Local Politics

Perdue calls for temporary penny sales tax increase

Posted July 7, 2009

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— Trying to break a legislative stalemate on state budget negotiations, Gov. Beverly Perdue on Tuesday called top lawmakers to the Executive Mansion to lay out her own plan for raising extra revenue in the coming year to erase a projected $4.6 billion deficit.

Perdue called for raising the state sales tax by a penny for 13 months, beginning Sept. 1. The increase would raise more than half of the $1.6 billion in revenue she would like to include in the 2009-10 fiscal budget.

Cash register, sales tax, retail sales Lawmakers balk at Perdue's sales tax idea

She also would enact taxes on a range of services like appliance installations and repairs, movie tickets, courier services and cosmetic surgery and would raise taxes on cigarettes by 50 cents per pack and on alcohol.

Her plan also calls for lowering personal and corporate income tax rates and providing tax relief to home buyers and small-business owners.

"We must make deep cuts, even to many good programs in our state, but we must also raise additional revenue," Perdue wrote in a letter to lawmakers. "I do not believe that the revenue packages presented by either the House or the Senate are sufficient to meet our goal of protecting North Carolina’s classrooms and vital services."

House budget negotiators offered a quarter-cent sales tax increase and higher income taxes on individuals making more than $200,000 a year, while the Senate leadership is backing an array of taxes on services, from auto repair to lawn mowing to manicures.

Lawmakers have made little progress on reaching a budget compromise in two weeks of negotiations. They passed a continuing resolution last week to keep state government running through July 15 in hopes of passing a budget by then.

"The continuing resolution has only eight days remaining. I urge all of you to work together toward a rapid resolution," Perdue told lawmakers, adding that her budget team already is reviewing spending and programs to offer suggestions for future changes.

Budget negotiators quickly shot down the governor's plan, saying they have been trying for weeks to agree to a package that would raise $1 billion in new revenue, not the $1.6 billion she proposed.

"We're having problems getting that much through. Many of the things she calls for in the package just aren't realistic," said Rep. Mickey Michaux, D-Durham.

"She knows from giving us that list and from giving it to the press that there will be a lot of things that are unacceptable," said Sen. David Hoyle, D-Gaston.

Lawmakers said they fear a temporary sales tax could last beyond Sept. 30, 2010, if the economy doesn't pick up as expected.

When asked how she could guarantee that the penny increase would be rolled back after 13 months, she said simply "because I'm the governor."


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  • 5Rs Jul 9, 2009

    lkanzig, actually Obama is spending us into the poorhouse at three times the rate of Bush. He is going to be wildly successful, unfortunately. His first full year budget (started July 1) projects adding $45,000 in debt for every taxpayer making $50,000 or more. And that is even before he saddles us with Health Care Reform NOT, where he is already buying votes because the base multi-hundred page bill is too bitter to swallow, even for our own Democratic Senator.

  • gpcherokee Jul 9, 2009

    Let all states raise the tax to 10 cents on the dollar for one year, then roll back to 7. Call it the WalMart Rollback Law! That should solve everything. Or just close all prisons and send the inmates to war and if they survive, then they are free.

  • lkanzig Jul 9, 2009

    obama is just following in the footsteps of the republicans and democrats on spending money.
    guess he figures if he throws enough at it, the economy might fix itself.

    unfortunately there is way too much greed and corruption. dont know if there is such a thing as enough money to fix it.

  • rlt197131 Jul 9, 2009

    “You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”

    The late Dr. Adrian Rogers , 1931 to 2005
    Kemo Sabi
    July 8, 2009 10:05 a.m.
    Report abuse

    That quote makes more sense than anything I've read on this blog. Thanks Kemo-Sabe for bringing it up.

  • NeverSurrender Jul 9, 2009

    Which is more likely if the sales tax increase goes through and politicians get used to the funds it generates?

    1. The politicians honour their pledge to sunset the "temporary increase".

    2. The politicians respond like a addict on crack and push the tax even higher to get more of a "high" by funding their pet projects?

    Only someone living in the same dream world as the politicians would seriously believe #1 would ever have a chance of happening.

    A sales tax increase is about the safest option for them...they know the poor and the middle class are the only ones disproportionately hurt by that regressive tax and that the poor don't have the time nor the power to return the favour by booting them out.

    They know the only people they have to listen to are rich people, their lobbyists and corporate interests...they're the only ones with the money!

  • JennyT Jul 9, 2009

    If I don't get my work done, I get fired. How about if the legislators don't pass a budget, we don't pay them until they do? Sounds fair to me!

    And let me work on the budget, I'm sure I could eliminate millions in waste in one day, and I don't even have an accounting degree. Commmon sense, that's all we need.

  • Space Mountain Jul 9, 2009

    I hate to see it happen, but I think things such as museums, libraries, and parks should be closed for now until we get the budget fixed. There doesn't need to be any money spent on those things right now. Also, stimulus money for roads is not going to do us any good. It might give the road constructors some money, but how does that help teachers that are being laid off? How does that help profesional businesses that are laying off people? I still think the NC DOT is in bed with these road constructors. Yes, it will provide them some money in the short term, but how does this help the state in the long term? We need mass transit more than fixing and building new roads anyway. NC is terrible when it comes to wasting money. The whole state govt needs an overhaul.

  • Space Mountain Jul 9, 2009

    The gas tax increase was supposed to be temporary, too. Now, it is the new minimum tax on gas. And I believe the last sales tax increase was supposed to be temporary. Yeah, that didn't happen. I think I am many people who voted for Obama, but voted for McCrory for governor. I really don't think Perdue has what it takes to fix things for NC. The NC state government is a mess, and it started with Easley. I am sorry I voted for him, too.

  • FoxtrotUniformCharlieKiloakaCALM Jul 9, 2009

    i like how people bring up the costs of war in iraq and bush but yet, no comments on how much obama man has spent in the few MONTHS he's been in control.

  • scientistjo Jul 9, 2009

    "I think only the fools that were ignorant enough to vote for Lady Bev should have to pay this tax." hangintough

    That's fine. And I haven't wanted to fund the war in Iraq, but those who were "ignorant enough" to vote for Mr. Bush forced me into this situation.