to the General Assembly budget staff, from increased enrollment in schools, new health care costs, technology improvements in the courts, waiting lists for child care and PreK, etc.

The state’s economy may be growing but there is a long list of unmet needs and funding for many vital programs has not yet been restored to the level they received before the Great Recession.

But the calls for more tax cuts continue, as they have almost every year since 2013. After the tax reductions that year, even groups on the right like the John Locke Foundation urged lawmakers to forego any more tax cuts to see how the 2013 tax changes were working.

But the General Assembly didn’t listen and continued their efforts to reduce state revenue every year. If this latest tax cut passes, the total reductions in revenue in since 2013 will mean there is $3 billion less available for public schools, health care, PreK and other needs of the people lawmakers represent.

No wonder legislative leaders are desperately searching for ways to increase principal pay, build schools, and pay for state employee health care.

They are giving billions of dollars away and it’s not going to folks in the state who are struggling. The N.C. Budget & Tax Center reports that including the latest proposal, 80 percent of the cumulative tax cuts since 2013 go to the wealthiest 20 percent of the people in the state.

A millionaire will receive a total break of $20,000 a year while people who earn just $20,000 will get an average tax cut of $15.

And to make matters worse, the Senate wants a constitutional amendment on the books to lock in a low income tax rate and prevent any future increases, regardless of whatever crisis the state faces.

Let’s hope lawmakers come to their senses soon and realize there is more to governing than cutting taxes again and again and again.

North Carolina needs investments too. Just ask the principals or the teachers or the parents.

We can’t cut our way to greatness.

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