State News

N.C. House Democrats take heat from both sides

Posted June 9, 2009

— House Democratic leaders took criticism from both within and outside their party Tuesday for their roughly $18 billion budget proposal for state government and a tax package that would raise revenues at the cash register, online and every April 15.

The chamber's two largest committees debated the two-year spending and tax plans that are seeking to close a more than $4 billion budget gap for the fiscal year starting July 1.

The additional taxes - which include higher rates on sales taxes, income taxes and alcohol - would generate more than $815 million next year.

House Democrats were still aiming to get both the budget and related tax changes approved by the end of the week.

"This is the least painful thing that we could come up with," Rep. Pryor Gibson, D-Anson, co-chairman of the House Finance Committee, said of the tax plan. "There's no pride in this document."

Under the plan, the sales tax rate most consumers pay would rise from 6.75 percent to 7 percent and be expanded to cover warranties and repairs.

Two new income tax brackets would be created for the highest wage earners. A couple making $400,000, for example, would fall into a proposed 8.25 percent tax rate and would pay an additional $1,000 in income taxes.

Alcohol would be affected, as well. The tax on beer would be increased by 1.5 cents per 12 oz. Can while a tax on wine would increase 7.5 cents per bottle. There would also be a 1.5 percent increase on liquor. Combined, it would bring an additional $39.4 million for the 2009-10 fiscal year.

Taxes on amusement parks, movies and other entertainment would generate $24.6 million for 2009-10.

Business taxes also would change, with more firms having to pay franchise taxes and corporations filing tax returns differently because the state believes they are hiding profits in out-of-state subsidiaries.

Both Republicans and some Democrats complained the taxes would discourage companies from setting up operations in North Carolina and hurt citizens who are already struggling to make it as the state's jobless rate nears 11 percent.

"We are mandating cuts in the profits of small businesses and workers across this state," said Rep. Thom Tillis, R-Mecklenburg. "You are absolutely through these tax increases going to cut out some of the very things that we need to happen to get this economy going on the right track."

House Democrats wanted the finance committee to vote on the tax package and the House Appropriations Committee on the budget later Tuesday.

The tax plan would be used to soften what lawmakers and public service advocates called some of the more onerous cuts in education, health care and courts and prison systems and probably save jobs.

Under the original $937.6 million plan – the finance committee trimmed it by more than $120 million by eliminating a proposed 25-cent-per-pack increase in the state cigarette tax -- $352 million would have gone to education in 2009-10.

For example, a provision to increase class sizes in public schools by two students next year and three the following year would exempt classes in kindergarten through third grade, saving almost 2,600 teacher positions next fall, according to legislative staff.

About $288 million would have gone for health and human services, $72.7 million for justice and public safety, $215 million in reserves and $9.7 million for other needs.

"Without the package, there can be no restoration of the cuts," said Rep. Paul Luebke, D-Durham, the chief architect of the tax plan.

The taxes, however, only would account for 20 percent of the current spending reductions - angering some Democrats who want more taxes to reverse more cuts. The $17.8 billion budget plan could still eliminate thousands of vacant and filled state positions.

"This plan is weak and it is not bold and not aggressive enough," said Rep. Earl Jones, D-Guilford, who said he would vote against it. "It does not provide a real recovery."

The finance committee agreed to cut out the increase in the state cigarette tax, which means the tax would remain at the current 35 cents.

Rep. Van Braxton, D-Lenoir, the amendment sponsor, said the tobacco industry already has been hit enough this year by a federal cigarette tax increase and a ban on smoking in restaurants and bars.

Still, Braxton said he and other conservative Democrats are having a hard time deciding whether they can live with higher taxes, deeper spending cuts, or a little of both. He said he might not be willing to vote for the budget, which is scheduled to come to the floor next week.

"Right now, there's not enough consensus," Braxton said.

The uncertainty doesn't bode well for House Democrats, who need 61 of their 68 members to vote for the budget and taxes to get a majority, since no Republicans are likely to vote for new taxes. Eliminating the cigarette tax increase may persuade more Democrats from tobacco-growing areas to accept the deal.

In addition to the taxes and other fees, the House closes a budget gap with $2.2 billion in cuts as well as $1.3 billion in federal stimulus money, said House Majority Leader Hugh Holliman, D-Davidson.

The Senate already approved a budget plan in April that called for raising $500 million more taxes. But that was before lawmakers found out that tax collection fell dramatically this spring, requiring the House to seek additional reductions and taxes.

Democrats in both chambers, along with input from Gov. Beverly Perdue's office, will negotiate a final budget bill this summer for Perdue to sign into law.


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  • Professor Jun 10, 2009

    And no, you can not spend yourself out of debt.

    If you would not swipe that care so often then you would not be in debt any way. lol lol

  • HJRVS Jun 10, 2009

    We gots no dough for the children, but Bev is happily spending Obama funny money to replace buses with hybrids and building bus stops with solar panels. HUH??? Read the recent WRAL article and take a look at what they are spending money on! Tell me again about the “suffering children”!

    What is wrong with these people?????

  • whatusay Jun 10, 2009

    Those in favor of Obamanomics (spend, spend, spend) are silent because they are still numb by seeing what they have done. Eventually everyone will be dependent on the government for survival, capitalism is fading. I can't believe one man could have ruined this country in 100 days. And no, Bush didn't contribute to what we have today. Obama has spent more than all the presidents since this country was 100 days. And no, you can not spend yourself out of debt.

  • Professor Jun 10, 2009

    I going to push of taxes for people talking. Taking about 30% from their checks should do it. lol lol lol

  • Professor Jun 10, 2009

    This seems to be a rob Peter to pay Paul sort of deal.. I'm confused.

    You are right on your comment. Before you know it, they will be begging these teachers to come back. The students will tear up the schools if they do not keep these good teachers there. Someone is making a hugh mistake.

  • Professor Jun 10, 2009

    While they are bickering among themselves, they need to get some JOBS in NC. Its pitiful the kind of leaders we have today. They don't compare to yesterday's leaders. At least we had jobs then.

  • Timetogo Jun 10, 2009

    QUESTION: So you're not hiring or re-hiring 2,600 teacher positions next year... don't you have to pay unemployment or welfare if they can't find work? This seems to be a rob Peter to pay Paul sort of deal.. I'm confused.

  • Ainjeh Jun 10, 2009

    Well said paythepiper. I'm sick of both federal and state governments. Neither government has the people's best interest at heart. Thank goodness I still have a job, but if they keep taxing like this, I'll be in the hole. I'm barely making it as it is.. what's the point of working if you have to pay all these stupid taxes?

  • paythepiper Jun 10, 2009

    I told you so! If anyone remembers my comments during the election, I said that this would happen. I am not a prophet, I simply know how this works.

    I said it before, I'll say it again, "The state is in the worst shape we have been in since the depression, so what do the voters do? They put the very people responsible for it in the governers chair and send another to the senate."

    Thanks straight party ticket voters for shirking your civic duty. Where are all the people that yelled about how good this election would be for NC?

    You wanted change, you got it. Thats all we are going to have left when Granny Perdue gets done with us, change.

    She campaigned about how she was a teacher and would take care of teachers, yeah she took care of you all right, took back your pay and will increase your class sizes.

    Where are all her supporters at? They filled this site before. Why don't you comment now about how good she is?

    I hate to say it, but I told you so.

  • livinggood2 Jun 10, 2009

    Why aren`t you Liberals screeming now on this site,you should be on hear saying you want tax increases. Write your Governor no Taxes. Go Tea Party