Gov. Perdue’s Tax Increase for Schools: A Bad Idea at a Bad Time

Yesterday, Gov. Perdue released a statement supporting a three-quarters-of-one- cent increase in the state sales tax to stop what she says are “deep and unnecessary cuts to public schools.”

I agree with Gov. Perdue’s assessment that education is key to our future. However, I cannot agree with her proposal to raise taxes.   The proposal is based on a number of myths.  Let’s look at five of the worst.

Can’t we dig down and give an extra penny for the schools?  That’s been the mantra from educators. Such thinking, however, undersells the real and adverse impact of tax increases.  Gov. Perdue refers to the sales tax as an increase of only “three-quarters of one-cent,” as if to imply we’re merely dealing with pennies.  Remember, raising the state sales tax rate from 4.75 percent to 5.5 percent reflects an actual percentage tax increase of 15 percent (most counties add another 2 percent sales tax, bringing the current total sales tax paid in most counties to 6.75 percent).

Furthermore, the rate applies to each dollar expended. So the difference is not mere pennies, but a double-digit increase in the total sales tax burden placed on consumers. Because low income and struggling families expend a higher percentage of income on items incurring sales taxes, such a tax will disproportionately impact these groups. Is this burden what we want to do in the middle of one of the worst recessions in memory?

Isn’t additional money necessary to protect quality schools?  This argument implies money and quality are directly related.  If so, why don’t New York City and Washington, DC have the best public schools as these districts spend far beyond the average school district per student? This fallacy has been dispelled long ago, yet it keeps returning.  Even after adjusting for inflation, nationally, spending per student has more than tripled over the last four decades.  Does anyone argue that our schools have improved commensurately? Simply throwing more money at the current education system distracts from real education reform, and further entrenches the failing status quo.

 The Legislature’s extreme cuts to education must be stopped.  The actual difference in education funding between the Governor’s proposed budget and the budget adopted by the legislature was less than two percent of a $7.5 billion K-12 education budget.  Such realities make the “extreme cuts” argument difficult to accept.

North Carolina is 49^th in per pupil spending.   Public school advocates say additional funding is needed because budget cuts have caused North Carolina to fall to 49^th in per pupil spending, a figure attributed in the Governor’s statement to the North Carolina Association of School Administrators.  Calls to that office produced no answers regarding the specific citation. Yet there are still other problems with using a ranking for per pupil spending .  Such figures frequently fail to take into account the impact of budget deliberations in other states, the outcomes of which would significantly influence a final ranking.  In addition, per pupil rankings also fail to account for differences in individual labor markets and economies, which help to explain why teacher salaries are different in North Carolina than they are in New York or Oregon or Illinois.

We must act now to prevent additional cuts.  According to Gov. Perdue, the Republican budget resulted in the loss of thousands of educator jobs. Preliminary NCDPI data, however, shows the majority of those job losses were federal and local administrative jobs.  In fact, the state added more than 2,100 teachers in the last year.  The Governor claims the loss of federal funding will force even further losses next year. However, the Governor knew two years ago that funding would end.  Saying we need more money now only reflects her failed leadership and her refusal to make difficult budget choices.

Conclusion

Raising the sales tax by 15 percent is a bad idea that needs to be defeated.  It’s bad public policy to raise taxes at any time, but even more so during a recession.   The Governor’s proposal falsely implies that school quality is tied to public spending and that educator job losses are a result of state funding reductions.  Our public schools have many challenges.  Lack of funding is not one of them.  North Carolinians would do well to consider serious proposals that offer real reforms to our broken public education system that empower students and parents rather than the government-run education establishment.