Governor Perdue releases budget proposal

Bound copies of Governor Beverly Perdue's budget were distributed to reporters Thursday (Jon Camp)

February 17, 2011 8:06:38 PM PST
Gov. Beverly Perdue released her plan to close the gaping hole in North Carolina's budget Thursday morning.

Click here to read the entire budget proposal on the governor's website.

The $19.9 billion spending plan 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. If Perdue's bill became law, school bus replacement would shift to local districts and all highway welcome centers and most state parks would be closed two days a week.

While her two-year budget proposal to the Legislature would pay for all teachers and teacher assistants currently funded by the state, other public employees 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.

"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 leaders newly in charge of the General Assembly and forming their own spending plan said there were positive steps in the incumbent Democrat's proposal which spends less than the current budget year when $1.6 in federal stimulus funds are added. But 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. Democrats in charge of the Legislature in 2009 and Perdue agreed to the penny sales-tax increase to help close shortfalls during the Great Recession.

"North Carolina, as we speak, has 5,000-plus K-12 students. Somebody has to pay for those students," Perdue told reporters.

She also took heat from local government leaders who said her budget would reduce public education funding by $350 million, shifting more responsibility to the districts and the counties.

Funding for clerical and custodial positions would be reduced by 15 percent, or 1,700 positions, and for school bus transportation by 10 percent, or 1,900 positions. Local governments also would be required to replace their own school buses. County commissioners are worried the changes could lead to local property tax increases.

"We hear 'we are not going to touch the classroom,"' said Joe White, a Charlotte-Mecklenburg Board of Education member and president of the North Carolina School Boards Association.

"Unfortunately, those of us who are in the (education) business know that when you cut so many people that support the classroom ... you have literally had a great impact on the classroom."

Perdue said it was time to reconsider the delineation of responsibilities between state and local governments on school funding. House Speaker Thom Tillis, R-Mecklenburg, said he was concerned about putting that kind of burden on counties all at once.

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 not pay raises for the third year in a row and give up to $20,000 early retirement bonuses. Some workers would be required to pay a monthly premium for their own health insurance for the first time.

"The governor has outlined a budget plan that will throw North Carolina into a race to the bottom," said Dana Cope, executive of the State Employees Association of North Carolina, which offered ideas this week that would have protected jobs. "She could have implemented enough of them so that she'd prevent any North Carolinian from being in the unemployment line."

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.

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