Democracy is defeated in Raleigh negotiations

Is democracy a failure?

If you look at how the North Carolina state budget has been conceived and presented, you'd have to conclude that democracy doesn't work. If democracy worked, the General Assembly would have a rational, transparent procedure for bringing together the interests of all 170 members of the legislature who would all serve the interests of their constituents who elected them to office.

But it hasn't worked quite that way. When the House and Senate passed conflicting versions of the state budget, the differences should have been resolved by a committee representing both chambers whose members would compromise on the differences in the two versions.

That's not exactly what happened. A handful of senators and representatives met behind closed doors and hashed out a compromise of sorts, but they also radically changed many provisions of law that were not, strictly speaking, part of the budget and had not been part of either chamber's budget bill. The provisions fundamentally changed state policies (including shuffling departments of state government) and even arbitrarily killed a long-planned light rail service without any public debate on the provision.

You can call these changes dictatorial or arbitrary or oligarchical or contemptuous, but you can't really call it democracy. What went on behind closed doors in Raleigh these past couple of weeks had little to do with democracy.

After the veto override, teachers keep jobs

Governor Perdue vetoed the Republican legislature's budget, saying the budget made too many cuts in education funding. The legislature, along mostly partisan lines (with five Democrats in the House siding with the majority), voted to override the veto.

Then a strange thing happened: School superintendents in Wilson, Raleigh and Charlotte announced that they would have enough funding from the sharply constrained state budget to retain all current teaching positions. No layoffs for teachers. Despite dire warnings that the Republican-written budget would result in massive teacher layoffs and a resultant decline in educational quality throughout the state, it looks like most school systems will survive with their teaching positions intact. Some support positions, even some "central office" positions, will be eliminated; after all, even Perdue's budget contained severe cuts in education funding. But massive layoffs of teachers statewide? It doesn't look like that will happen.

That's not to say that there aren't severe -- and questionable -- cuts in state funding. Mental health services will suffer. Prisons will be without peacekeeping chaplains. Many teacher aide positions will disappear (although there will be money to reduce class size in kindergarten and first grade -- a tradeoff whose wisdom I question). In what seems to me might be the worst for the long-term health of public schools, legislators decided to eliminate the Teaching Fellows scholarship program. For 25 years, this innovative program has provided four-year scholarships to students willing to teach in public schools for a minimum of four years. Teaching Fellows targeted academically superior students and provided enrichment opportunities in an effort to improve the quality of the state's teachers, and it is teacher quality, more than any other factor, that improves student performance. (Full disclosure: My younger daughter was a Teaching Fellow and was an exceptionally good math teacher in three different school systems, more than fulfilling her obligation to the state, before resigning to raise her children.) If the Republicans running the General Assembly are going to reduce class size, thereby increasing the number of teachers, they'll need a Teaching Fellows program to attract students into the ranks of teaching.

For legislators (and others) who want to know what's wrong with public education, I recommend this article from The Atlantic. Although many of the problems cited are confined to New York City Schools and other heavily unionized systems, the interests of the entrenched bureaucracy and the "us first" attitude of the teacher unions (the North Carolina Association of Educators is an affiliate of the National Education Association) also apply to North Carolina.

Miracles still happen in Raleigh

You can count this as a minor miracle: The North Carolina General Assembly has passed a budget before the new fiscal year begins. That has not happened since 2003. Gov. Bev Perdue signed the budget bill with hours remaining before the spending plan would take effect.

Despite an $800 million shortfall in revenues, legislators managed to pass a budget without major tax increases and without some of the dire scenarios predicted as negotiations percolated in legislative offices. There will be cutbacks all around. Public schools will be a little tighter. The UNC system will be trimmed, but not so much that it will have to leave buildings vacant. Out-of-state scholarship athletes will once again pay out-of-state tuition, or have it paid by boosters. Four million dollars in highway repairs will be postponed. And mental health services and in-home care will see reductions that will affect the quality of life and health of clients and patients.

Meanwhile, state ferries will get a big boost, adding $11 million in funding. To partly offset this increase, road repairs will be cut $4 million. I'm old enough that I've driven a lot of N.C. highways and roads; I've even taken rides on a state ferry. But in my 40-plus years of driving, my ratio of highway driving miles to ferry sailing miles is probably in the range of 200,000 to one. Some North Carolinians will have an even more skewed ratio. So why does North Carolina increase funding for ferries while reducing funding for roads? It has to be political clout. Outer banks residents have to have ferries, and the Coast Guard has recently increased regulatory costs for ferries, but ferry users could easily pay more of the cost of operating ferries. That cost now is almost entirely borne by taxpayers, most of whom rarely if ever take a ferry cruise.

Anomalies such as this will continue until North Carolina revamps the budget system, including state taxes. North Carolina needs a reliable means of earning revenue, and taxpayers want rational regulations. Legislators and legislative staff need to examine what this state really needs, and then appropriate that money, without any extras for local museums, redundant highways or unnecessary state employees. The state will never get out of budget crisis mode until genuine controls on spending and political ambitions are put into place.

Legislators approve state budget — Ouch!

They're about six weeks late, but North Carolina's legislators are finally getting around to doing the most important thing we hire them to do: Pass a state budget. Don't expect a lot of rejoicing throughout the land, however. This budget will hurt everyone in the state, some more so than others.

The budget, which awaits final votes in the House and Senate, will raise sales taxes by a penny. This tax is paid by everyone, which makes some nominally egalitarian types happy, but, in reality, the sales tax is the most regressive of taxes, falling heaviest, proportionally, on those with the least income. Perhaps to correct that flaw in the state's new revenue stream, the budget also imposes an income tax surcharge on "high income" taxpayers. The surcharge starts at $100,000 in taxable income, which, while well above the state's mean household income, is not exactly "rich." A lot of two-income couples who consider themselves working class will have to pay an extra 2 percent surcharge on this year's income.

The public will feel the budget's bite in other ways, too. Legislators are cutting public school appropriations and leaving it up to individual school districts how to allocate those cuts. My bet is that the cuts will more often be sliced out of teaching positions and classroom supplies than out of central office administration. This recession has prompted a lot off workers and executives to absorb pay cuts. I doubt that any school superintendents, assistant superintendents, principals or directors of arithmetic will see their pay cut.

Also feeling the brunt of the budget cleaver will be some of the state's most helpless people. The budget cuts back on community support for the mentally ill and developmentally disabled. Community assistance workers make it possible for many handicapped people to live useful, near-normal lives. Taking away that assistance could well create problems that end up costing the state more money in the long run.

Although legislators did trim spending a bit — the budget passed on party-line votes, so the budget is purely a Democratic document — they left untouched what seems to me to be simple, painless cuts, the low-lying fruit of budget talks. For example, this weekend is tax-free weekend. Highly touted by retailers, this back-to-school weekend is more popular than its actual value to consumers, who get a discount of a whopping 6.75 percent on purchases that fit the state's criteria. But the sales tax moratorium costs the state about $12 million in forgone revenue. That's not enough to balance the budget, but it's a start.

I'm also amazed that I've heard nothing about the millions of dollars legislators decided to borrow last year for construction projects on university campuses around the state. This borrowing, which did not involve a taxpayer referendum, comes on top of $3 billion in university spending that taxpayers had approved a few years ago for projects that are still under construction. The state could save millions — and perhaps take a moment to rethink some of this profligate spending — by halting projects such as the ECU dental school and the expansion of the dental school at UNC-Chapel Hill. Those are lost opportunities to save real money without hurting anyone.

The biggest question remaining from this budget is whether voters will pay any attention. Democrats seem confident that the spending cuts and tax hikes will not come back to haunt them. Republicans hope taxpayers will remember who was in charge when their taxes were raised and teachers were laid off.

Education spending doesn't all go to classrooms

Gov. Bev Perdue has thrown a monkey wrench into state budget deliberations. Perdue announced that she could not support a plan by Democratic legislators to raise taxes by around a billion dollars to close a hole in the current year's budget. Many insiders saw Perdue's statement as disingenuous, considering that her own budget advisers had been involved in the legislators' negotiations.

Another part of Perdue's self-righteous announcement caught my eye. The governor said she would insist that current per-pupil spending on public schools not decline, even one cent. Education is too important ... our children are our future ... yada, yada, yada. Here's the fallacy in that high-principled-sounding defense of education: Per pupil spending includes all of the state's spending on public education, including redundant assistant superintendents for left-brain learners, directors of crayon accounting and under-secretaries of snack machines. Per-pupil spending is a convenient measure of investment in education, but all of that spending doesn't go to the classroom or benefit students. Suppose, for example, the Department of Public Instruction raised all administrative salaries by 100 percent and cut teaching positions by 20 percent. Per-pupil spending might remain the same, but the quality of instruction and the benefit to students would drop precipitously.

Perdue ran on a platform touting her graduate degree and experience in education, but this latest attempt to shore up her political base is transparently phony and won't stand up to the simplest analysis. It also won't do much to improve her statewide approval ratings, which have fallen as drastically as housing prices in south Florida.

Tuition increase punishes community college students

Just over a year ago, two Democratic candidates for governor were proclaiming that they would make community college tuition free. Then-Lt. Gov. Bev Perdue and then-State Treasurer Richard Moore touted their free-tuition plan as an economic and educational stimulus. Moore, in particular, had a detailed plan for where he would find the money to cover the tuition expense. Both said the plan was attainable and would benefit the state in many ways.

North Carolina politicians count on people having short memories regarding campaign promises and "temporary" taxes. Instead of making community college tuition free, the General Assembly has raised tuition, nearly doubling the charge for some classes. The computer class I'm taking at Wilson Community College cost me $65, not counting the textbook. This fall, the same class will cost $120. By some calculations, that's still a bargain, but it's a heckuva lot more than the current cost, and it will be a real hardship for some people struggling to update their job skills.

The tuition increase is in effect even though the General Assembly has not passed a 2009-2010 budget. The increase is part of the continuation budget, passed by legislators to carry the state until a full budget can be adopted. The chances of the final budget (whenever it comes) not including the community college tuition increase is probably almost nil. Legislators aren't going to want to refund money to students who have paid the higher tuition already.

Politicians give lip service to the notion that education is a top priority in the state. To prove their dedication to education, they approve expensive, useless and duplicative university buildings and programs; they mandate reduced class sizes, resulting in added costs for facilities borne by local school districts; they tout "cutting-edge" changes in curriculum (remember the Basic Education Plan?) that are abandoned after a few ineffective years; they mandate tests; they mandate specific teachings (such as a class dedicated to the Constitution); they regulate student behavior; they demand the collection of a variety of warehoused statistics.

But when it comes to an issue that could have a real impact on people's lives and on the economy — improving job skills through continuing education at community colleges — legislators see only a means of increasing state revenues from those North Carolinians least able to pay.

Meanwhile, we'll spend $25 million on a pier.

Save us from a boost in the sales tax

Give Gov. Bev Perdue credit, as the News & Observer gave her this morning, for opening up the doors and file drawers of state government to more public scrutiny. But when it comes to budgeting, Perdue seems to be still trying to make the numbers add up.

Earlier this week, Perdue announced support for a one-cent increase in the state sales tax, raising the rate on retail sales to 7.75 percent. If that weren't enough of a surprise, Perdue also proposed raising the state income tax rate for high-income taxpayers, increasing the tax on wine and beer, and expanding the sales tax, to some services, including cosmetic surgery and limousines. Earlier in this legislative session, there was talk of a sales tax reform that would expand the tax to common services, such as lawn care, and reducing the overall rate, perhaps to around 5 or 6 percent.

Raising the sales tax is the wrong strategy. If Perdue's one-cent increase is adopted, North Carolina's tax will approach the sales tax levels of states without an income tax, which rely on sales taxes for most of their revenue. The state would be far wiser to expand the sales tax and reduce the rate. Perdue's selective and timid expansion to limousines and cosmetic surgery is hardly an effective tax policy. If the sales tax were applied to all services, including advertising, accounting fees, legal fees, lawn care, car maintenance, home repairs, etc., the rate could be significantly reduced while still collecting the same amount of money.

And North Carolina, despite this downturn, should be collecting plenty of money. The state does face a budget deficit, which might be as large as $4 billion or maybe as little as $1.5 billion, depending on how you count it. Perdue and legislative leaders aren't counting the $1 billion-plus in federal stimulus money the state expects to receive. This deficit is partly the result of spending commitments legislators made in the past few years. Last year, you might remember, legislators decided to borrow money for a variety of construction projects, which leaders said would boost the economy and inoculate North Carolina against a looming downturn. That worked well, didn't it?

Legislators should start their budgeting by putting an immediate stop to all borrowing and halting construction projects, including the new dental school at ECU and the expansion of the dental school at UNC. Better to wait longer for a dental appointment than to spend money you don't have. After halting capital projects, legislators should look for efficiencies and should eliminate programs that are no longer necessary or are ineffective. Only then should taxes be addressed. Legislators should look at ways of making taxes fairer and more effective, not simply looking for ways to increase revenue. North Carolina's taxes on wine and beer, for example, are already among the highest in the region. Expanding the sales tax to services and lowering the rate would benefit most consumers and put state revenues on a sounder basis.

But raising the sales tax by another penny? Perdue is on the wrong track.

Perdue performs mathematical miracle

Gov. Beverly Perdue had spent much of her first month in office talking about how tough the state budget is going to be, but when the governor announced her budget proposal, something miraculous happened: The $3.4 billion budget hole had been cured by budget cuts of less than $400 million. Perdue's education background obviously goes all the way back to the New Math of the 1970s.

The state's current budget of $21.4 billion would shrink all the way down to $21 billion under Perdue's proposal. What pain! What austerity! The new budget spends more than the state budgeted just two years ago.

Perdue achieves this mathematical miracle in part by using federal stimulus money to pay for continuing state expenses. By doing so, she is laying a trap for next year's budget. The federal stimulus package is (presumably) a one-time appropriation. Using the stimulus for ongoing expenses, including schools, merely postpones the reckoning.

Despite the magnitude of the budget deficit, Perdue could not present a budget without an increase in education funding. She wants the state to spend more money on schools, increasing per-pupil state spending by $135, even though the money simply isn't there. Even though the governor is boosting education spending, local school boards are preparing for possible layoffs because they're not sure the numbers add up.

Perdue would raise taxes on cigarettes and alcohol to raise around $500 million. Hitting smokers and drinkers is more palatable than other forms of tax increases, but it's still a tax hike, which increases the state's taking of the public's income. Governors and legislative leaders have unabashedly touted the rapid annual increases in state spending over the past decade. In the four previous budget years, state spending increased 8.6 percent annually. After eagerly spending previous budget surpluses with new spending programs, North Carolina was facing an inevitable reckoning, but Perdue seems to be denying or postponing that reckoning.

North Carolina should have sufficient funds to educate its children, maintain its highways and enforce its laws without continual excessive increases in state spending, and it should be able to set spending priorities, eliminating, when necessary, ineffective and inefficient spending.