Tillis/Berger Budget Slashes Education By $481 Million To Give Tax Cuts To Millionaires

Contact: Ben Ray
(919) 559-3811
BenRay@ncdp.org

 ** For Immediate Release **

Tillis/Berger Budget Slashes Education By $481 Million To Give Tax Cuts To Millionaires

RALEIGH-- House Speaker Thom Tillis and Senate President Phil Berger’s budget slashes education to fund tax cuts for millionaires, placing the public schools and universities that drive North Carolina’s economy in danger.  Nearly half a billion dollars is cut by the end of the two-year budget, and the dangerous Tillis/Berger tax plan ensures that more cuts will follow in the future.

 “Thom Tillis and Phil Berger are undermining the very foundation of North Carolina’s economy by slashing nearly a half a billion dollars from public education,” said Ben Ray, a spokesman for the North Carolina Democratic Party.  “Employers move to North Carolina because of our highly educated workforce, an advantage that Thom Tillis and Phil Berger are willing to throw away to give tax cuts to millionaires.  North Carolinians deserve leaders that will fight to create jobs and focus on the economy, not slash our public schools to pay for big tax cuts for the wealthy.”

 

BACKGROUND

THE 2013-15 BUDGET SLASHES INVESTMENTS IN EDUCATION BY $480 MILLION...

The 2013-15 Budget Cut Education By $481,514,630.

  • The 2013-15 Budget Cut Community Colleges By $37,078,016. Community Colleges were funded at $1,037,430,475 for FY2013-14 – recurring adjustments were cut by $33,494,580 and nonrecurring adjustments increased by $17,359,572, for a revised appropriation of $1,021,295,467 and a net cut of $16,135,008. Community Colleges were funded at $1,037,430,475 for FY2014-15 – recurring adjustments were cut by $21,494,580 and nonrecurring adjustments increased by $551,572, for a revised appropriation of $1,016,487,467 and a net cut of $20,943,008. [The Joint Conference Committee Report On The Continuation, Expansion, And Capital Budgets – Senate Bill 402, 7/21/13]
  • The 2013-15 Budget Cut Public Education By $179,960,316. Public Education was funded at $7,984,924,757 for FY2013-14 – recurring adjustments were cut by $79,794,040 and nonrecurring adjustments cut by $37,170,068, for a revised appropriation of $7,867,960,649 and a net cut of $116,964,108. Public Education was funded at $8,111,097,830 for FY2014-15 – recurring adjustments were cut by $66,215,430 and nonrecurring adjustments increased by $3,219,222, for a revised appropriation of $8,048,101,622 and a net cut of $62,996,208. [The Joint Conference Committee Report On The Continuation, Expansion, And Capital Budgets – Senate Bill 402, 7/21/13]
  • The 2013-15 Budget Cut The University System By $264,476,298. The University System was funded at $2,709,551,807 for FY2013-14 – recurring adjustments were cut by $104,723,381, and nonrecurring adjustments cut by $21,780,156, for a revised appropriation of $2,583,048,270 and a net cut of $126,503,537.  The University System was funded at $2,737,874,470 for FY2014-15 – recurring adjustments were cut by $142,472,761, and nonrecurring adjustments increased by $4,500,000 for a revised appropriation of $2,599,901,709 and a net cut of $137,972,761. [The Joint Conference Committee Report On The Continuation, Expansion, And Capital Budgets – Senate Bill 402, 7/21/13]

...TO SPEND MORE THAN $500 MILLION ON A TAX PLAN THAT BENEFITS THE WEALTHIEST OVER MIDDLE CLASS FAMILIES, AND EVEN HIKES TAXES ON SOME NORTH CAROLINIANS

The 2013-15 Budget Included $524 Million For The Legislature’s Tax Plan. The Reserve for Tax Simplification and Reduction Act (HB 998) was $86,600,000 in FY2013-14 and $437,800,000 for FY2014-15. [The Joint Conference Committee Report On The Continuation, Expansion, And Capital Budgets – Senate Bill 402, 7/21/13]

Under The Legislature’s Tax Plan, The Wealthiest Families Would See $2,400 Tax Cuts -- At Least Five Times Greater Than The Tax Cuts For Middle Class Families. A family with two children with a federal AGI of $20,000 would see an average tax change of -$3; a family with federal AGI of $40,000 would see an average tax change of -$80; a family with federal AGI of $60,000 would see an average tax change of -$84; a family with federal AGI of $100,000 would see an average tax change of -$364; and a family with federal AGI of $250,000 would see an average tax change of -$2,434. [House/Senate Tax Agreement, Taxpayer Scenarios: Personal Income Tax - Joint Plan, 7/15/13]

  • Under The Legislature’s Tax Plan, “Both Proponents And Opponents Of The Plan Acknowledge That The Biggest Breaks Will Go To The Highest Income Earners.” “As for how the tax bill will affect any one individual, family or business, there is room for debate. Republican proponents of the measure point to an analysis by the legislature's nonpartisan fiscal research staff that shows taxpayers across all categories will see at least some slight reduction in tax burden under the bill. But an analysis by the liberal-leaning North Carolina Budget and Tax Center predicts that taxpayers who make less than $84,000 per year will end up paying more in taxes, once all the tax code changes go into effect. [...] Both proponents and opponents of the plan acknowledge that the biggest breaks will go to the highest income earners.” [WRAL, 7/18/13]
  • The Legislature’s Nonpartisan Fiscal Staff Determined Some Seniors And Young Families Would End Up Paying Higher Taxes Under The Tax Plan. “As for how the tax bill will affect any one individual, family or business, there is room for debate. Republican proponents of the measure point to an analysis by the legislature's nonpartisan fiscal research staff that shows taxpayers across all categories will see at least some slight reduction in tax burden under the bill. [...] An additional analysis by the legislature's nonpartisan fiscal staff does pick out some individual scenarios among older adults and young families in which taxpayers will end up paying more in taxes every year. Part of the reason those 65-plus may pay more is because the bill eliminates an exemption for retirement income contained in the current tax code. Both proponents and opponents of the plan acknowledge that the biggest breaks will go to the highest income earners.” [WRAL, 7/18/13]

The North Carolina Budget And Tax Center Estimated That Taxpayers Who Earn Less Than $84,000 Per Year Will Pay Higher Taxes, On Average, Under The Legislature’s Plan Once All Tax Changes Are Taken Into Account. “As for how the tax bill will affect any one individual, family or business, there is room for debate. Republican proponents of the measure point to an analysis by the legislature's nonpartisan fiscal research staff that shows taxpayers across all categories will see at least some slight reduction in tax burden under the bill. But an analysis by the liberal-leaning North Carolina Budget and Tax Center predicts that taxpayers who make less than $84,000 per year will end up paying more in taxes, once all the tax code changes go into effect.” [WRAL, 7/18/13]

  • North Carolina Budget and Tax Center: Compared To 2013 -- When North Carolinians Benefitted From The Earned Income Tax Credit -- Under The Legislature’s Tax Plan The Bottom 80% Of Taxpayers Would See Higher Taxes. [North Carolina Budget and Tax Center, NC House/Senate/Governor Tax Reform Agreement (All North Carolinians, 2013 Income Level), Special Data Request to Institute on Taxation and Economic Policy, 7/16/13]
  • North Carolina Passed A Law To Eliminate The State Earned Income Tax Credit, Which Benefits Middle Class And Lower Class Families. “With the Senate’s final approval Wednesday, a measure to let a modest state tax credit for low- and moderate-income taxpayers expire in 2013 is headed to Gov. Pat McCrory. The measure to eliminate the earned income tax credit drew the scorn of Democrats, who unsuccessfully sought to extend the credit. The legislation lowers the state’s tax break slightly for the 2013 tax year because the federal tax credit rose. Republicans said the bill aims to “decouple” the state from federal tax policy. But Democrats link it with efforts this session to curtail unemployment benefits and prevent Medicaid expansion to show the majority party is disregarding the poor.” [Raleigh News & Observer, Under the Dome, 3/6/13; H.B. 82, became law, 3/13/13]

AND THAT’S NOT ALL: THE MISGUIDED TAX PLAN WILL COST A WHOPPING $2.4 BILLION OVER FIVE YEARS, FURTHER RISKING MIDDLE CLASS INVESTMENTS

The Legislature’s Tax Plan Would Cost $2.4 Billion Over Five Years. The tax plan agreement would cost $86.6 million in FY 13-14 and $437.8 million in FY 14-15. [House/Senate Tax Agreement, Revenue Impact, 7/15/13]

  • NC Budget And Tax Center: The Tax Plan Agreement “Won’t Support Job Creation And It Will Drain Resources Needed To Bolster Our Economy” Because “It Puts At Risk The Ability To Educate Our Children, Care For Our Elders, Keep Our Communities Safe And Support Businesses.” “This is a bad deal for North Carolinians. What the Governor and Legislature agreed on won’t support job creation and it will drain resources needed to bolster our economy. It puts at risk the ability to educate our children, care for our elders, keep our communities safe and support businesses, while failing to fix the problems with the state’s tax code. And, it gets rid of policies that work such as the Earned Income Tax Credit. This is not a historic day for North Carolina; tax reform hasn’t been achieved. Instead, we’ve been handed a plan that will tarnish our state’s reputation as a leader in the South, a place where people want to live and businesses want to grow. It is very likely that as a result of this failure to pursue real, comprehensive tax reform, state sales taxes and local property taxes will go up in the future. That’s what happened in every other Southern state that has personal and corporate income taxes that can’t keep up with growing public needs. Our state cannot be competitive nationally or internationally with this reckless approach. It undermines the education of our workforce and support for research and innovation. The prospects of an ongoing race to the bottom for North Carolina now are all too real.” [Statement on NC tax deal, Budget and Tax Center Director Alexandra Sirota , 7/15/13]

 

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