NC Capitol Connection
JUNE 2014 VOL. 6, NO. 6
Special Section Inside
Civitas Action Rankings
, 250 000
QUESTIONS Elections Board to Probe Dubious Registrations
100 S. Harrington St. Raleigh, NC 27603 Vol. 6, No. 6
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As of in October 2013, 13,416 deceased people were listed on NC voter rolls.
BY susan myrick With a quarter-million questionable voter registrations on the books in NC, it’s no wonder the State Board of Elections (SBOE) needs more investigators. That’s also why sustaining and enforcing the voter reforms passed in 2013 is more urgent than ever. A subscriber-based state politics news publication, the NC Insider, recently reported that Kim Strach, director of the SBOE, is asking the General Assembly for money to hire more investigators to look into electionrelated complaints. Strach has a plan, too: She made that clear when she announced
the hiring of a newly retired FBI agent to head up the investigation team. The former agent, Chuck Stuber, is also an attorney and certified public accountant and worked with Strach in the investigations into allegations against former Speaker of the State House Jim Black and former Gov. Mike Easley. Jim Black, a Democrat and former Speaker of the N.C. House, spent nearly four years in federal prison after being convicted on federal corruption charges in 2007. Mike Easley, two-term Democratic Governor and former state Attorney General, was convicted of a fe-
lonious campaign finance violation in 2010 by entering an Alford plea. (Under an Alford plea, the defendant does not admit guilt but admits that sufficient evidence exists that the charge will most likely be proven by the prosecution. The defendant is then convicted of the crime(s) of which he is accused.) The deal Easley made with federal prosecutors put an end to a state and federal investigation. A trove of questionable voter registrations was uncovered as a result of an interstate investigation designed to expose duplicate registrations CONTINUED on page 3
NC Welcomes Energy Development BY JIM TYNEN One of the first major bills passed by the General Assembly would boost energy development in North Carolina. Senate Bill 786, the Energy Modernization Act, lifted a 2012 moratorium on hydraulic fracturing, called fracking. The bill mandates that state agencies finalize rules for it by Jan. 1. Permits to drill could be issued as soon as March 2015, though most observers don’t expect major activity un-
til later that year at the earliest. “We have sat on the sidelines as a state for far too long on gas exploration,” Gov. Pat McCrory said upon signing the bill June 4. Thirty-two other states permit fracking, with others considering approval of the process. California just rejected an effort to impose a moratorium on fracking there. Hydraulic fracturing is the process of injecting liquid (usually water) at high pres-
sure into subterranean rocks to open existing fissures and removing oil or gas. About 1 million wells have been hydraulically fractured in the United States over the past six decades. Developing the state’s energy resources offers the hope of new jobs for workers and royalty payments to landowners, especially in rural areas. “The expansion of our energy sector will not come at
a cost to our precious environment,” McCrory said, responding to criticism of the bill. “This legislation has the safeguards to protect the high quality of life we cherish.” Another bill passed early in the session will end local business privilege taxes, effective July 1, 2015. Politicians and business leaders have widely agreed that the welter of taxes is confusing and is often applied unequally. CONTINUED on page 10
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June 2014 NC Capitol Connection
From the Editor
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NC Finally Moves To Join Energy Boom
BY JIM TYNEN North Carolina is finally taking a step forward on developing the wealth right under our feet. Senate Bill 786, which has just passed, aims to modernize energy development here. Its most important provisions clear away some obstacles to using hydraulic fracturing – fracking – to bring natural gas to the surface. Drilling permits could be issued in May of next year. Critics have complained about how the legislature “rushed” the legislation through. My thought is: What took them so long? Sometimes the hype makes fracking seem dangerously new. But the technique was pioneered in 1947 and first used commercially in 1949. A baby born then could now collect Social Security. More than a million fracking projects have been undertaken in the United States, and 2.5 million worldwide. In other words, this isn’t some untested experiment, but something that’s been done millions of times across the planet. Problems would be widespread and obvious by now. Yet they aren’t. To find problems, critics have to hunt all over, with little if any success. Plus, John Hanger, former secretary of the Pennsylvania Department of Environmental Protection, has said, “Our experience in Pennsylvania that we have not had one case in which the fluids used to break off the gas from 5,000 to 8,000 feet (1,5002,400 meters) underground have returned to contaminate
groundwater.” PA has worked through any problems; NC can take it from there. Other places have found what works; it’s time North Carolina caught up.
there is a lot. The U.S. Geological Survey has analyzed the Deep River Basin, a potential energy field within North Carolina, mostly in Lee, Moore and Chatham
and brought in millions in revenues. The Fayetteville Observer sent one of their writers up to Pennsylvania to report on what is happening with
Energy development means jobs for working people – often those who have been hit hardest by the economic trends of recent years. Development also means good jobs for geologists and other professionals. Plus, the royalties go to landowners and local governments. There are plenty of people in our rural areas who have struggled to keep their family farms going. A six-figure check from an energy company can pay a lot of bills. Fracking also generates tax revenue, which is the sort of thing that should interest our liberal friends. Sure, there are genuine issues with energy exploration. Some of those problems, however, are problems a lot of people and counties Critics of hydraulic fracturing try to raise fears about the process, but 99.5 percent of the materials used are here would water and sand, with the remaining fraction being common products, including salt. Source: energyfromshale.org like to have: Opponents of development counties. The USGS found fracking in that state. He crowded streets, new taxalso sometimes try to obscure there is a 95 percent chance found the development of payers, well-paid workthe issues by noting that un- there is at least 779 billion shale energy has brought ers looking for a place to til we drill, we don’t know cubic feet of natural gas in a boom to western Penn- spend their paychecks, and for sure how that basin. sylvania, which has been local farmers and business much natuThat’s just one area. There struggling economically owners moving into higher NC Capitol Connection ral gas there are others. (That’s not even for decades. I lived in that tax brackets. PUBLISHER is under counting the offshore re- area too, and I can testify Did the General Assembly Francis X. De Luca francis.deluca@nccivitas.org our feet in sources, but that’s a topic for that fracking has brought rush into energy developMANAGING EDITOR North Car- another day.) a welcome infusion of jobs ment? North Carolina has Jim Tynen jim.tynen@nccivitas.org olina. The Critics also say the state and cash. been dithering and fretting GRAPHIC DESIGNER implication rushed into passing the law. Out in the mountains of about this issue for years, Tiffany Taylor is that we Well, far be it from me to Pennsylvania, a lot of people even as other states cashed Editorial & Advertising are wasting deny that making laws is in- have struggled on hardscrab- in. Billions in resources – to 100 S. Harrington St. Raleigh, NC 27603 phone: 919.834.2099 | fax: 919.834.2350 our time deed like making sausages, ble farms or trying to find power factories, homes and Capitol Connection is a publication of the Civitas Institute looking. and it can be unappetizing. jobs when factories closed. even our cars – lie right unIt’s tech- But if anything the Tar Heel (Sound familiar?) Now, der our feet. It’s time to let nically true State is lagging behind. We however, in the shale devel- working people put on their The Civitas Institute is a 501(c)(3) non-profit dedicated to advancing conservative and that we have been debating this is- opment areas in that state, hard hats and work boots, free-market principles in the state of North Carolina. don’t know sue for years. In the mean- you can drive around and and get to work bringing All non-advertising content published in NC Capitol Connection may be republished as long as appropriate for sure. time, other states have see many new houses with that wealth to the surface credit is given and it is published in its entirety. © 2014 by John W. Pope Civitas Institute But by all developed shale sites and new cars in the driveway. for the benefit of all of indications landed thousands of jobs Fracking is a big reason why. North Carolina.
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June 2014 NC Capitol Connection
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Elections Board Confronts 250K Questions CONTINUED FROM page 1
numbers match up with a voter registration in another state and who have vote histories in both states for the 2012 General Election. Considering the number
power to prevent such abuses in the future. While it is reassuring to see the SBOE finally taking positive steps to shift its focus to ensuring the integrity of the
cross-checks findings, Strach’s and voted in both states in and voting. In 2014, North request for more money to the 2012 general election. Carolina joined the Interstate hire additional investigators • 155,692 voters with the Voter Registration Crosscheck is justified. same first and last names, Program, a consortium of 28 The whole scenario also DOB and last four digits states that shared and combrings into question the powof SSN were registered pared their voter registration er and willingin another state – and Statistics for Non-Presidential Primary Elections data records. North Carolina ness of the prethe latest date of regis(1990-2014) joined this group to comply vious board, tration or voter activity Year Voted Registered Voters % Turnout Reg. Voters with the new elections reand state did not take place within form legislation (Voter Inforgovernments NC. It’s important to re1990 538,651 3,147,867 18% mation Verification Act, or of previous member such outdated 1994 430,838 3,544,095 13% VIVA). As a result, in April the eras, to inregistrations are ripe for 1998_05 805,319 4,547,438 18% SBOE produced a report that vestigate vote election fraud. revealed massive irregularifraud. That The SBOE has also taken 1998_09 166,387 4,622,198 8% ties in voter registration and the SBOE had the legislature’s direction to 2002_09 1,060,667 4,999,736 21% the likelihood of substantial two investiga- clean up the voter rolls in 2006 651,086 5,460,054 12% voter fraud. tors to cover other ways. During an auStrach appears to be taking an entire state dit of death records from 2010 880,128 6,105,831 14% the cross-check results serifurther under- the Department of Health 2014 1,028,136 6,517,104 16% ously and indicated the SBOE cuts the argu- and Human Services, the would focus its emerging in- of questionable votes the voting process, it’s important ment that “there’s no elec- SBOE discovered: vestigation on the smallest crosscheck has uncovered, we to reflect on the fact that be- tion fraud here.” With so few • 50,000 new death regroup of questionable voters can’t reasonably expect the fore the hiring of Stuber the people to find it, it’s no woncords that had not prerevealed in the report. Strach SBOE’s investigation will go elections agency had only one der so few cases have come to viously been provided referred to the 765 voters past these 765 voters. This is compliance specialist and one light in previous years. to the State Board whose first and last names, why the cross-check’s results election investigator to handle A fuller look at the report’s of Elections. dates of birth and last four are a powerful illustration of complaints and other alleged findings shows the scale of • 13,416 deceased votdigits of their Social Security the new elections reform law’s violations. In light of the the problem: ers on the voter rolls in • 765 voters with an exact October 2013. match of first and last • 81 deceased voters that names, dates of birth had voter activity after (DOB) and last four digthey died. its of their Social Security Realistically, not all the numbers (SSN) were reg- 250,000-some cases cited istered in NC and anoth- above will be fully investiBY susan myrick er state and voted in the gated. But the existence of The votes have been counted and the biggest loser may be a surprise to some: the myth that other state in the 2012 such a huge pool of queselections reform would suppress turnout. general election. tionable voter registrations According to the State Board of Elections, one-stop early voting concluded May 3 with • 35,750 voters with the underlines the need for re259,590 votes cast over the 10-day period. Early-voting turnout in the 2010 primary totaled same first and last name form of the system and pros172,972 votes cast over a 17-day period. A greater proportion of registered voters participated in and DOB were registered ecution of the most egregious 2014 (3.98 percent) over 2010 (2.83 percent). in N.C. and another state fraud cases. To sum up, though the voting period was shorter in terms of days, the reform clearly failed to discourage voters: Turnout, rather than slumping, increased by 86,618. To make matters worse for our friends on the left, AfricanAmerican turnout also increased during early Check the address label. If the word “subscriber” is not included on the voting and overall – by 2 percentage points – address label of this issue, you must subscribe to ensure you continue compared to the Primary in 2010. This is not to receive NC Capitol Connection each month. good news for the far-left activist groups suing the state over election reform. There were few other surprises in the actual NAME legislative races, although four incumbents lost to their challengers. In the House, Democrat Annie Mobley (House District 5) lost to HowADDRESS ard Hunter III, son of Howard Hunter Jr., who held the seat before Mobley. Rep. Roger Younts (R-80) lost to Sam Watford and veteran legislaCI T Y STATE ZIP tor Robert Brawley (R-95) lost to John Fraley. Neither Watford nor Fraley faces opposition PH ONE in November. In Senate District 3, Democratic Sen. Clark Keep me up to date! Sign me up to receive: * Jenkins lost to Erica Smith-Ingram, who will Civitas Weekly Newsletter Press Releases Poll Results Events & Training not face opposition in November. There will be more new faces in the General * EM AI L (required for items listed above) Assembly next year, though, while there will be few contests that could be called nail-biters, 10 legislators in the House and five in the Senate Mail to: 100 S. Harrington St. Raleigh, NC 27603 | web: nccivitas.org/getnews | phone: 919.747.8052 did not seek re-election.
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Election Loser: Myth of Early-Voting Suppression
June 26, 2014 • Raleigh, NC
Get the facts on voter opinion! nccivitas.org
Seeing What Teachers Really Make BY bob luebke Teacher pay is a topic that has dominated the education landscape in North Carolina for most of the past year. Fueled by growing dissatisfaction with the current system and only one small (1.2 percent) raise in five years, general agreement is emerging that we need to pay our teachers more. What there is not agreement about is how a pay plan will be structured and how it will be financed. Gov. Pat McCrory recently unveiled his teacher pay proposal. The proposal included 7 percent raises for younger teachers and 2 to 4 percent raises for other teachers. (A plan in the state House would provide 5 percent raises; a Senate proposal calls for 11 percent raises.) While the governor’s plan offers a good starting point for the current debate, it still lacks important information. How much do teachers actually earn? What do teachers earn relative to other education positions? These are questions that need to be answered. To that end, our office requested a listing of all Wake County Public School System (WCPSS) employees – salaried and hourly – by position, department or school, as well as their annualized salaries (including the local salary supplement). WCPSS is the largest school district in the state. The findings are both interesting and instructive.
Instructional and Administrative Staff Forty percent of WCPSS employees are either instructional, support or administrative staff. The highest paid WCPSS are administrators or administrative staff. A fair number of support staffers (i.e., career development specialists, social workers and media specialists) also have higher salaries than teachers. WCPSS has 174 staff who earn $90,000 or above.
Lessons Teachers, like other professionals, earn salaries that vary widely. Statements that imply teachers are paid the same or should be treated the same are misleading. Currently, in NC teacher pay is tied to longevity as well as advanced degrees or certifications. However, if you want to significantly improve your income, become an administrator. Administrators’ salaries are significantly higher than teachers’. In order to keep our best teachers in the classroom, there must be other avenues that boost income and reward excellence. The ideas behind McCrory’s Career Pathways Initiative are a good place to start.
Conclusion
Employees Total number of WCPSS employees: 18,355; 16,485 salaried staff and 1,870 hourly employees. (Figures are for 2013-14)
Teachers WCPSS employs 10,053 teachers. Of that amount, 9,753 are employed full time (100 percent); 300 are employed part time.
Average Salary Average salary for full-time WCPSS teacher: $45,991. (State average: $45,355)
Teacher Pay The chart on the opposite page makes it apparent the distribution of teacher pay in the district is no “normal distribution.” “The Pile Up” 38 percent of WCPSS teachers earn between $35,000 and $39,999. When local salary supplements are included, starting teachers earn about $35,000 a year. Because teachers have received only one raise and no step increases in the last five years, the percentage of teachers earning starting or close-to starting pay has mushroomed.
Any discussion on teacher pay needs hard data on what teachers earn and their pay relative to other educational staff. The issue of teacher pay can look very different after reviewing these facts. Data show 38 percent of teachers earn between $35,000 and $39,999. Another 32 percent of teachers earn $50,000 or more. These realities argue for targeting a response to the teachers most in need. The data also suggest that the way to additional income for most teachers is through getting an administrative post. Some teachers can continue to earn a good living with a salary that is supplemented by differential pay for advanced degrees or certifications. If we value teachers, and teaching, North Carolina must develop additional income opportunities. Adopting those proposals can go a long way in ensuring North Carolina has a teacher pay plan that is fair, rewards excellence, and encourages student achievement. Let’s get started!
NC Voter Petition
Higher Pay Not all teachers are poor. Though 38 percent earn between $35,000 and $40,000, another 32 percent earn $50,000 or more; and 9 percent of WCPSS teachers earn $60,000 and above. Clearly WCPSS teacher pay is far from uniform. Longevity and pay supplements for advanced degrees (10 percent) and National Board Professional Teaching Standards Certification (12 percent) are two of the most common ways to boost their pay.
Teacher Pay vs. WCPSS Employees Fifty-nine percent of WCPSS salaried employees are teachers. Relative to other selected WCPSS positions, average teacher pay ranks slightly below the middle of the pack.
to support More Pay For the Best Teachers Providing added pay to the best teachers will reward outstanding effort. I urge the NC legislature to work to provide teacher pay incentives that will improve our schools. I also urge local school boards to support this important reform.
Name (First, M.I., Last)
Street Address
City State, Zip County
Phone Email
Signature Date Cut out and mail to: Civitas Institute, 100 S. Harrington St. Raleigh, NC 27603 Please make copies of this form for others to sign
Monthly Petition
June 2014 NC Capitol Connection
Civitas Institute Poll Luncheon
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June 2014 NC Capitol Connection
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What do Wake County Teachers and Support Staff Earn? Wake County Public Schools employ 16,485 salaried staff. Teachers comprise 59 percent of WCPSS full-time staff. A review of salary data shows teacher pay varies widely
$20,000 - $34,999 4 TEACHERS
WCPSS Fulltime Teacher Pay by Category 2013-2014*
38% of all teachers earn between $35,000 and $34,999
$35,000 - $39,999
$40,000 - $44,999
Average Teacher Salary:
$45,000 - $49,999
$45,991
$50,000 - $54,999
32%
of all teachers earn over $50,000
$55,000 - $59,999
$60,000 - $64,999
$70,000 - $94,999
$65,000 - $69,999
176 TEACHERS
=100 TEACHERS 9,753 Total
131
60
168
33
Area Superintendent $123,863
291
Senior Director $100,224
52
Principal $92,267
336
Director $85,546
188
Senior Administrator $73,006
13
Assistant Principal $62,071
Counselor $53,299
9,753
Administrator $61,397
Media Specialist $53,263
167
Technology Facilitator $51,578
56
Teacher $45,991
285
Lead School Secretary $35,053
Clerical Assistant $20,256
2,335
Mechanic $33,042
Teacher Assistant $19,108
Average Salaries and Employees for Selected WCPSS Staff Positions
7
*Data provided by WCPSS
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Polling
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June 2014 NC Capitol Connection
Tillis Leads Hagan in Poll The latest Civitas Institute Poll shows state House Speaker Thom Tillis, the Republican candidate, leading Democratic incumbent Kay Hagan in the race for the U.S. Senate. Tillis leads Hagan 39 percent to 36 percent, with Libertarian candidate Sean Haugh the choice of 8 percent of the 600 registered NC voters polled. When asked their preference without Libertarian Haugh in the lineup, Tillis led 46 to 41 percent. Tillis’ lead over Sen. Hagan could change over the course of what will surely be a tough battle this fall. What Senator Hagan’s camp should find troubling is the 55 percent of voters who say it is time for someone new while only 35 percent say she deserves reelection. Most political observers expect Hagan and the Democrats to try to focus the campaign on state-level issues, hoping that liberal dissatisfaction with the General Assembly can fuel turnout. Republicans are expected to focus the debate on national issues such as Obamacare and foreign policy. In our poll 51 percent of voters said they would be voting based on national issues like Obamacare, federal spending and borrowing and foreign policy while 41 percent said North Carolina-specific issues such as state spending, education and specific state laws and policies would be their top concerns. Much can happen during the campaign and Civitas will be doing the most accurate polling in North Carolina The poll of 600 registered North Carolina voters was conducted May 20-22 and has an error margin of plus/minus 4 percent. Twenty-five percent of the respondents were contacted on cellphones.
If the election for US Senate an
Oct ‘13
Jan ‘14
If the election for US Senate were being held today for whom would you vote between... 39%
36%
Thom Tillis
Kay Hagan
Republican
Democrat
8%
15%
Sean Haugh
Lean/ Undecided
Libertarian
Suppose there were only two candidates ... for whom would you vote between: Thom Tillis, the Republican and Kay Hagan, the Democrat? 46%
Thom Tillis
Republican
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41%
Kay Hagan
Democrat
June 2014 NC Capitol Connection
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To see more Civitas Polls go to nccivitas.org
nd Congress were being held today, would you rather…
50% Elect a Republican who will be a
check and balance to President Obama’s policies and programs.
40% Elect a Democrat who will
support President Obama’s programs and policies.
Mar ‘14
Apr ‘14
May ‘14
10% Don’t Know/Neither/Other
On Election Day in November, what would you say would be your primary motive to vote?
51% Issues National 41% NC Issues
Mar ‘14
Apr ‘14
7% Don’t Know May ‘14
Has Kay Hagan performed her job as US Senator well enough to deserve re-election, or is it time to give someone new a chance to do a better job?
35% Total Deserves Re-election 25% Definitely
11% Probably
55% Total Time for Someone New 44% Definitely
12% Probably
9% Undecided/Don’t Know/More Info Needed nccivitas.org
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June 2014 NC Capitol Connection
Bad Bill of the Week BY brian balfour Do you think your taxes are too high? Would you like a tax break? Well, some NC legislators are happy to give you a big tax break – if you are a big Hollywood film studio. For years, North Carolina politicians have been tugging on the Armani suits of Hollywood execs to offer them targeted tax credits to film in our state. The credits were scheduled to expire at the end of this year, but House Bill 1142 Modify Film/ Historic Rehab Tax Credits would have extended these credits – indefinitely. Meanwhile, Senate Bill 743 would create a $20 million Film and Entertainment Grant Fund to replace the film industry tax credit. That measure passed in the Senate, and as of this writing was awaiting House action. But though the details might change, the underlying problem would remain: Tar Heel taxpayers would be giving special favors to a highly profitable industry. Civitas has written extensively in the past against crony capitalism because it is not only bad economics, but also an unfair practice that puts a greater concentration of power into the hands of the political class. A few points to remember: • Handouts distort economic decisions, causing scarce resources to flow not to their most efficient uses but toward those granted political privilege. • Cost-benefit analyses of film subsidies cannot take into account the opportunity costs involved in film production, that is, the production and investment that are foregone because they have been utilized instead by the film industry in response to the tax credits. • Giving favors to politically favored industries means that everybody else pays
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NC’s Latest Hollywood Flop: Handouts for Film Cronies higher taxes to support a given level of government spending. This creates an
a greater incentive for corrupt activity, including outright bribes.
special breaks for film production is bad policy and are scrapping their tax credit
unfair advantage for the favored industry and depresses economic activity in all other industries. • When politicians signal that they are willing to play favorites, this creates
Moreover, there is plenty of research available showing that taxpayers are net losers when it comes to film incentives. More and more states have been realizing that targeting
schemes, as discussed in a 2011 Tax Foundation report. Finally, NC legislators should learn a lesson from the Michigan city of Allen Park. The city was promised a filming boom by a Hollywood
studio seeking to exploit the state’s generous tax credits. The city went millions into debt to finance a studio, and then the company bailed after making one straightt o - D V D movie. The Hollywood fat cats are back in California, while the city struggles to pay off millions in debt for a big, empty studio. Because it represents cronyism and political privilege, is bad economics, and would have concentrated more power into the hands of the political elite, HB 1142 is one of our 2014 Bad Bills of the Week – and SB 743 is more of the same.
State NAACP leader William Barber (center) led “Moral Monday” rallies that drew lots of media attention during the General Assembly’s Short Session. See p. 10 for more on the protests.
June 2014 NC Capitol Connection
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Lawmakers Take New Tack on Teacher Pay BY bob luebke With teacher pay reforms blocked in the courts, during the ongoing Short Session Gov. Pat McCrory and Senate Republicans pushed differing
ford County judge granted an injunction halting implementation of the law in those counties. Separately, teachers and the North Carolina As-
on teacher pay and have the system be more reflective of local labor markets. Cost estimates for the McCrory plan are about $250
mean wage for the same time period was $42,420 for all occupations in North Carolina. Likewise, the annual mean hourly wage for Edu-
million. The plan would be financed through budget reductions – $50 million reduction to the UNC system – and by not filling various other state positions. The Career Pathways will be financed through a $9 million transfer from the NC Education Lottery. Three weeks after the governor released his teacher pay plan, Senate Republicans released their own plan as part of the Senate budget. The plan promises to raise teacher pay by an average of 11 percent for teachers who choose to relinquish tenure. When all fund-
cation, Training and Library Occupations in North Carolina was $21.78. The annual mean wage for same group was $45,310. In addition, as we write, the House has included a 5 percent pay raise for teachers in its budget. That plan includes no provisions on teacher tenure. The Senate plan would also repeal the current teacher tenure legislation that was challenged in the courts. Instead, teachers who chose not to relinquish tenure could keep tenure protections but would not be eligible for raises. The new plan also
The teacher pay issue has riled the Monday protesters.
plans to address North Carolina’s teacher pay controversies. As of this writing, neither plan is a slam dunk legislatively, and each faces obstacles to passage. Disagreements already exist over the Senate plan and the governor has expressed his opposition to it. The background was last year’s attempt to begin tying salaries more closely to performance in the classroom. The General Assembly passed legislation to provide the top 25 percent of teachers in each district with a $500 pay raise for four years – $2,000 over four years – in exchange for relinquishing tenure rights. But more than 40 of the school districts in the state passed resolutions objecting to the pay plan. Many school districts claimed that far more than 25 percent of their teachers deserved the raises. For example, the AlamanceBurlington Board of Education said that 82 percent of the district’s teachers met or exceeded the state’s Teacher Effectiveness Index in 2012-2013. The Orange County Board of Education said the same figure in that district was 84.6 percent. The Cabarrus County Schools asserted that 92 percent of its teachers met the effectiveness standards. Durham and Guilford counties went further and sued the state. In April, a Guil-
sociation of Educators also went to court. On May 15, Wake County Superior Court Judge Robert Hobgood sided with the plaintiffs. He ruled the plan was unconstitutional and issued a permanent injunction against the law. As the resistance to the law raged, Republican leaders were crafting new proposals. In the first week of May, McCrory unveiled his teacher pay proposal. The plan includes 7 percent raises for younger teachers and 2 percent to 4 percent raises for older teachers. The governor’s plan also restores the pay supplement (10 percent) for teachers with advanced degrees or who are teaching in the subject of their advanced degree. The plan also provides principals and assistant principals with a 2 percent salary increase and other state employees a salary increase of $1,000 including benefits, which translates into about a 2 percent increase. The governor’s plan also calls for creation of Career Pathways, a $9 million project to allow educators to earn raises for locally determined leadership roles or teaching in high-need schools or highsubject areas. The project would be pilottested over the next three years and is scheduled to be implemented statewide in 2018. The Governor’s plan is also intended to give local officials more input
will increase the minimum starting salary for teachers to $33,000. The plan calls for no changes regarding education attainment or certifications and will provide school-based administrators bonuses of $1,000 and permanent fulltime or non-certified central office staff salary and benefit increases of about $618. The price tag on the Senate plan is $468 million. Like the McCrory plan, the Senate plan will be financed through a combination of program cuts and savings from eliminating other positions. These include reducing the number of teacher assistants by nearly half, for a savings of $233 million. Cuts will also be made to the departments of Health and Human Services and Public Safety. If the Senate plan is enacted, proponents say average teacher salary for North Carolina teachers would jump from 47th to 27th place nationally. In the 10-state Southeast region, the Senate plan would cause average teacher salaries in North Carolina to jump from ninth to third place ($51,198) behind Georgia ($52,880) and Louisiana ($51,381). Both plans add value to the importance of putting a highquality teacher in the classroom. The Senate plan provides a substantial pay increase (11 percent) in exchange for teachers giving up teacher tenure (career status). The McCrory plan offers to boost mid-career teachers’ salaries through involvement in a variety of leadership options. Conservatives hope a final pay plan provides teachers with a fair salary, ties pay to performance, and gives local school districts greater influence and decision-making authority on issues of teacher pay. If that framework is developed, then the teacher pay crisis will likely be a thing of the past.
“If the Senate vision is enacted, proponents say, average teacher salary for North Carolina teachers would jump from 47th to 27th place nationally.” ing sources are included, the average teacher salary would increase to over $51,000. To put the issue in perspective, according to the Bureau of Labor Statistics, in 2014 the mean hourly wage for all occupations in North Carolina was $20.39. The annual
would expand the pool of “top teachers” it asks school systems to identify from 25 percent to 35 percent. The Senate plan collapses the current teacher salary schedule to 21 steps. Beginning teachers currently earn $30,800. The Senate plan
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June 2014 NC Capitol Connection
Don’t Like Tax ‘Hikes’? Here Are Real Ones BY brian balfour Progressive protestors, including “Moral Monday” demonstrators, have for roughly the past year voiced their opposition to a supposed state “tax increase” passed last year. Specifically, they gripe that the landmark 2013 North Carolina tax reform – which lowered income tax rates on all income levels – actually results in a tax increase on 80 percent of North Carolinians. Lower-and middle-income households will be especially hard hit, they claim. The “80 percent will pay higher taxes” claim, has been soundly debunked. Washington Post fact-checkers have called the claim “absurd,” factcheck.org bluntly said the claim “is wrong,” while WRAL-TV in Raleigh declared the statement is “unsupported by facts,” and “is simply not right.” Indeed, even the head of the organization that produced the report used as the basis for the 80 percent claim has said, “It’s just a very inaccurate use of the 80 percent number.” So progressives are quick to voice outrage over make-believe tax increases, but how do they feel about actual tax hikes? Between 1991 and 2009, the state sales tax nearly doubled from 3 percent to a high of 5.75 percent. Adding on local sales taxes, most North Carolina families were paying a 7.75 percent sales tax on purchases. Progressives label the sales tax as “regressive” and harmful to low-income households disproportionately. So why no protests in 1991, 2001, 2003, 2005, 2007 or 2009, all years in which the sales tax was increased? And recall it was Democratic Gov. Bev Perdue who wanted to extend the 2009 temporary sales tax increase in 2011, a “regressive” tax that would have cost North Carolinians $820 million a year. Yet chanting protesters were notably absent from the legislature’s hallways that year. The fact of the matter is that progressives have no problem with tax increases – even socalled regressive tax hikes – as evinced by their silence on a long list of tax-raising legislation over the last few decades.
A partial list of significant tax increases enacted from 1985 to 2010 in NC: • Authorized local governments to add another 0.5% to sales tax – 1986 • Increased state gas tax by 2 cents per gallon plus a new 3% sales tax on wholesale price of gas – 1986 • Increased corporate tax rate from 6% to 7% – 1987 • Raised excise tax on liquor from 22.5% to 28% – 1987 • Increase state sales tax rate from 3% to 4% – 1991 • Raise tax on insurance premiums from 1.75% to 1.9% – 1991 • Increased corporate tax rate from 7% to 7.75% and levy an additional surtax from ’91 to ’94 – 1991 • Added a 7.75% personal income tax rate for income above $100,000 – 1991 • Motor fuels tax increased by ½ cent – 1991 • Increased cigarette tax from 2 cents per pack to 5 cents, levies a 2% tax on wholesale price of other tobacco products – 1991 • Imposed a 1% gross receipts tax on movie admissions – 1998 • Increased state sales tax rate from 4% to 4.5% (supposed to expire in 2003) – 2001 • Created an 8.25% personal income tax bracket for highest income households (supposed to expire in 2003) – 2001 • Imposed 5% sales tax on satellite television service – 2001 • Renewed the “temporary” 4.5% state sales tax rate – 2003 • Renewed the “temporary” 8.25% income tax rate – 2003 • Increased tax on telecommunications from 6% to 7% – 2005 • Increased sales tax on liquor from 6% to 7% – 2005 • Increased cigarette tax from 5 cents per pack to 35 cents – 2005 • Extended the 8.25% income tax rate for another 2 years – 2005 • Increased tax on home satellite services from 5% to 7% – 2005 • Renewed (again) the “temporary” 4.5% state sales tax rate – 2005 • Made permanent ¼ penny of the 2001 “temporary” state sales tax increase – 2007 • Increases state sales tax rate from 4.75% to 5.75% (also in 2009 as part of the “Medicaid swap,” 0.5% of the local sales tax was shifted to the state) – 2009 • Changed the state gas tax cap to a floor, ensuring higher gas tax – 2009 • New sales tax on online click-though sales and digital products – 2009 • Increased taxes on beer, wine and liquor – 2009 • Increased tax on cigarettes and tobacco products – 2009 • Created a “temporary” 3% surcharge on tax bill for corporate income taxes – 2009 • Created a “temporary” surcharge beginning at 2% for personal incomes over $60K – 2009
Moral Monday/NAACP Demands Energy Would Cost Taxpayers $10 Billion
CONTINUED FROM page 1
BY brian balfour As more information becomes available about the demands of the “Moral Monday” protestors and their leaders in the state chapter of the NAACP, the price tag for their wish list grows exponentially. Estimates now reach an eyepopping $10 billion a year to pay for the “people’s agenda.” That would mark a whopping 50 percent increase in the state budget. To fund the “Moral Monday” demands would cost every man, woman in child in North Carolina roughly an additional $1,000. That amounts to adding another $4,000 to the tax bill of each family of four. To start with, Civitas tallied a partial list of “Moral Monday” demands that we could quickly
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evaluate and arrived at an immediate budget impact of roughly $3 billion. That included, picking just a few of the more expensive items: • Bringing teacher salaries up to the national average: $1 billion in the first year. • Repealing the 2013 tax reform: $500 million in the first year. • Accepting Medicaid expansion under Obamacare: $3.1 billion over 10 years. • Revoking unemployment insurance reform: $3.6 billion over five years. • Increase funding for worker training and education programs: $378 million/yr Senate President Pro Tem Phil Berger’s office shortly thereaf-
ter released the draft of a budget amendment that included cost estimates for many of the protesters’ demands. The estimates were put together by legislative staff and as such offer insights previously unavailable to Civitas. Months earlier, Berger’s office had sent a letter to state NAACP head William Barber asking for specific policy recommendations. After Barber responded, Berger asked General Assembly staff members to draft a budget amendment that would include many of the points addressed in Barber’s letter. The amendment calculates about $7 billion above the Civitas estimate to taxpayers. The largest item is $6.8 billion to provide funding for health insurance for
all North Carolinians, regardless of immigration status. Included in the 14-point “people’s agenda” laid out by the state NAACP are the demands for “health care for all,” and “NC must provide immigrants with health care.” How do the protestors propose that all their demands be paid for? They never say. Berger’s amendment includes a provision suggesting that to fund just $7 billion of these demands the state would need to increase its corporate income tax from 6 percent to 50.5 percent. Goodbye, job growth. Such an outrageous price tag and devastating economic consequences reveal just how radical and extreme the “Moral Monday” protesters truly are.
The change would cost NC towns and cities an estimated $62 million a year. However, McCrory and legislative leaders have said they will work to find a way to replace those funds. The measure also mandates that, as of July 1, municipalities impose the taxes only on businesses that are actually within their boundaries. However, that measure has a much smaller financial impact, about $6 million, and it’s expected that municipalities will be able to adjust to that change. The bill also added a new excise tax for electronic cigarettes: 5 cents on every milliliter of the liquid used in e-cigarette cartridges. That’s on top of the regular state sales tax.
June 2014 NC Capitol Connection
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Unemployment Update
Unemployment Continues Downward Turn BY SUSAN MYRICK The North Carolina Division of Employment Security announced the seasonally adjusted unemployment rate was 6.2 percent in April. The rate is down 0.1 percentage point from March’s revised rate of 6.3 percent and 2.2 percentage points lower when compared with the same period last year. The number of North Carolinians employed increased in April by 14,104, and compared to the same time last year the number had increased by 69,372. The number of people unemployed in April fell by 4,193. North Carolina’s not-seasonally adjusted unemployment rate was at 6.0 percent and rates decreased in 99 out of 100 counties. Only Greene County reported an increase: 0.1 of a percentagepoint. The rates in 35 counties were at or below the state’s 6.0 percent rate. Scotland County reported the highest unemployment rate at 11.6 percent, while Orange had the lowest at 4.0 percent. Of the state’s 14 metro areas, all saw unemployment rate decreases. Rocky Mount had the state’s highest metro area rate at 9.1 percent (falling 0.3 of a percentage point over the month) and the Asheville area had the lowest rate at 4.5 percent. North Carolina’s rate (6.2 percent) falls close to the middle range of our closest neighbors: Virginia (4.9 percent), South Carolina (5.3 percent), Tennessee (6.3 percent) and Georgia (7.0 percent).
Cherokee 7.80
Clay 5.90
10.0%
9.5%
Unemployment Reform Implemented in NC
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
Jan-‐13 Feb-‐13 Mar-‐13 Apr-‐13 May-‐13 Jun-‐13 Jul-‐13 Aug-‐13 Sep-‐13 Oct-‐13 Nov-‐13 Dec-‐13 Jan-‐14 Feb-‐14 Mar-‐14 Apr-‐14 United States
North Carolina
Camden Currituck Gates Northampton 4.40 5.90 Warren 6.30 Person Vance 8.20 8.30 Hertford 6.30 Granville 8.70 Perquimans Halifax 7.20 Watauga Wilkes 6.30 7.00 Pasquotank 9.00 5.60 6.80 Yadkin Orange Chowan 8.30 Forsyth 4.90 Franklin 4.00 Guilford Mitchell Avery 7.40 Bertie 5.80 Alamance 5.70 Durham 6.30 7.20 7.30 8.80 5.80 Caldwell Nash 4.70 Alexander Davie Madison Yancey 7.10 Tyrrell 8.50 Edgecombe 6.60 5.30 5.40 Washington 7.20 Martin 10.20 4.60 Iredell Davidson 7.00 6.90 Wake Burke 5.80 6.30 Randolph Wilson 4.70 Chatham 6.30 Catawba Buncombe McDowell Rowan 5.80 9.00 4.20 Haywood 6.60 6.50 Pitt 4.40 6.10 5.00 6.00 Swain Johnston Lincoln Greene Beaufort Lee Hyde 8.50 5.30 Rutherford 5.90 7.40 7.20 Cabarrus Montgomery 8.00 7.30 Henderson Harnett Wayne 8.00 Cleveland Jackson 5.40 6.40 Polk Stanly 4.60 Gaston 6.90 6.10 6.40 5.20 Moore 4.20 5.50 Transylvania Lenoir 6.00 Mecklenburg Macon Craven 5.70 6.10 7.00 6.20 6.50 7.10 Pamlico 6.40 Richmond Jones Cumberland Union Sampson 8.00 7.20 Anson 7.10 Hoke Duplin 5.30 5.80 6.90 6.40 6.60 Scotland Carteret 11.60 5.60 Onslow 4.0 - 5.0 6.00 Bladen Robeson Pender 8.70 8.80 6.80 5.1 - 6.5 Ashe 7.40
Graham 10.60
Alleghany 6.70
North Carolina Unemployment (2013 -‐ 2014)
Surry 6.30
Stokes 5.10
Rockingham 7.30
Caswell 6.40
Dare 7.50
N.C. Counties
April 2014 Unemployment
6.6 - 8.0
Columbus 7.90
8.2 - 9.5
New Hanover 5.80 Brunswick 6.30
10.2 - 11.6
2008-2014 Unemployment Rate Comparison County
10-08 1-13 4-14
County
10-08 1-13 4-14
County
10-08 1-13 4-14
County
10-08 1-13 4-14
Alamance
7.1
10
5.8
Cumberland
6.8
11
7.1
Johnston
6.1
8.9
5.3
Randolph
6.7
11.1
5.8
Alexander
7.9
10.2
5.3
Currituck
3.6
10.5
4.4
Jones
6.8
10.7
7.2
Richmond
9.5
13.6
8
Alleghany
6.6
12.6
6.7
Dare
4.2
20.1
7.5
Lee
8.2
12.7
8
Robeson
8.1
13.9
8.8
Anson
9.5
12.8
6.9
Davidson
7.4
10.7
6.3
Lenoir
7.8
10.8
7
Rockingham
7.9
11.7
7.3
Ashe
6.3
13.8
7.4
Davie
6.9
9.3
5.4
Lincoln
7.2
10.8
5.9
Rowan
7.2
10.3
6.1
Avery
5.6
13.7
7.3
Duplin
5.9
10.6
6.6
Macon
5.3
13.3
6.5
Rutherford
8.7
14.7
8
Beaufort
7.3
11.8
7.2
Durham
5.4
7.9
4.7
Madison
5.7
10.1
4.6
Sampson
5.4
9
5.8
Bertie
7.5
13.5
8.8
Edgecombe
11.4
16.6
10.2
Martin
6.9
12
6.9
Scotland
11.7
17.8
11.6
Bladen
8.1
13.6
8.7
Forsyth
6.3
9.4
5.8
Mcdowell
8.1
11.9
6.6
Stanly
7
10.1
5.5
Brunswick
6.9
12.2
6.3
Franklin
6.7
9.6
5.7
Mecklenburg
6.6
9.7
6.2
Stokes
6.1
9
5.1
Buncombe
5.1
8.1
4.4
Gaston
7.7
11.1
6
Mitchell
7.7
15.5
7.2
Surry
8.3
11.1
6.3
Burke
8.6
11.6
6.3
Gates
5.2
8.3
6.3
Montgomery
8.3
11.1
6.4
Swain
5.5
19
8.5
Cabarrus
6.4
9.4
5.4
Graham
8.2
20.4
10.6
Moore
6.4
10.1
5.7
Transylvania
5
11.5
6.1
Caldwell
8.3
12
7.1
Granville
7
10.3
6.3
Nash
8.6
12.7
8.5
Tyrrell
6
13
7.2
Camden
5.4
9.4
5.9
Greene
7
9.8
7.4
New Hanover
5.4
10.4
5.8
Union
6
8.6
5.3
Carteret
5
10.6
5.6
Guilford
6.7
10.3
6.3
Northampton
7.7
12.1
8.3
Vance
9.8
13.8
8.7
Caswell
8.2
10.4
6.4
Halifax
9.7
14.7
9
Onslow
5.8
9.6
6
Wake
5
7.8
4.7
Catawba
7.9
11.6
6.5
Harnett
7.1
11.5
6.9
Orange
4.2
6.6
4
Warren
9.7
12.9
8.2
Chatham
5.5
7.5
4.2
Haywood
5.7
10.2
5
Pamlico
5.7
11.2
6.4
Washington
7.2
13.5
7
Cherokee
8.7
14.1
7.8
Henderson
5.1
7.9
4.6
Pasquotank
6.4
12.4
8.3
Watauga
4.1
9.5
5.6
Chowan
8.5
11.3
7.4
Hertford
6.6
11.5
7.2
Pender
6.4
11.5
6.8
Wayne
6.3
9.8
6.1
6
10.6
5.9
Hoke
6.3
9.7
6.4
Perquimans
6.7
11.1
7
Wilkes
8.2
11.7
6.8
Cleveland
8.5
11.3
6.4
Hyde
4.6
15.7
7.3
Person
7.3
11.1
6.3
Wilson
7.9
13
9
Columbus
8.1
13.8
7.9
Iredell
6.5
10.4
5.8
Pitt
7
9.9
6
Yadkin
6.1
10.1
4.9
Craven
6.2
10.8
7.1
Jackson
4.3
11.3
5.2
Polk
5
8.2
4.2
Yancey
7.2
13.8
6.6
Clay
*Data is from the North Carolina Department of Commerce Labor and Analysis Division
nccivitas.org
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June 2014 NC Capitol Connection
Scandal BY bob luebke What’s going on with the North Carolina Education Lottery? That’s the question that’s on the minds of many after reports surfaced about questionable expansions in the lottery budget and another source claimed there is a $60 million lottery “reserve fund.” It’s no secret Gov. Pat McCrory wants to use lottery money to equip schools with more technology. The governor has even said that money could come from limiting “annoying” advertising and cutting the Lottery’s “bloated” administrative costs. Last week Civitas and two other sources obtained copies of the proposed lottery budget budget several days before Lottery commissioners were scheduled to formally approve the 2014-15 budget. What did we find? A budget that included significant expansions. The Lottery’s proposed budget included a healthy 6.08 percent increase for “EPA Regular Salaries” and a whopping 105 percent increase in “Reserves for Salary Increases.” The budget for general advertising increased a hefty 12.9 percent. The Lottery’s budget for “Other Services” went up 19 percent, while the budget for “Other Administrative Expenses” was up 189 percent, from $124,000 to $358,000. Those figures were published on at least three conservative news sites days before Lottery commissioners were to take a final vote on the 2015 budget. Did the publicity make any difference? That’s a good question. A number of the figures
NC Lottery: Spending Money Doesn’t Wash Away Questions
changed. The budget increase for “Salaries and Fringe Benefits” was reduced from 6.26 percent to 2.95 percent; as was the increase for regular salaries reduced from 6.08 percent to 3.24 percent. With regard to other budget categories – such as advertising and marketing – the final figures remained unchanged from the original budget. These categories increase by 12.9 percent and 3.35 percent respectively. It should be noted that Lottery commissioners also approved a hefty budget increase (17.5 percent; trimmed back from
19 percent) for “Other Services.” Included in this category are such things as legal services, travel, employee training and postage and mailing. Also included in the expansions is a 141 percent increase for the cryptic category of “Other Administrative Expenses.” In addition to some hefty budget increases, one source alleged the existence of a $60 million Lottery reserve fund – an allegation that would certainly get the quick attention of lawmakers. Asked to comment on the claim, Van Denton, Director of Communication for
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the NC Education Lottery, said in a written statement: “No $60 million reserve fund exists within the finances of the N.C Lottery.” Seven years after its opening, basic questions about how the lottery is administered and how money is distributed continue to dog the agency. The dissatisfaction has found its way into much legislation in recent years. There have been bills to designate funds for digital learning, restore lottery funds for school construction and to provide additional money for scholarships. There have been bills to tell lottery players the odds of winning, to prohibit lottery advertising at high school and collegiate sporting events, and to terminate the current appointments of Lottery commissioners, as well as bills to eliminate the word “education” from the lottery’s title. All this is to suggest that while the Lottery is here and
has pumped $478 million into the public schools last year, dissatisfaction remains over how it is run. It’s true the sum the lottery has transferred to public education has increased every year of the last seven years. However, the percentage of all revenue that has actually been transferred to the public schools has steadily declined from 35 percent in 2007 to 26 percent in 2014. NC General Statutes designate that lottery funds must be used for K-3 teacher pay (45.8%), fund pre-K programs (15.7%), school construction (20.8%), needbased college scholarships (6.3%), UNC need-based financial aid (2.2%), a UNC need-based financial aid reserve (6.8%) and digital learning (2.4%). Lottery revenue can be used to help meet costs in these areas. However, the Lottery exacts its own cost. It serves as a regressive tax, taking money from citizens least able to provide for themselves. North Carolinians are still not comfortable with the Lottery. Many believe the lottery is the sanctioned preying of one class upon another that is morally justified by designating a percentage of the money for education. Encouraging gambling and getrich schemes is never a good thing – no matter how much money is transferred to the public schools.
Scandal is a regular column in Civitas Capitol Connection that will explore public corruption in NC Government. Have a local corruption story? Email corruption@nccivitas.org or call 919.834.2099.