RALEIGH, N.C. (WNCN) – Officials in Democratic Gov. Roy Cooper’s administration said Friday that an income tax cut proposal by Senate Republicans would lead to the state taking in billions of dollars less in revenue and have significant impacts on education.
In a conference call with reporters Friday, State Budget Director Kristin Walker said the plan could lead to a reduction of more than $13 billion in revenue in the 2030-2031 fiscal year compared to the current year, which is about 19 percent of the general fund budget.
RELATED: Budget analysis from Gov. Cooper’s office (pdf)
The governor’s office said in the current fiscal year, the state is spending about $11.3 billion on K-12 education. Under the scenario they outlined, that would be cut by $2.1 billion. The UNC system budget would see cuts of $680 million and for community colleges, it would be $260 million. The analysis factors in population growth, officials said.
“And, it’s really difficult to hire teachers, counselors, nurses, teacher assistants, school bus drivers when you’re not sure you’re going to have that money the next year,” said Geoff Coltrane, senior education adviser to Cooper.
Leaders of the House and Senate are still meeting privately to try to reach an agreement on how much to cut state income taxes and how quickly those cuts should go into effect.
The Senate proposed a plan that would incrementally reduce the state’s personal income tax rate from the current 4.75 percent down to 2.49 percent in 2030. The House’s budget proposal did not call for cuts as steep.
Under current law, the personal income tax rate is already set to drop to 3.99 percent in 2027.
Legislative leaders say they’re discussing whether to include triggers so that the tax rate would only drop if the state hits certain revenue targets.
“So, a lot of things have been done,” said House Speaker Tim Moore (R-Cleveland) about the budget talks. “Where a lot of the friction is on the tax cuts in the out years.”
Lauren Horsch, a spokesperson for Republican Senate leader Phil Berger, was critical of the governor’s office’s analysis.
“For years Gov. Cooper and other Democrats have been crying wolf about how cutting taxes will drive our state to the brink and cause a budget deficit. Their hyperbolic predictions have yet to come true,” she wrote in an email. “Our economic record shows that we can cut taxes, grow our economy, sustain a healthy savings reserve, and increase funding for education year over year. Republicans in the General Assembly have a solid record of looking out for North Carolina’s future. Gov. Cooper is only looking out for his political future.”
Cooper signed the budget two years ago that implemented the current tax plan. He has urged Republicans not to pursue any further cuts, saying education is already underfunded.
The talk of reducing taxes comes as lawmakers consider a significant expansion of gambling.
Republicans are discussing authorizing four additional casinos and legalizing video lottery terminals statewide.
Walker’s office estimated that expanded gaming, including mobile sports betting, would generate about $1.5 billion annually, which would not be enough to offset the Senate’s proposed income tax cuts.
“When we’re talking about $13 billion lost, even if that’s conservative it’s nowhere near going to make up the kind of revenue decrease we’re going to see,” Walker said. “It certainly wouldn’t come in anywhere close to replacing what we would lose from the income tax and the corporate tax.”
Walker said the potential $2 billion loss for K-12 education would equal 28,000 classroom teachers or eliminating 11,000 state-funded teacher assistants as well as funding for students with disabilities and all state-funded counselors, nurses, social workers and psychologists.