Local Politics

Many states in budget bind

Posted June 15, 2009

— As House and Senate leaders prepare to begin negotiating on North Carolina's budget, they might find some comfort in knowing that legislators nationwide are in similar fiscal straits.

The average state deficit for the 2009-10 fiscal year is 18.9 percent of the general fund budget, according to a recent study by the left-leaning North Carolina Budget and Tax Center.

Money generic, dollars Budget woes not limited to N.C.

"It's an extraordinary time. It's not just a usual budget downturn," Republican Vermont Gov. Jim Douglas said.

Douglas is among about 20 governors who were in Cary Monday for an education symposium sponsored by the National Governors Association and the James B. Hunt Jr. Institute for Education Leadership and Policy.

The Budget and Tax Center study found that 16 states have raised various taxes to help balance their budgets, and 17 others aside from North Carolina have proposed tax increases.

Vermont lawmakers have erased a $250 million budget shortfall with a mix of cuts and taxes, Douglas said.

"They increased taxes on gasoline, on liquor, on cigarettes, on income (and) on estates, and they put in a new tax on downloading music to your iPod," Douglas said.

Minnesota lawmakers won't resort to tax increases, despite facing a $3.2 billion deficit, Republican Gov. Tim Pawlenty said.

"We're going to have to tighten our belts and live on a little less for a while until the economy returns," Pawlenty said.

A budget proposal passed late Friday by North Carolina House members would raise taxes by $784 million to close a projected $4.6 billion deficit. Much of the revenue would come from a quarter-cent sales tax increase, with the rest coming from higher income taxes on couples earning more than $200,000 a year and new taxes on services like appliance installations and repairs.

Senate leaders support higher taxes, but they say increases to sales and income taxes shouldn't be part of the mix.

Scores of advocacy groups rallied outside the Legislative Building Monday night, urging House and Senate budget negotiators to include a balanced mix of tax increases and spending cuts as they hammer out a compromise budget.

Gov. Beverly Perdue said she believes higher taxes are necessary to avoid drastic cuts, especially to education funding. She is expected to lay out an updated budget plan on Wednesday.

"I am studying, reviewing and trying to decide where I believe the absolute figure must be for North Carolina to protect kids and to protect our future," Perdue said.


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  • mrmud4x4 Jun 16, 2009

    What happened to all the bailout $$$$? I thought congress was gonna save us all........oh yeah, that's right..........it's Bush's fault. I am absolutely positive that next year at election time....there will be another "crisis" that only the present congress can save us from........again. LOLOLOL
    all this hope and change is cracking me up!!!! it doesn't matter who's up there, NC will still be in the hole and crying about not having enough!!

  • Worland Jun 15, 2009

    Just another excuse for the Spend-o-crats to raise taxes. Instead of cutting back on nonessential programs, they're going to cut teachers and law enforcement then raise taxes. Nice!

  • ForTheLoveOf Jun 15, 2009

    What a great strategy "Yeah, we're gonna cut spending on the necessities; but we'll keep the funding for our pet projects...you know, things like piers, lighthouses, inmate funding, medicare and medicaid for everyone who goes into the ER for a headache....or a cut that could be fixed with a bandaid." Then once the public is sufficiently scared that they will lose their public safety or education, they will say "yeah, let's raise taxes". No votes for anyone who supports raising taxes and wasteful spending.

  • Mr Douglas Jun 15, 2009

    Maybe NC should foreclose on itself.