Haley Budget Priorities: Savings and Tax Cuts but Not Schools

Although state funding for our local schools is $600 million short of what our funding formula (the Education Finance Act) calls for and state economists project nearly a billion dollars in available additional revenue , Governor Nikki Haley’s first Executive Budget includes no increase in EFA dollars for local schools.  Haley directs an additional $10 million to the 1 % of public school students in the Public Charter School District.

Like a homeowner who puts money aside for a rainy day while it’s raining and the roof still needs replacing, Haley proposes moving $219 million of “excess” revenues into reserves on top of the $98 million transferred to the General Reserve Fund.

Haley also “returns to the taxpayers” (well, some of the taxpayers) $78 million in an income tax cut achieved by collapsing the middle tax brackets into one 3.75 % bracket.  The top 45 % of income tax filers (with incomes over $32,700 for a family of four taking the standard deduction) could buy an additional fast food lunch with the $7 per month cut.  The majority of us don’t even get a lunch.  This cut will continue to reduce revenues through the years.

Haley also proposes to phase out the corporate income tax, costing another $62 million in this budget and much more in future years.  Cutting corporate income taxes has a very small effect on economic development—a much smaller effect than not investing in our workforce.   A fuller discussion is here.

This budget includes no pay raises for state employees, who have already gone three years with no increase. The plan increases state contributions to health coverage and retirement.  A 1 % state employee pay increase would only take an additional $14 million in General Fund dollars.

The Haley budget does some good things, like paying for the health care for 80,000 children already eligible for coverage and attempting to keep up with enrollment growth and health care inflation. The proposal puts more money into a mental health system that had suffered deeper state cuts than any in the nation.

Governor Haley keep saying that her goal is economic development.  This budget undermines investments in a trained, educated and healthy workforce.  Without that employers won’t come here regardless of what tax breaks you give them. That starts with funding our schools and for Governor Haley, the only schools with priority are charter schools.

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