New report find state tax cuts reduce revenue, cost the state valuable resources for public education

RALEIGH (January 28, 2016) — Tax cuts will hamper North Carolina’s ability to invest in public education and promote widespread prosperity over the next two years, according to a new report released today by the Budget & Tax Center, a project of the NC Justice Center. Consequently, these tax cuts put high-quality learning and education opportunities for all North Carolina students at risk.

State tax cuts in the latest budget will reduce available revenue for the biennium by $841.8 million, the report said, and come on top of costly tax cuts passed by state lawmakers in 2013. Within four years the annual cost of the 2015 tax cuts are estimated to reach $1 billion a year, according to the Fiscal Research Division, as rate reductions for individual taxpayers and profitable corporations phase in.

“The foregone revenue from costly tax cuts are resources the state will not have for early childhood learning initiatives, public schools, affordable higher education, and other vital public services that helped promote broad economic gains for North Carolinians in the past,” said Cedric Johnson, policy analyst with the Budget & Tax Center and author of the report.

Quality learning and education opportunities aid the healthy development of children, well-being of families, and economic prospects for the entire state. And yet eroding state support for early childhood development and public schools in recent years has challenged the ability to ensure that all North Carolina children enter their formal schooling years ready to learn, the report said. These challenges will only persist under the current two-year budget. This year, more than 6,400 fewer state-funded NC Pre-K slots are available than in 2009 despite more than 7,200 children being on NC Pre-K wait lists last year.

The current state budget for public schools provides a level of resources for public schools at slightly above last year’s levels. State lawmakers shifting existing state dollars from one area to another means that the actual increase in support for public schools is less than what appears in the budget, the report said. For example, while the state appears to spend an additional $254.6 million on classroom teachers, the current budget doesn’t include $254.6 million in lottery dollars for classroom teachers that were included in last year’s budget. Accordingly, state dollars provided for teachers in the current budget simply replace the missing lottery dollars, meaning no net additional state funding will be provided for classroom teachers.

As important as what is in the state budget for K-12 education is what is not included, the report said. No additional state funding is provided for professional development for teachers or principals. Furthermore, no additional state funding is provided to place more nurses in public schools and lower the student-nurse ratio. State funding for classroom materials, instructional supplies, and equipment also remains inadequate, meaning teachers are likely to incur out-of-pocket expenses for such resources.

As for higher education, state support per student at four-year public universities this year is down nearly 16 percent, the report said. The eroding support is due in part to more than 12,000 additional students enrolling in public four-year universities during this period without any corresponding increase in state support.

“Public investments in a wide range of areas, including early childhood development and public schools, are the essential building blocks of long-term economic growth and shared prosperity,” Johnson said. “Yet at this critical point in the state’s uneven and slow economic recovery, policymakers chose to deliver greater benefits to the wealthiest few rather than build a solid foundation that supports opportunity for many. As a result, all North Carolinians lose.”

The full report can be found at this link:

FOR MORE INFORMATION CONTACT: Cedric Johnson,, 919.856.3192; Jeff Shaw,, 503.551.3615 (cell).