Raleigh, N.C. — After a long debate over tax cuts and education spending, the state Senate voted 30-19 Wednesday to tentatively approve its $21.5 billion spending plan.
While senators sparred over sales tax distribution and local tax options, the main point of contention was the proposal to cut 5,200 teacher assistants in the coming school year – a $57.5 million cut – while giving a corporate tax break of $109 million next year.
Republicans argued that the TA cut is needed to help pay for an additional 3,200 teachers to reduce class sizes in kindergarten through first grade – an $80 million item in the budget.
"We have a finite amount of money, and we want to spend that money the best way we can to educate kids in the classrooms," said Sen. Dan Soucek, R-Watauga, arguing that studies show smaller class sizes are the most effective way to boost education outcomes in primary grades.
Democrats pointed to the corporate tax break as evidence the state could easily afford both the teacher assistants and the additional new teachers, and they tried repeatedly to amend the bill to reduce the tax cuts and redirect the money to education.
"We present the lowering class size in grades one through three and the teacher assistant cuts as a choice," said Sen. Mike Woodard, D- Durham. "It doesn't have to be. It should be both. We don't need to pick winners and losers. We need to pick winners."
"We need to make education a priority, and we need to fund it adequately, before we take funds away to give them to corporations through tax cuts they haven't asked for," said Sen. Terry Van Duyn, D-Buncombe. "It’s a signal to the people of North Carolina about what we think is important, and unfortunately, what this budget says is, it’s not them."
Republican leaders used parliamentary maneuvers to block most of the Democrats' amendments from being voted on and voted down the few that were allowed to come up for a vote.
Senate leaders argued the corporate tax cuts are being paired with personal income tax cuts that will lower tax bills for lower- and middle-income taxpayers. They credited the tax reforms they enacted in 2013 with the state's economic recovery and lower unemployment rate and said the corporate tax cut is the necessary next step in attracting new jobs.
"Folks, there's never enough [money], as we've heard, but this is doing what we promised North Carolina we would do," said Sen. Tom Apodaca, R-Henderson. "I haven't heard one of these entities say, 'We don't want the money.' They're all saying, 'We can work with this."
"The way we tax in North Carolina is how we develop our workforce, and there’s a lot of things when we’re talking about what attracts jobs here in North Carolina," agreed Sen. Andrew Brock, R-Davie. "It goes down to the very bottom, and the bottom is the bottom line."
Sen. Dan Blue, D-Wake, took issue with the argument that lower corporate tax rates would bring in more jobs, noting that North Carolina's economic growth rate last year lagged behind the region and the nation.
"We started these big tax giveaways a couple of years ago," Blue said. “If they were working, my friends, these numbers would be going in a different direction. We can either give it back to folks and let them take it away, or we can invest in our middle class."
Democrats and Republicans sparred all afternoon over education spending numbers. Republicans said they've increased education spending every year since they took control of the legislature in 2011. But Democrats pointed out that that's primarily due to school enrollment growth, which lawmakers have to fund. Meanwhile, they said, the state's spending per pupil remains lower than it was before the recession, as does textbook funding.
Republican Sen. Ralph Hise, R-Mitchell, blamed Medicaid growth for the slow restoration of education spending. noting that state spending on the entitlement program has grown 52 percent since 2009.
"If you want to know where all those other funds are, take a look at Medicaid," Hise said, urging his fellow senators to agree to stay as long as it takes this summer to work out a Medicaid reform deal with the House and Gov. Pat McCrory. "This time, we finish the game. We make sure we reform the Medicaid system so we can get on to other things that are important to the state of North Carolina."
All Senate Democrats voted against the measure, joined by Republican Sens. Fletcher Hartsell of Cabarrus County, Bob Rucho of Mecklenburg County and Andy Wells of Catawba County.
The final vote on the spending plan is scheduled for Thursday morning. It then goes back to the House, which is not expected to approve it. The next step is conference committee, where House and Senate leaders work out a compromise behind closed doors.