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State workers offer budget savings ideas

Posted February 15, 2011 4:00 a.m. EST
Updated February 15, 2011 4:43 p.m. EST

— The group that represents many North Carolina state employees on Tuesday rolled out a series of ideas from its members about how to close the state budget gap.

The State Employees Association of North Carolina said its ideas would save the state more than $10 billion, or almost four times the projected $2.7 billion deficit for the fiscal year that starts in July.

Democratic Gov. Beverly Perdue and Republican lawmakers have said state employee layoffs are likely to cut spending and balance the budget, but SEANC Executive Director Dana Cope offered alternatives like expanding the tax base and eliminating corporate tax loopholes.

"Don't make public employees bear the entire burden," Cope said. "Let's share sacrifice and make sure companies pay their fair share."

National companies, for example, are allowed to spread their profits among all 50 states, so they aren't paying taxes in North Carolina on all the revenue generated in the state, he said. Many firms also get state tax breaks for filing their annual returns on time or by locating operations in the state, he said.

"Why should our government pick and choose which companies, which corporations will win and which will be losers?" he said.

State lawmakers last week approved legislation that would cut current funding to several state economic development funds, but Cope said they should go further and return all of the money to the state budget to help with the deficit.

Perdue is expected to announce he budget proposal later this week, but Cope suggested Perdue plans to consolidate state agencies to reduce spending are mostly "political rhetoric for an election that's two years away."

Some workers said Tuesday that they worry about the competition between Perdue and the new Republican majority in the General Assembly to see who can cut the most form the budget.

"I think everybody's on edge all the way around just because the budget has to be cut and we're not knowledgeable where that's going to take place," Carol Hewitt said.

Many state workers said they believe Perdue inherited a tough situation that now requires tough decisions.

"It's not something that's going to happen overnight. It's going to take time, but you have to look at different ways to approach it," Eva Higgins said.

State workers have suggested money-saving ideas like instituting four-day, 10-hour workweeks for state agencies, raising North Carolina's cigarette tax so it's on par with most other states, keeping a temporary one-cent sales tax in place for now, taxing franchised companies and limited liability companies and standardizing state health care.

The state offers physicians, pharmacists and hospitals different reimbursement rates to treat state workers, state prison inmates, Medicaid recipients and people in the state's high-risk insurance pool, Cope said. If rates were standardized across all four systems, he said, the state would save billions of dollars and improve efficiency.

State lawmakers also shouldn't be allowed to participate in state-funded health care since they are part-time workers, Cope said. That would save the state about $723,000 a year, he said.

"We're trying to bring North Carolina out of this economic crisis that we face, and in order to do that, you shouldn't add anybody – I don't care who they are or where they work – no one should be added to the unemployment line," he said.

Lawmakers said, however, that layoffs are inevitable. State workers who keep their jobs also should expect pay cuts, they said.

"We'll conserve the jobs best we can, but we're going to have to reduce salaries because that's what private business does. That's the nature of it," said Sen. Stan Bingham, R-Davidson.