Sen. Berger’s Greetings from Raleigh


I hope everyone has enjoyed the holiday season.

Being a grandparent has rekindled the excitement of the Christmas season for me. I remember when my parents bought my son his first electric car. Annie and I experienced the same joy as we gave our granddaughter Elizabeth a pink electric car this Christmas.

There are going to be many changes here in Raleigh this year. For the first time since Reconstruction, Republicans hold a majority of the seats in the senate. I will lose my co-chairmanship of the Health and Human Services Subcommittee on Appropriations. I have a new legislative assistant, Anna Meadows. I have known Anna since we both attended UNC-Chapel Hill three decades ago. She worked for six years in the student financial aid office at UNC, then returned to school to earn a bachelor’s degree in journalism and mass communication at the university. During a 10-year period in Franklin County she served as a news reporter and editor of The Franklin Times. Anna will work with me to provide services to constituents who are experiencing problems with the government and to provide timely information to you on all of the developments in Raleigh. She can be reached at 919-715-8368 or by emailing bergerdla@ncleg.net.

The 2011 Budget: Will There Be Devastating Cuts to Public Education?

During the current two-year budget cycle, the state’s budget was balanced with infusion of approximately $1.7 billion in federal stimulus money and a Democratic-supported tax increase, principally through a temporary sales tax increase of 1 cent that generated approximately $1 billion. For the upcoming biennial budget, it is doubtful that there will be any federal stimulus and the temporary sales tax increase is set to expire this year. An additional dilemma in balancing the upcoming budget is a projected $500 million increase in the cost of healthcare coverage for current and retired state employees.

The new Republican leadership has announced that the $1 billion tax increase will be allowed to expire. The Republican leadership has also announced that they will not support any tax increase of any kind. Gov. Perdue also supports this position. She recently stated, “At this point in time, I don’t know how to spell tax increase. It is off my plate now.”

http://www.wral.com/news/local/politics/story/8789753/

Where will the governor and the Republicans cut to offset the loss of $2.7 billion in revenue if the 2009 tax increase is allowed to expire and the federal government fails to provide another round of stimulus to the states? One proposal being discussed is cutting middle school budgets across the state by increasing class size. According to the Winston-Salem Journal, Gov. Perdue is apparently leaning toward supporting this idea.

http://www2.journalnow.com/news/2010/dec/23/WSMAIN01-perdue-on-the-issues-ar-639606/

I recently had the pleasure to talk with my 9th grade creative writing teacher, Mary Susan Heath, who taught me at Smithfield Junior High. She introduced me to the great works of literature: Huckleberry Finn, Romeo and Juliet, and the poetry of Walt Whitman and Emily Dickinson. She is now completing her 36th year of teaching at Eastern Wayne Middle School. I wrote her to explore her evaluation of increasing class size by cutting teacher positions. She responded:

“…(L) arger classes in middle schools would be disastrous, and I am not using hyperbole. Yes, with larger classes, those personal connections that can make or break [a young student] are harder to make. ….I predict that if we increase class size, particularly at the middle school level, the dropout rate will soar. That’s definitely not what North Carolina needs.”

There are alternatives to increasing class sizes in order to balance the state’s budget.

The Alternative: Tax Reform

During the Great Depression, North Carolina took the bold step of implementing a sales tax on goods, as we had moved from an economy based upon agriculture to an economy based largely on the manufacture of goods. Our state’s economy has moved away from dominance by manufacturing and it is now predicated largely on the buying and selling of services. Our antiquated tax system unfairly and disproportionately taxes goods to generate revenue to pay for public services rather than balance taxes across both manufacturing and service sectors.

We have to face the fact that we have a shrinking tax base when it comes to taxing merchandise sales. Even when the economy was doing well, we repeatedly experienced a shortfall and have turned to raising the sales tax on goods. A senate proposal in 2009 to put a tax on more services would have lowered the sales tax rate, lowered the corporate tax rate and increased revenues to help protect the classroom, and to a lesser extent, other services. That proposal failed, however, in favor of raising the sales tax by 1 cent.

Another reason I like the idea of lowering the sales tax by expanding the range of taxes to include services is because it is fairer to the middle class, working poor and those on fixed incomes. A middle class family of four earning $400 a week uses up a disproportionate amount of its income on the sales tax that covers food, clothing, cars, books, etc. It can mean less disposable income for extras or less income for the necessities. When wealthier families pay a sales tax on their purchases, it affects them a lot less because it’s really coming out of a larger disposable income pool.

To illustrate further why a tax on more services is fairer, the middle class family mentioned above may buy a lawn mower and pay sales tax on it, whereas a family of more means can opt to pay a service to mow their lawn and not pay any sales tax. Examples of services in North Carolina that are currently taxed include dry cleaning and laundry services, electricity, car and video rentals, and cable service.

Our K-12 educational system, community college system and university system cannot maintain the quality that we expect and demand if we do not have a stable source of revenue. Many states have already made the transition to taxing some services. North Carolina only taxes a very few services in comparison to most states. If we expanded the tax base to include more services, we could lower the sales tax across the board and have additional revenue to pay for enough teachers to keep classroom size at manageable levels.

The Jan. 19 Forum on Tax Reform and Charter Schools

On Wednesday, Jan. 19, our annual district forum will address the issue of Tax Reform at the Vance-Granville Community College Civic Center in Henderson. The keynote speaker will be Richard Vinroot, the former Mayor of Charlotte and the 2000 Republican nominee for governor. Mr. Vinroot advocates tax reform as a critical step to preserve the future of North Carolina. After he speaks, there will be a panel discussion that will include speakers who both support and oppose such a proposal. Mr. Vinroot also serves as an attorney for the charter schools across the state and will talk about that issue as well.

The forum starts at 10 a.m. and will end around 2:15 p.m. Lunch will be provided.

District 7 Public Forum

Tax Reform and Charter Schools: What does the future hold?

Agenda

10:00-10:10 AM Welcome and Introductions

Sen. Doug Berger
Rep.-elect Glen Bradley
Rep. Michael H. Wray

10:10-10:40 AM Opening Speaker

Richard Vinroot, Attorney

10:40- 11:45 AM Charter School Panel Discussion

Darrell Allison, President
Parents for Educational Freedom

Bryan Hassel, Co-Director
Public Impact

Richard Vinroot, Attorney
Robinson Bradshaw & Hinson, P.A

Leanne Winner, Director of Governmental Relations
NC School Boards Association

11:45- 12:10 PM 25 Minute Break *(Lunch will be provided)

12:10- 2:00 PM Tax Reform Panel Discussion

Sen. Daniel Clodfelter, NC Senator
District 37

Roland Stephen, Associate Professor and Assistant Director
Research and Policy at the Institute for Emerging Issues
NC State University

Roy Cordato,Vice President for Research
John Locke Foundation

2:00- 2:15 PM Closing remarks

If you plan to attend the forum, please RSVP one of the following offices by Jan. 12:

Sen. Berger, (919) 715-8363 or email

Rep. Wray, (919) 733-5662 or email

For any additional questions or concerns about the District Forum or anything else, please Dougb@ncleg.net or call (919) 715-8363.

As always, I look forward to your thoughts and comments on the issues discussed in the newsletter. Please feel free to respond to any issue whether it was covered in the newsletter or not. It is an honor to serve as your state senator, and I will do everything in my power to live up to that honor.

Sincerely,

Signature

Doug Berger