Local Politics

Dems reach tentative deal on taxes

Posted July 30, 2009
Updated July 31, 2009

— Legislative leaders crossed their fingers Thursday that a plan to raise almost $1 billion in new taxes would be satisfactory to Democratic lawmakers and Gov. Beverly Perdue.

A tax deal that the House and Senate agreed to a week ago fell apart after Perdue objected to a provision that would add an extra charge to income taxes owed at the end of the year.

The new deal includes a similar income tax increase but exempts most state residents by using a tiered structure.

Money generic, dollars Plan limits who would pay extra on income taxes

Couples whose taxable income – the income after all deductions and exemptions are figured in on the annual North Carolina tax form – is less than $100,000 and individuals whose taxable income is less than $60,000 wouldn't have to pay a surcharge under the plan lawmakers proposed Thursday.

Fiscal analysts in the General Assembly said that means 87 percent of North Carolina taxpayers wouldn't be affected by the plan.

A 2 percent surcharge would be applied to the tax owed by couples whose taxable income is between $100,000 and $250,000, and those whose income is more than $250,000 would pay a 3 percent surcharge. For individuals, the 2 percent bracket would run from $60,000 to $150,000, and individuals making more than $150,000 would pay 3 percent extra on their taxes.

A couple who owe $6,000 in state income tax, for example, would pay an extra $120. For many, that would translate into smaller tax refunds next spring, although those who haven't had enough tax withheld from their paychecks this year would have to write a bigger check to the Department of Revenue next April.

"Only 13 percent will be paying any additional surcharge, and the surcharge is on the tax liability so it's not an onerous burden for anyone," said Sen. David Hoyle, D-Gaston.

Although several lawmakers declared a deal to be in place, House Majority Leader Hugh Holliman was reluctant to follow suit, saying lawmakers have seen previous arrangements collapse before.

"We want to touch all the bases, and part of that is (working with) the governor's office and, of course, our caucuses too before we say there's a deal," said Holliman, D-Davidson.

The Democratic caucuses in the House and Senate will back the tax proposal, legislative leaders said, although they haven't met formally to discuss it.

"They've more or less seen it, and they're pretty much on board," Hoyle said. "I know we've got enough votes."

Appropriations committees are expected to work through the weekend to finalize spending plans so that an overall budget can be presented to the House and Senate next week, officials said.

To keep state government running past Friday, when a stopgap spending measure expires, lawmakers passed another stopgap plan Thursday. The legislation restricts spending to 84 percent of 2008-09 levels and includes no expiration date.

Senate President Pro Tem Marc Basnight and House Speaker Joe Hackney spoke with Perdue Thursday afternoon and said she was still skeptical about the tax plan but likely would go along with it.

"There is a semi-deal of some sort that the speaker, myself and the governor have reviewed," Basnight said.

Perdue said the budget remains a work in progress but said she thinks lawmakers are heading in the right direction.

"Lawmakers know I will not sign a budget that cuts education to the bone and unfairly taxes our working families," she said. "We aren’t there yet. We still have work to do, but I’m confident we are moving in the right direction."

Perdue urged lawmakers to raise $1.5 billion in new revenue to avoid drastic cuts to public education as lawmakers try to erase a projected $4.6 billion deficit. House and Senate leaders, however, have stuck to plans that would generate $990 million in new revenue.

In addition to the income tax surcharge, the latest plan includes a one-cent increase to the sales tax rate and higher taxes on tobacco and alcohol. The state also would claim a bigger share of alcohol taxes under the plan, holding onto some money previously distributed to municipalities.

Both the sales tax increase and the income tax surcharge would expire after two years.

"We don't like taxes. No one likes taxes, but these are tough times, and we had to raise something to get us to fill the $4.5 billion gap," Hoyle said.


This story is closed for comments.

Oldest First
View all
  • lkanzig Jul 31, 2009

    would the republicans and demcrats quit crying!!
    you people are pathetic!
    its the democrats they want to raise taxes.
    its the republicans they want to spend money on this and that.

    the democrats in this budget mess are like deer in headlights, blind and confused.
    the republicans are whining and crying because nothing has been done, but yet have not offered any help or advice.

    you people need help! and while you are getting it, commit bev to a mental ward, because she has clearly lost her mind!

  • jet2rdu Jul 31, 2009

    There is one important fact that the Democrats on Jones Street and in the Governor's mansion will never, never understand, "IT IS NOT THEIR MONEY".

    For those Democrats who today can't understand Plain English from the taxpayers of NC, this may help you, since after the next elections you will have lots of free time to study a new language, such as English:

    responsabilidad fiscal

    fiskalische Verantwortung

    responsabilité fiscale

    fiscale verantwoordelijkheid

  • Luv2Camp Jul 30, 2009

    Where are the cuts??? I have heard the scare mongering about cuts in education. Where are the cuts to other areas of state govt? This is a serious question and not a statement.

  • whatelseisnew Jul 30, 2009

    Again these Dems resort to the only thing they know how to do. Ladle on taxes and borrow money on top of that. So they intend to extract another billion or so dollars out of the pockets of the endangered species known as taxpayers. Do you think they will stop once they have 100 percent of all private sector money?

  • Eduardo1 Jul 30, 2009

    Another sell out. Hope that we remember the names of these bums & of course our dear Gov, come the next election. They sure are taking a page from our federal gov't!

  • jurydoc Jul 30, 2009

    They are also cutting 300 class sections which translates into 9,750 seats for students. See for yourself here:


  • jurydoc Jul 30, 2009

    larieke -- You are dead wrong. I am one of those positions. 40% (176) of them are currently filled, the rest are vacant. They are EXISTING position cuts.

  • Mustange Jul 30, 2009


  • tooter9565 Jul 30, 2009

    This will be perm. taxes not 2 year simply because in 2 years everyone will adjusted to paying them like everyday items and our lawmakers will just simply let it slide and be too lazy to make sure they end in 2 years. These people are worse than the satillite and cable companies that I have been fighting with for days now. They give you a break in one area for a few months but add everything back and in the end you are paying more than before. I am considering going back to antena tv no internet and one phone for the house..so now what do I give up to make sure these taxes don't break me..I don't think many of us are getting ahead anymore.

  • 5Rs Jul 30, 2009

    S82R, Jay4, jet2rdu,agree with you all. We have the same legislators (Basnight and cronies) that we have had for the last decade and we expect improvement?

    There are a lot of redundant and overlapping programs both at the state and federal levels, but everyone is protecting their bureaucracies. For instance, department of Public Instruction had two leaders (courtesy of Miss Bev) and 25 departments to manage 50 programs. What is the difference between More at Four and Smart Start, why couldn't they be combined? At the Federal level, the Dept of Energy started out small and now has operations that have nothing to do with Energy. Not saying that programs aren't worthwhile, but there is a ton of stuff that could be looked at by top quality administrators / consultants, for instance as the recent look-see at UNC.