Tax changes could jeopardize teacher raises

Posted April 9, 2014

— Tax cuts that state lawmakers passed last year have trimmed the amount of revenue North Carolina is collecting to the point where promised raises for teachers are at risk.

When lawmakers wrote the two-year budget last summer, they left about $360 million unspent for this year, which they planned to use for proposed raises for beginning teachers. That cushion might not be there when the new fiscal year starts in July, however.

Lawmakers likely will have to use $200 million or so to cover another shortfall in the Medicaid budget, and the General Assembly's Fiscal Research Division has issued a gloomy forecast for tax collections.

Although collections through the end of March were $12.1 million above target, personal income tax is coming in $221 million below forecasts, according to the Fiscal Research Division. Also, fewer corporate tax returns to date don't bode well for the amount of tax money coming in from businesses over the next few months.

The revenue squeeze is the result of tax cuts included in last year's overhaul of the state tax system already taking effect, while other changes meant to offset the impact of the cuts, such as the elimination of several deductions, won't be felt until people file their 2014 tax returns next year.

"It's frustrating," said Sen. Jerry Tillman, R-Randolph. "I still think we need to do and will do something for teachers, but it's all going to depend on the money. We can't do it if we don't have the money."

Lawmakers are used to having more money to work with in the second year of the budget cycle because they try to underestimate in their budgeting. Tillman, the Senate's chief budget-writer for education, said no one foresaw the lag between tax cuts and new revenue.

At this point, he said, it depends on the so-called "April surprise," the collections and refunds on April 15 that can change the entire budget outlook – for better or worse.

"We will know much more by the end of April, and let's hope for the best because the teachers definitely need a raise," he said. "We're trying our best to find the money."

Legislative leaders said they are committed to a plan Gov. Pat McCrory outlined in February that would raise starting salaries for North Carolina public school teachers by almost 14 percent over the next two years.

The $176 million plan would lift the base pay for new teachers from $30,800 to $35,000 by the 2015-16 school year, including a $2,200 raise this fall followed by another $2,000 next year.

Tillman said restoring pay bumps for teachers in the process of earning master's degrees will cost another $20 million.

Anna Roberts, a spokeswoman for House Speaker Thom Tillis, said she believes the plan will still work within the budget as it stands.

"As we’ve said all along, raises beyond the plan we announced in February are contingent on Medicaid cost overruns and revenues," Roberts said. "The budget projection information is still preliminary, and there’s still a lot of data unaccounted for."

McCrory spokesman Josh Ellis said the governor still plans to include teacher raises in his budget proposal.

Neither Ellis, Roberts nor Shelly Carver, a spokeswoman for Senate President Pro Tem Phil Berger, would say how teacher raises would be funded if the expected revenue doesn't materialize.


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  • Sally Bethune Apr 14, 2014
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    If the GA wants an undereducated work force for our future. Knock yourself out. You have done such an outstanding job protecting the rich, you'll get reelected. And watch more and more teachers move to SC (God forbid) or Virginia or simply leave teaching all together to make a salary a family can life on. Some great teachers will stay because they are dedicated, but my very strong guess mostly the bad teachers will stay!

  • morrison2 Apr 13, 2014

    It's predictable. The state reneges on promises to teachers. This is the sort of claptrap we have come to expect from both parties. The NC democrats are crooks and the GOP is the anti-eduction party. What a buffet! I know there is one item on the menu..... and it ain't tasty.

  • Bob Bruck Apr 11, 2014
    user avatar

    Lets see- rich folks get huge tax breaks- revenues are down- to no raises. Solution- if will only allow millionaires to become teachers- problem solved.

  • redfish Apr 10, 2014

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    Ok lets see if I can make myself perfectly clear in the issues of revenue and spending. Item one, regain the respect, confidence and trust elected officials deserve. Item two trust but verify all spending. No secrets. Then We the citizens of NC can decide, all is debatable only we need to restrict the legislature to the priorities that benefit all. That doesn't cover whats needed by some or the many, those needs are ours not our elected officials. Once we burden them with our personal wants, opinions, priorities, well ya have what we have now. I will vote libertarian and maybe a tea party type if they have the right brain cells functioning. We as in We the People can do amazing things if we are asked rather than told. Getting everyone or most to realize a project or program is worthy isn't easy. But heck if it were easy I would be governor or dog catcher. Both of which are important when ya need em.

  • KPoston Apr 10, 2014

    The current salary structure is contributing to teacher turnover. Teacher turnover in North Carolina reached a five-year high in 2013 with 14.3 percent of teachers leaving their positions, up from 12.1 percent in 2011-12. That means one in eight classroom teachers in North Carolina left their jobs last year. In our poorer counties, turnover rates were as high as 35 percent. We need to stop the bleeding -- increasing base pay for all teachers will help, not just early career and staring salaries. Even a half percent decrease in the turnover rate would mean 2,300 less new teachers needed to meet statewide supply and demand needs. We need to focus on both recruiting new teachers AND keeping the veteran ones we already have.

  • Carl Keehn Apr 10, 2014
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    You realize that both the Symphony and the Art Museum are funded primarily by private donations. In order to receive any public funding, they are required to raise in excess of 75% of their funding privately. That is why both the symphony and art museum have such active foundations.

    In the case of the North Carolina Symphony, they also perform a valuable educational role; travelling throughout the state and performing as well as offering clinics and introducing young children to the musical instruments.

  • elcid liked Ike Apr 10, 2014

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    So now taxes are a la carte? Lots of people don't like tanks. A lot more don't like the police. Should they be allowed to opt out of paying for them?

  • Scuro Apr 10, 2014

    So what some people are saying is this- that the quality of education severely decreases with an increase in pay? Are there any external factors that could have affected this such as change in common core or cutting of teacher assistants?

    Some suggest teachers do not deserve to earn a reasonable wage. There are counties that cannot retain teachers because teachers simply cannot afford to live there. Teachers work far more than some people will acknowledge. The teachers that are in the profession have continued teaching because they are passionate. There is no "monetary" incentive. Summers aren't as glorious as they seem- they are spent developing the classroom.

    By the way, I dislike the idea of "If you don't like the salary you shouldn't teach." If we simply follow that guideline you will lose most teachers. You don't want to run out the passionate ones. You can't guarantee who will or will not stay.

  • redfish Apr 10, 2014

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    If you want to donate for roads buy your neighbor some gasoline. I'm sure the state and your neighbor will appreciate the donation. Spending items that should be funded by We the People and not the legislature. Maybe like the symphony or arts, I could list many but those two are non political for the most part. I like em both but don't want someone working two jobs barely making it and trying to save a few bucks for a kids education to help pay for those two items, by force. Getting the idea, non essential spending is non essential and should be funded with freedom to give or not.

  • Bill Brasky Apr 10, 2014

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    No raises in 2009 and 2010 due to the bad economy. This pay freeze was something that both parties agreed on....But since 2011 one majority group of politicians remain unwilling to give raises for public school teachers despite the improving economy.

    With that said, the teachers that I speak to on a day to day basis, are more concerned with proper funding for public schools than they are their own pay...That should tell you something about their motives.