Governor against income tax hike

RALEIGH "I have spoken with the President Pro Tem and the Speaker today and told them that I would not support a budget with an income tax increase on North Carolina's working families. I reemphasized the need to protect public schools," said Perdue in a statement released to the media.

House and Senate Democrats in the North Carolina Legislature had signed off on a plan that would have raised nearly $1 billion in taxes. The deal raised the sales tax rate by a penny, added an extra 2 percent onto income tax bills and increased the cost of a pack of cigarettes by 10 cents. Alcohol taxes also would go up.

But after learning of the Governor's opposition Thursday, the deal appeared to be falling apart with top legislators saying they will have to go back to the drawing board.

That means budget negotiations could drag on into August. The new budget year began July 1, and the Legislature and Governor have agreed to stopgap spending measures to keep the state government running.

"We will go back and take a look at what we can do," House Majority Leader Hugh Holliman told reporters.

Perdue didn't say in the statement that she would veto the budget if it contained an income tax increase for low- and middle-class families, but Holliman said his impression was that it could happen.

Perdue spokeswoman Chrissy Pearson said it was premature to talk about a veto. "The governor feels there is still a lot of negotiating to be done before getting to that point," Pearson said.

Holliman said Perdue continues to want an additional $200 million in revenues to prevent further cuts in education, but he said that would be even more difficult.

Perdue's tax reservations comes a day after she sent out another statement that chastised lawmakers for failing to get out a budget on time, telling them "the clock is ticking."

Sen. Linda Garrou, D-Forsyth, one of the Senate's chief budget negotiators, said she'd be willing to work through the weekend to work out the final differences in the budget, which would spend $18.9 billion this year.

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