Gov. Beverly Perdue rolled out a budget plan Thursday that seeks to close a $2.4 billion budget gap by cutting 10,000 employee positions, consolidating agencies and programs and extending a temporary sales tax. Perdue said her $19.9 billion spending plan would make North Carolina more efficient while protecting the jobs of all teachers and teacher assistants currently funded by the state. Other public employees, however, wouldn’t be as protected. As many as 3,000 of the positions designated for elimination are currently filled, Perdue’s budget office said. There are currently about 266,000 state-funded positions. The proposal for the year starting July 1 tracks a previously announced plan to narrow 14 agencies and departments into eight, while cutting or eliminating 139 additional programs. “I don’t sleep well at night, worried about (workers), but at the end of the day, I do know, quite frankly as the governor, that this is the right decision as we move forward with a leaner state government,” Perdue said at a news conference.
GOP legislative leaders — newly in charge of the General Assembly and forming their own spending plan – acknowledged that there were positive steps in the Democrat’s proposal, which which spends less than the current budget year when $1.6 in federal stimulus funds are added. However, they said it doesn’t cut far enough and breaks a promise by keeping intact through mid-2013 three-quarters of a penny of the one-cent sales tax set to expire June 30. While the measure would lower the base tax most consumers currently pay from 7.75 percent to 7.5 percent, and still generate $827 million next year, the change is still a tax increase, said Senate leader Phil Berger, R-Rockingham, who had pledged with other Republicans to let the one-cent sales tax expire. “The people of North Carolina in November sent a strong message, and that message was balance the budget and don’t raise taxes. The governor sent a message back to the people today: ‘I’m balancing the budget by raising your taxes,'” Berger said. Perdue defended the sales tax, saying it helped her avoid eliminating funds for an additional combined 12,500 teachers and teacher assistants.
The proposal didn’t contain an effort to revive the video poker industry through heavy regulation. Perdue earlier had sounded intrigued by the idea, which could have generated several hundred million dollars annually. “I didn’t want the next six months, quite frankly when so much is at stake for North Carolina … to be distracted by this philosophical and moral debate over gambling and other video poker and the lottery,” she said. The two-year budget would place cuts of 7 percent to 15 percent on most state programs compared to last year’s recurring funding levels, while the public schools and higher education would see 4 to 6 percent reductions. State employees and teachers would get no pay raises for the third year in a row and could receive up to $20,000 in early retirement bonuses. Some workers would be required to pay a monthly premium for their own health insurance for the first time. As previously announced, Perdue said she wants the Legislature to reduce the corporate income tax rate from 6.9 percent to 4.9 percent. She also wants to provide an unemployment tax credit for 135,000 small businesses, spend $75 million on improvements to university and government buildings and set aside $150 million for the state’s rainy-day reserve fund.(Gary D. Robertson, THE ASSOCIATED PRESS, 2/17/11).
