North Carolina

Abstract

For the first time in more than 100 years, the governor and the majority in both houses of the legislature are Republican. The 2013–2015 budget signed by the governor in July 2013 implements several changes that are poised to have longterm impacts on the quality and stability of the teaching force and the delivery of public education in North Carolina. The budget incorporates major personal and corporate tax cuts from the Tax Simplification and Reduction Act, which will cost the state $86.6 million in tax revenue in FY 2013–2014 and $437.8 million in FY 2014–2015. This tax plan eliminated the current three-tiered individual income tax structure and sets a flat rate of 5.8% in 2014 and 5.75% in 2015. The act eliminated the personal exemption, but it increases the standard deduction. The corporate income tax will be lowered from 6.9% to 6% in 2014 and to 5% in 2015. The decrease in state revenue brought by the tax rate decrease is balanced by cuts to many programs, including public P–12 and higher education, and a slight broadening of the sales tax base. Higher education will see a 4.7% decrease in state funding and the P–12 public schools, a 1.2% decrease. The budget for the North Carolina Department of Public Instruction, the K–12 administrative agency, will be cut by $780,000. Similarly, the budget for the University of North Carolina (UNC) system, composed of 17 four-year institutions, will be cut by $66 million. The UNC Chapel Hill’s medical school budget will be cut by $15 million.