The Week in Public Finance: Teacher Protests and Strikes Are Winning Historic Tax Hikes

Oklahoma is now the second state to reverse course on tax cuts in favor of boosting teacher pay. Will Arizona be next?
by | March 30, 2018
Thousands of teachers rally at the state Capitol in Charleston, W.Va., in late February. They went on strike over pay and benefits. (AP/John Raby)

Oklahoma this week joined a growing number of states in giving their teachers long-overdue pay raises. The national movement, prompted by teacher strikes and protests throughout the country, may represent a turning tide in places that have heavily cut public education dollars.

On Wednesday, the Oklahoma legislature passed a historic tax increase -- the state’s first in 28 years -- to give teachers their first salary boost in more than a decade. The $450 million tax hike required a three-quarters majority, a barrier that has typically been unsurmountable in deeply conservative Oklahoma.

“That’s something we never thought we’d see,” says Shawn Hime, executive director of the Oklahoma School Board Association (OSBA).

The final legislation, which comes after years of failed attempts to increase education funding, will raise teacher salaries by an average of $6,100 and include $50 million in additional funding for operations and instructional material. Gov. Mary Fallin has said she will sign it.

Oklahoma is one of seven states that have not only made some of the nation’s deepest cuts to public education, but have also done so while enacting major tax cuts. Among the seven, Arizona and West Virginia have also seen massive protests regarding low teacher pay. West Virginia raised teacher pay after a nine-day teacher strike in late February, but did not raise tax rates to do so. All three states that have seen protests also rank among the bottom five states for teacher salaries.

Oklahoma’s action follows a similar move by Kansas last year to reverse course on those tax cuts. The reversals, says the Center on Budget and Policy Priorities’ Nick Johnson, indicate a new willingness in some places to start questioning a “tax cut orthodoxy” that has gripped many states since the Tea Party movement came to power in 2010.

“You have legislators -- Republican legislators being most notable among them -- willing to say openly that the ‘tax cuts at all costs’ strategy is starting to have really visible, negative implications that they’re not comfortable with," he says.

The legislation in Oklahoma will likely stave off a planned teacher strike next week, although teachers and students still plan to rally in front of the state Capitol on Monday. Classes are expected to resume on Tuesday, according to the school board association.

Despite the historic vote, places that have cut education as deeply as Oklahoma still have a lot of ground to make up. The funding increase will cut the $17 per-pupil spending gap between Oklahoma and its neighboring states by half. “Our goal moving forward starting next year,” Hime says, “is to create a long-term plan to have increases annually so we don’t look up 10 years from now and end up in the same place we are today.”

Meanwhile in Arizona, teachers are asking for a 20 percent pay raise and no new tax cuts until per-pupil funding reaches the national average, which is currently about $11,400. Arizona’s funding is one-third below that amount. The state has also dropped school funding by $1 billion since 2008, accounting for inflation.

Mike Griffith, a school finance expert with the Education Commission of the States, says stagnant teacher pay, as well as cuts to retirement and health benefits since the recession, has been an issue for years. It's caused teacher shortages, particularly in the middle of the country. “It used to be you had pretty good benefits, but not great pay,” he says. “Now what we’re seeing is, your benefit package isn’t great and your pay isn’t great.”

 

In other public finance news this week:

Hartford Gets a Bailout

Hartford this week finalized a deal in which Connecticut will pay off the struggling capital city’s $550 million in general obligation debt over the next 20 years. In exchange, Hartford’s finances were placed under state oversight.

Republicans in the state legislature are unhappy with the deal and argue that Connecticut is simply bailing out the city. They're threatening to cut other funding.

Meanwhile, Mayor Luke Bronin issued a bristling response, saying the city had done its part by cutting its budget and winning labor concessions after initially negotiating a deal with the state last fall. “If Republican leaders regret the long-term partnership they embraced last fall,” Bronin said, “they should have the courage to call for our capital city to file bankruptcy, because that's the only responsible long-term alternative to the partnership they supported last fall.”

 

Can New Jersey Compete With New York’s Film Tax Credits?

New Jersey lawmakers want to bring back the state’s controversial film tax credit program, which was suspended by the previous administration during the recession. Proponents of the program, such as Emmy Award-winning director Gary Donatelli, say New York filmmakers would quickly hop across the river if New Jersey offered tax credits. In addition, he told NorthJersey.com that finding room to film in New York is becoming more and more difficult.

But billing the credits as a program that can compete with the film behemoth that is New York is a hard sell. The New Jersey legislation would create $75 million in tax credits for films and $10 million for digital media. That’s just a slice of the $420 million program in New York state.

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