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Perdue's second State of State offers big plans, few details

Posted February 14, 2011 4:00 a.m. EST
Updated February 15, 2011 5:41 a.m. EST

— The state budget was the main theme of Democratic Gov. Bev Perdue’s second State of the State address Monday evening, delivered before a Republican-controlled legislature for the first time in more than a century.

Perdue told lawmakers that her budget proposal, due later this week, will include steep cuts in state spending to address a projected budget shortfall of around $2.5 billion. She said she would cut thousands from state payrolls, continue a salary and hiring freeze, combine and privatize some functions, and offer early retirement buyouts to some workers.

But the speech wasn’t all about cuts. Perdue also rolled out several new policy initiatives she says will help keep the state competitive in the future.

Perdue earned a standing ovation from lawmakers for proposing to lower the corporate income tax rate from 6.9 percent to 4.9 percent as a way to attract new business and new jobs to the state.

“This change will push North Carolina to the forefront in growing jobs for our people, and that, my friends, must be the number one priority for every one of us in this chamber tonight,” she said.

Perdue also said her spending plan would include college funding for high school students, a campaign promise she made in 2008. The program, “North Carolina’s Career and College Promise,” would guarantee a two-year college degree to high-school juniors who meet certain criteria.

The governor said the program will help keep students in school.

“For what may be the first time – for many of them or their families – they will have a clear, attainable path to success,” Perdue said. “They will have the ambition to conquer tomorrow. They will be the workforce we depend on to propel our futures.”

Perdue pledged to avoid cutting teacher positions in her budget, and she cautioned lawmakers to do the same.

“I have made deep and painful cuts,” she said. “But there is one thing I will not do – I will not sacrifice our children’s future. We will not eliminate teachers, whose jobs it is to build that future and the future of our state.”

“Hear me now,” she added. “I will not back down from these priorities.”

Perdue’s speech didn’t explain how she intends to pay for her tax cuts and programs, especially given that the state budget is already awash in red ink. Those details should be forthcoming in the governor’s formal budget proposal, expected Thursday.

Senate President Pro Tempore Phil Berger delivered the official Republican response to the State of the State. He said the GOP will focus on cutting spending, limiting government power and supporting the private sector.

“We heard the voters last November. Government must get out of the way if the private sector is to prosper," Berger said. "Government simply can’t continue spending beyond its means and expect a different result."

Berger also reiterated Republican opposition to extending temporary sales and income taxes as a way of patching up the budget shortfall.

“Governor Perdue promised the tax hikes passed two years ago would be temporary. We will keep her promise, because the best economic stimulus we can provide is letting people and businesses keep more of their own money," he said.

Speaker of the House Thom Tillis was even more blunt on the question of extending those temporary taxes: “We made a promise to the voters of North Carolina. We’re gonna keep it.”

Perdue and Republican leaders have been at odds over a bill that would allow the governor to find at least $400 million in savings in the current year budget, but that would also raid economic development funds Perdue says are vital to recruiting new industry to the state. The governor is expected to veto the measure.

Tillis said Republicans were pleased to hear Perdue say she wouldn’t play partisan politics.

“We’re encouraged to hear that the governor wants to work with us. There’s already something headed to her desk. She can prove that," said Tillis.