@NCCapitol

Perdue wants higher sales tax for education

Posted January 17, 2012 1:12 p.m. EST
Updated January 18, 2012 12:09 a.m. EST

— Gov. Beverly Perdue said Tuesday that her budget proposal for next year will include a temporary sales tax increase to restore education cuts made by the Republican-led General Assembly when they let a similar tax expire last July.

The announcement by Perdue, made during a visit to a Greensboro elementary school, comes four months before the legislature returns to town for its budget-adjusting session. Her statement appears to set the stage for a re-election campaign that could pit Perdue against the new GOP majority on the issue of taxes and education.

"Education is the key to our children's future and to North Carolina's economic future," Perdue said. "Investing in education is central to our ability to attract new jobs and businesses to our state. We owe it to our children and our state to stop these cuts and make education a priority again – a fraction of a penny for progress."

Perdue said her budget for the year starting July 1 would call for restoring three-quarters of the penny sales tax that had been on the books for two years starting in 2009. That would raise the sales tax in most counties from 6.75 percent to 7.5 percent.

For an average family, that would be about $15 per month. It would generate an estimated $750 to $800 million in revenue over the year that the hike would be in place.

"The cuts that the Republican leadership made to the education budget last year in the General Assembly are unnecessary and extreme," Perdue said. "They've done serious damage to the core of North Carolina's educational backbone."

The GOP-led legislature rejected Perdue's proposal last year to set the sales tax at 7.5 percent, instead allowing the full penny to expire on time at a cost of more than $1 billion in lost revenue. The revenue reduction meant Republican budget-writers had to look for additional cuts in education and health care, where nearly 80 percent of the state's $19.7 billion annual budget is allocated.

Senate President Pro Tem Phil Berger said the governor should expect similar rejection for her proposal in the legislature this time around.

“Obviously, Gov. Perdue’s attempt to nip this economic recovery in the bud is dead on arrival at the General Assembly,” Berger, R-Rockingham, said in a statement. “The Democratic primary for governor apparently has devolved into a fight over who can raise the most taxes, spend the most money and grow the biggest government. Gov. Perdue’s latest tax-hike stunt proves she can’t fix this mess she made.”

House Speaker Thom Tillis also released a statement criticizing Perdue's proposal.

"(It) would raise the state portion of the sales tax by an estimated 15 percent, would make it harder for working families to purchase prepared food, clothing, medical supplies and other basic necessities to support an extreme agenda for larger government," Tillis, R-Mecklenburg, said. "That is completely unacceptable."

Perdue, however, said she is ready for the fight and that despite what Republicans say, the people and business leaders she has talked to are concerned about the impact of the GOP cuts they've already seen.

"Let me be direct on this issue. I will never turn my back on the children of North Carolina," she said. "I will stand up for public schools, and I will fight any battle that I need to fight for the future of this state, and that's an investment in our children."

Next year, when federal funding runs out, could be worse, and she said she believes voters will back her proposal to avoid deeper cuts.

"Our history is chronicled by our consistent investments in education," she said. "Our people step up and do the right thing for the future, and this is the right thing for North Carolina's future."

Perdue vetoed the two-year budget last June, but a handful of House Democrats joined all GOP lawmakers in both chambers to override her veto and enacted the budget anyway.

Thousands of local education positions were eliminated this past fall, but Perdue and Republican legislators have been in a semantic fight for months over how many of these positions were actually filled and whether the state budget was to blame for them.

Partisans and advocates on both sides of the issues lit up social media after her announcement, with children's advocates and Democrats praising the governor and Republicans pointing out Perdue will have to run again as someone who is redoubling her efforts to get a tax increase passed.

"These dollars could restore hundreds of millions in cuts to classrooms, adequately fund our state’s Medicaid program, serve all eligible children in our state’s nationally-recognized pre-kindergarten program, partially restore cuts to Smart Start and reduce the cost of accessing the courts," Jeff Shaw, spokesman for the North Carolina Justice Center, said in a statement. "This would change the direction set forth in last year’s final budget, which put state investment at the lowest level in 40 years."

"Gov. Perdue often chooses silence on controversial issues like the criminal scandals involving her campaign and administration, but she apparently can’t bite her tongue when the subject matter involves her desire to raise taxes," Scott Laster, executive director of the North Carolina Republican Party, said in a statement. "We don’t have to read her lips when we can simply hear her re-election slogan now: Perdue 2012 For more … taxes.'”