Yesterday, Governor Bev Perdue introduced her budget proposal for the new fiscal year. It is a $19.9 billion budget that includes spending cuts along with the extension of a “temporary” sales tax increase. While Republican lawmakers applauded certain parts of the budget proposal, they are decisively against any effort to retain any part of a sales tax increase.
In the summer of 2009, Governor Perdue asked for and received a “temporary” 1-cent increase in the state sales tax. When asked why anyone should trust that the sales tax increase would be temporary, Perdue responded by saying, “Because I’m the governor.”
Now, less than two years later, Perdue is proposing a budget that extends three quarters (0.75 cent) of the 1-cent sales tax increase in an effort to generate revenue for the government. Republicans lawmakers, many of whom campaigned against tax increases, are not happy with the proposal.
Perdue also advocated a two percent cut in North Carolina’s corporate tax rate, which would bring the rate down to 4.9 percent. This would be a good move because lowering the corporate tax rate will create a better business environment and help to make North Carolina more competitive. Republican lawmakers, many of whom have spent years advocating for lower taxes, applauded the idea.
While Perdue’s budget doesn’t decrease any funding for classrooms and teachers, it does call for the government to cut funds for non-instructional services (such as janitors) within the public school system. Speaker of the House Thom Tillis (R-Mecklenburg) expressed concern over such a move, asserting that it would be unfair to shift the burden to local governments because they would be forced to either raise taxes or cut services.
Perdue’s budget also calls for the elimination of 10,000 state government positions. As many as 3,000 of those positions may currently be filled, making layoffs a near certainty.
Now that Perdue has released her budget ideas, Republican lawmakers in the GOP-controlled House and Senate will move forward with writing their own tax and spending plans. Once finished, these plans will be sent to Governor Perdue, who wields veto power over whatever the General Assembly may send her. This means that there is plenty of debate that will take place before a final budget goes into effect.