Most of a temporary increase to North Carolina’s sales tax rate would remain in place, state parks and welcome centers would close two days a week and about 10,000 government jobs would be eliminated under two-year spending plan outlined Thursday by Gov. Beverly Perdue.
With fiscal analysts projecting a $2.4 billion deficit for the fiscal year that starts in July, Perdue’s $19.9 billion budget for the 2011-12 year is only about $1 billion less than the budget she proposed two years ago.
The governor previously said she would allow temporary taxes approved two years ago by lawmakers to expire as scheduled this year, but her budget plan rolls back the penny increase to the state sales tax by only a quarter cent. That means the state tax rate would be 5.5 percent – down from the 5.75 percent now collected but higher than the 4.75 percent that would be collected if the tax were to expire.
The surcharge on income taxes for upper-bracket earners will expire as scheduled under Perdue’s budget.
As promised Monday in her State of the State address, Perdue also wants to cut the state corporate income tax rate from 6.9 percent – among the highest in the Southeast – to 4.9 percent – among the lowest in the nation.
To save money, Perdue proposed consolidating 14 state agencies into eight, eliminating many back-office functions she says are redundant. Altogether, her budget calls for eliminating 10,000 state jobs, but State Budget Director Charlie Perusse said only about 3,000 are now filled.
The governor said her spending plan protects every state-funded teaching position in North Carolina, but the budget also would eliminate about 4,000 clerical, custodial, transportation and administrative jobs in public schools. She also wants to cut funding for textbooks by about one-third.
Perdue said she expects more than 1,000 state workers will accept an early buyout provision included in her budget. The plan calls for giving those eligible for retirement an extra $10,000 payout, while younger workers who would retire with reduced benefits would get a $20,000 payout.
Other spending cuts include closing the nine welcome centers at North Carolina’s borders on Tuesdays and Wednesdays, and state parks also will close two days each week. The state Department of Transportation and Department of Commerce will begin privatizing the welcome centers next year, according to the budget proposal.
State lawmakers last week passed legislation that would hold money back from several economic development funds this year. Although Perdue has spoken out against the move, she includes taking $7 million from the Job Development Investment Grant program to help balance the budget.
Leaders of the Republican majority in General Assembly will examine Perdue’s plan as they create their own budget.
Senate President Pro Tempore Phil Berger quickly issued a statement saying Perdue was breaking her promise to allow the temporary sales tax to expire.
“Instead of making tough choices to tighten the state’s belt, Gov. Perdue is balancing the budget on the backs of North Carolina taxpayers and local governments,” Berger said. “She is breaking her promise to end the taxes she raised, she is underfunding our retirement system and she is saddling local governments with hundreds of millions in additional expenses. This is not how to get North Carolina back on track.”
Republican legislative leaders have said their budget would focus on cutting spending, limiting government power and supporting the private sector. They plan to deliver a budget to Perdue’s desk before July 1, when the new fiscal year starts.
Reporter: Laura Leslie
Web Editor: Matthew Burns
Posted: 6:30 a.m. today
Updated: 18 minutes ago
