Higher taxes in NC's future?

March 10, 2009 3:40:30 PM PDT
Governor Bev Perdue says big spending cuts are coming, but she has not ruled out higher taxes.Perdue has so far spoken about spending cuts and more spending for schools, but she has not made commitments about taxes.

And experts from different sides say the budget hole is so big, that state leaders will likely look for ways to raise more money.

"The Governor laid out several goals cutting spending, keeping things together, and raising spending on education," said John Hood with John Locke Foundation. "And it's hard to see how she does that."

Some who track state budgets; say filling a $3 to $4 billion budget hole without raising taxes would be very tough.

"It is likely that at some point in the near future, law-makers are going to need to have the discussion on tax increases as well," said Elaine Mejia of the Left of Center NC Budget and Tax Center.

Mejia says the state should broaden the sales tax to include not just goods sold, but services too. Gardening and sports tickets are not taxed, but could be.

"Services that are taxed in at least 25 other states, you would be talking about taxing another 46 services and you would be raising some $500 million a year," Mejia said.

Even hood says he sees higher taxes coming for cigarettes and alcohol.

"Tax increases against smokers, against drinkers, against other people the state feels it can pick on and get away with it," Hood said.

Hikes in so-called sin taxes are often easiest to pass, but most agree they won't raise much money for now.

"I don't want to fight the battle twice," Perdue said. "So I am going to save the whole unveiling until Tuesday morning."

Perdue will release her budget proposal for the public and the legislature next Tuesday. But she has not offered a hint about the state's growing unemployment rate.

However, Perdue did say Tuesday morning, "you're going to see that unemployment number tomorrow and it's not good for our state."


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