Local Politics

Cuts, sin tax increases, federal help will balance budget

Posted January 22, 2009
Updated March 9, 2009

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— When state lawmakers return to Raleigh next Wednesday to begin crafting the state budget, they will use a combination of cuts, tax increases and federal assistance to erase a projected $2 billion deficit, Sen. Marc Basnight said Thursday.

Basnight, a Dare County Democrat and the powerful president pro tempore of the Senate, was short of specific, however, when speaking with reporters about the difficult task of balancing the budget amid a recession that has cut into revenue from sales and personal and corporate income taxes.

Sen. Marc Basnight Basnight: 'You can't cut your way out'

Tax loopholes would be closed, spending would be cut and services would be streamlined, he said, declining to elaborate.

Gov. Beverly Perdue last week ordered state agencies to cut spending by 7 percent to save about $1 billion in the current budget. She also went to Washington, D.C., to seek money from the proposed $800 billion national economic stimulus package.

Senate Majority Leader Tony Rand said recently that he expects lawmakers to look at cutting education spending – an idea that previously was unthinkable – solely because public schools account for about 60 percent of the budget.

Basnight said so-called "sin taxes," levies on cigarettes and alcohol, would likely go up to boost revenue, but he said other tax increases would be unlikely.

"I don't believe you can cut your way out of this alone. You would do damage that would be long-term," he said.

Senate Minority Leader Phil Berger, R-Guilford, said the Democratic leadership works too hard to chase revenue instead of doing more to cut programs.

"We continue to enable the bad decisions that have been made in the past. We should be treating this economic downturn as an opportunity to make government leaner," Berger said.

Basnight said he would move to retain the option of transferring money from the Highway Trust Fund to the general fund to cover any shortfalls. The state will have to raid its "rainy day fund" to put the State Health Plan on better financial footing, Basnight said.

The State Health Plan, which provides medical insurance for almost 650,000 state workers, public school teachers and retirees, is about $300 million in the red and needs an immediate bailout, officials said. Jack Walker, the plan's director, recently said premiums and co-pays likely would go up to ensure the plan remains solvent.

Basnight didn't address the subject of pay for state workers, but he said he doesn't expect any layoffs.

"I can't see laying people off," he said. "Certainly, people will retire, (and) there will be vacancies. Will they be filled? In education, I would assume so. In corrections (and) health care, yes. In other positions, probably not."

Perdue last week froze hiring in state agencies, except under extraordinary circumstances.

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  • anndavis Mar 17, 2009

    I did not think the Bill for this tax had passed yet. I was in Wal-Mart today and their cigarettes had already gone up. Some cartons were as much as $55.00 a carton.

  • teacher-mom Jan 23, 2009

    Wasnt Pat McCrory guilty of hiring illegal aliens to do some work? I remember something about that.

  • teacher-mom Jan 23, 2009

    Maybe if we did not have to worry about paying the bills for all the bums and rich people we would not eat. It beats dealing with drug dealers or driving drunk.

  • teacher-mom Jan 23, 2009

    I do not understand why they do not tax tanning salons, nail salons, tatoo parlors, and hair braiding salons. we really do not have to have any of those places. I can saee why people drink and smoke. Heck, the next thing you know, they will add a fat tax. There go the Snickers bars...

  • Dr. Dataclerk Jan 23, 2009

    thanks democrats.....I think anyone in the state that voted Dem should cover th edifference...they are the ones that wanted this in teh first place
    arfamr1005

    First of all darling, go back to elementary and learn to spell for heavens sake. Go Democrats we won all the way making history while doing so. President Barack Obama and the beautiful First Lady Michelle Obama and their little angels Malia and Sasha. At Last............

  • arfamr1005 Jan 23, 2009

    thanks democrats.....I think anyone in the state that voted Dem should cover th edifference...they are the ones that wanted this in teh first place

  • superman Jan 23, 2009

    Are their still tax loop holes. I been paying income tax all my life. Where have they been and what have they been doing to still have tax loop holes. Why have they waited to fix them now? They increase tax on cigarettes and then the sales continue to go down and then where will they be. Right back at ground zero. Reduce the tax on cigarettes and then maybe sales will go up!

  • cbarnett Jan 23, 2009

    Balance the budget, eh? People are losing jobs everyday - just look at WRAL's home page. More layoffs today. Who do they think is going to keep buying alcohol and cigarettes with no job?

  • why not Jan 23, 2009

    Why can't we get rid of these clowns and put people who have common sense into office? If I had to run the State like I have to my small business, we'd be in great shape. You can't spend what you don't have! Wait and pay for it as you go, then when tough times hit, you can ride it out much better than being strapped w/ huge payments. Where has common sense gone?

  • Z Man Jan 23, 2009

    Oh yea, American indians will ship cigarettes from their reservations. You pay the resevation tax, not the federal/state tax.

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