Wednesday, July 31, 2013

Statement on NC Budget

The NC General Assembly recently passed a $20.6 billion state budget into law. This is a balanced budget that provides funding for core services of government. All things considered, I believe this budget is a positive step towards getting our state finances in order.

As you can imagine, crafting a state budget is a difficult process. This process is even more difficult when state revenue is tight as a result of the ongoing economic recovery. Therefore, we have to be very judicious and methodical in how we allocate taxpayer dollars.

When I ran for the NC House, I ran on a platform of lower taxes and fiscal responsibility. After reviewing the state budget, I felt that it was a responsible approach to spending taxpayer dollars. Therefore, I concluded that the proposed state budget, which resulted from extensive negotiations between the House and Senate, deserved my vote.

This budget provides funds for the core services of government, such as education, transportation, public safety, and Medicaid.

Many of the concerns that people have expressed about the state budget are related to public education. Some people seem to be concerned that our state budget does not do enough to support our education system. But that is simply not the case, and I would like to take a moment to explain why.

First, it is important to remember that the overall education budget actually increased over the previous school year. No current teaching positions were cut, and no current teachers will take a pay cut. It is also important to remember that public education comprises 56 percent of the state budget. This is up one percent from last school year, when education was 55 percent of the state budget.

With over half of the state budget dedicated to funding public education, it is hard to argue that North Carolina is not supporting our education system.

It is true that the budget would eliminate teacher tenure and replace it with a contract program and bonus pay. This makes sense, as it would be a way to reward the best teachers, while identifying those teachers who may need further training. Operating under a contract method will increase overall accountability of educators, which is important, as we need to have quality teachers in the classroom.

There has also been talk about a provision in the budget that would eliminate the Master's degree incentive for teachers. The fact of the matter is that having a Master's degree does not necessarily make a teacher more effective. Therefore, it would make better sense to pay and retain teachers based on their overall performance, rather than their education background.

For example, let's say that you own and operate a business. Would you find it logical to pay your employees based on the types of degrees they have, or would you find it more logical to assess your employees based on their performance on the job? I would submit that it would make better sense to assess and compensate employees based on their ability to meet the bottom line and get the job done. And I believe it is logical to apply that same philosophy to teaching professionals.

As for teacher pay in general, I do believe that overall teacher pay should be increased. The starting salary of a teacher, in my opinion, is lower than it should be. In fact, not being able to provide a pay raise for teachers in this budget is something that I regret. However, we must remember that state funds are limited (especially due to the economic recovery), which makes it difficult to provide a pay raise to state employees at this time.

This is simply a matter of understanding economic reality. We must remember that there are thousands of private sector employees who have gone an extended amount of time without a pay increase, and in some cases, have lost their job. In other words, the economic reality has not affected state employees alone; it has affected many of our citizens.

It is worth noting that the current budget includes five extra days of vacation for state employees (which includes teachers). Also, as a result of tax reform, all of our citizens (including teachers) will keep more of the money they earn. This is an important factor, as tax reform will relieve the financial burden on all of our citizens.

Let us not forget the fact that, while teachers do not necessarily earn a lucrative salary, they do receive very good benefits. Health care, vacation, and retirement are excellent benefits that are provided to our teachers. These benefits clearly cost money (especially the health care and retirement), which is part of the state's obligation to our teaching professionals (which is supported by taxpayer dollars).

By contrast, many self-employed individuals don't get these benefits. Instead, they have to pay for their own health insurance and plan their own retirement. This is not to say that teachers have it made compared to everyone else; I am simply trying to put this into a logical perspective.

Moving forward, I believe that we should work to increase overall pay for teachers. If we are able to hold educators accountable for their work, then educators should be able to earn a higher salary. I also believe that we should continue to work to provide more funding for classrooms.

In the realm of public education policy, we have passed laws this session that will strengthen our public charter schools system and provide more choices for parents. All of this is being done while still supporting our traditional public school system. Working to allow more choices for parents and more opportunities for children is a worthy endeavor.

Finally, I would like to conclude with some highlights of the state budget. This should help to provide some insight as to what the current budget entails:
  • Overall state spending increased by about 2.5 percent under this budget, while providing significant tax cuts for all of our citizens.
  • Includes $1.5 billion in additional state dollars for Medicaid costs.
  • Includes a provision to allow the executive branch to develop a plan for Medicaid reform.
  • Provides funding for an additional 2,500 pre-K slots.
  • Supports the governor's vision for overhauling the North Carolina Highway Trust Fund, which consolidates various funding streams to prioritize and accelerate transportation infrastructure projects.
  • Endeavors to remove politics from transportation decision-making by eliminating named projects from statute.
  • Restores funding for 69 trooper positions within the State Highway Patrol and provides increased funding for needed fuel, equipment and training.
  • Adds 22 magistrates and 175 probation and parole officers across the state to ensure that cases are processed efficiently and that criminal offenders are supervised and in compliance with the law.
  • Fulfills our obligation to state employees by fully funding the state retirement system and state health plan, and provides five bonus leave days for state employees.
  • Ensures budgeting certainty for cities, counties and towns by providing localities with some transitional hold harmless funds.
  • Sets aside approximately $230 million for the rainy day fund to protect against future shortfalls, bringing the total to approximately$650 million.
All things considered, I believe this is a fiscally responsible budget, and that it will help to improve North Carolina's financial situation.

Being a legislator involves making difficult decisions. Choosing to vote in favor of this budget was not an easy decision, but I felt that it was the right thing to do. We have to take steps to make North Carolina competitive with other states, and promoting sound fiscal policies along with tax reform is a part of that process.

Thank you for taking the time to consider my reasoning in supporting the state budget. Hopefully this helps to provide context as to why I chose to support this spending plan.

As always, do not hesitate to contact me if you have any questions or feedback.

Quote to Remember

"There is no dignity quite so impressive, and no independence quite so important, as living within your own means."
- President Calvin Coolidge

Coming Soon

In the next few days I will be releasing a summary of the accomplishments that were made in the General Assembly this year. I will detail some of the reforms that were passed into law, and explain why I believe North Carolina is on the right track.

Also, I will soon be releasing a public statement to explain the reasoning behind SB 317, which will reconfigure the Guilford County Board of Education.


Jon Hardister

Tuesday, July 16, 2013

Tax Reform Moves Forward

Several weeks ago the NC House passed a tax reform plan. Shortly thereafter, the NC Senate passed its own version of tax reform. Since then, members of both legislative chambers have engaged in negotiations to determine the best way forward in reforming our tax code.

On Monday, July 15 our leadership in the General Assembly -- along with Governor Pat McCrory -- announced an agreement on tax reform. After thorough discussion and debate, we have agreed on a plan that will simplify our tax code and ease the tax burden on our citizens. This is great news for the economic future of North Carolina.

It is important to remember that tax reform is a process; not an event. This tax reform plan will result in a significant improvement to our economic environment, while laying the groundwork for additional reform in the future.

In fact, the Tax Foundation has said that our tax reform plan will take North Carolina from the 44th worst to the 17th best tax climate in the nation.

Here are the highlights of our tax reform plan:
  • Reduces the personal income tax to a fair, flat rate of 5.8 percent in 2014 and 5.75 percent thereafter.
  • Reduces the corporate tax to 6 percent in 2014, and 5 percent thereafter.
  • Allows standard deductions of $7,500 for single individuals (or those who are married and file separately); $12,000 for head-of-household; and $15,000 for those who are married and file joint taxes.
  • Expands the sales tax to cover some, but not all, services.
  • Exempts food, medicine, and Social Security from taxation.
  • Keeps the mortgage interest and property tax deductions, but caps them at $20,000.
  • Exempts non-profits from taxation with a cap of $45 million.
  • Eliminates the Estate Tax (commonly known as the "Death Tax").
  • Caps the gas tax at 37.5 cents/gallon.
This is a solid, pro-business tax reform plan. As I said, tax reform is a process, and this is an excellent step in the right direction.

Having the opportunity to vote in favor of this tax reform plan was a great honor. Many of our legislators, including myself, campaigned on promises to reform our tax code in a sensible fashion. I believe this plan accomplishes that goal.

Please do not hesitate to contact me if you have any questions or feedback.