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Perdue says she’s working on taxes

RALEIGH (AP) ó On the eve of an historic General Assembly session, Democratic Gov. Beverly Perdue raised a stronger possibility that her two-year budget proposal for North Carolina state government could extend two temporary taxes approved in 2009 and set to expire this year.
Speaking with reporters Tuesday before full Republican control at the Legislature for the first time since 1870, Perdue said she was still deciding which direction she would go on sales and income taxes in her spending plan, which should come out by the end of February. But she appeared to shift from earlier statements in September and December, suggesting she was inclined to let them expire.
She said Tuesday she had never taken the tax extensions off the table.
ěI donít know what Iím going to do. I know where my priorities are,î Perdue said. But ěIím not going to increase taxes.î
Republicans have pledged to end the temporary taxes and would only need a handful of votes from House Democrats to make any such legislation survive a Perdue veto. A Perdue proposal to keep the taxes in place would create an early bone of contention between her and the new GOP leadership, both of which have been talking cooperation.
The difference between extending an extra penny on the sales tax and surcharge on income tax bills for corporations and the highest wage earners or letting them expire is about $1.3 billion in annual revenues ó more than one-third the projected $3.7 billion budget gap for the year starting July 1.
Perdue spokeswoman Chrissy Pearson said the governorís comments Tuesday reflects her wrestling with difficult decisions in recently weeks over which state services she may have to cut. Perdue and the GOP have said cuts and layoffs are likely this year.
ěAt the end of day I am not going to be the woman that shuts down public education in North Carolina,î Perdue said. ěI am not going to be the one who puts 50 kids in a classroom.î
In early September, Perdue told reporters she planned to develop a budget proposal that wouldnít extend the temporary sales tax that raised the minimum rate consumers paid on most goods to 7.75 percent, but left some wiggle room.
When pressed in early December on both temporary taxes, she said ěit is my intent right now not to do any taxes.î A week later, she told reporters: ěI donít even know how to spell tax increase.î
Incoming House Majority Leader Paul Stam said the GOP is resolute in letting the taxes expire. Stam, R-Wake, said Perdue was initially opposed to an increase in her 2008 campaign, then asked for higher taxes in 2009.
Stam said the higher sales tax hurts the poor disproportionately: ěI think she needs to cut it out.î
Social justice groups that have urged lawmakers to find additional revenue to help close the budget gap to avoid mass layoffs and service cuts were heartened by Perdueís comments.
Perdue also said she would be comfortable with potential legislation that would require all state agencies ó beyond those under her direct control ó to make spending cuts during this fiscal year to put away money to help close next yearís budget gap.
Pearson said a proposal being floated would require agencies to locate cuts equal to 2.5 percent of their annual appropriation. Perdue last month ordered a similar 2.5 percent cut for Cabinet-level agencies but couldnít require other state departments to follow suit. These and other previous cuts in state government could save up to $400 million, Pearson said.
Perdue also asked the General Assembly to review 345 boards and commissions under legislative control and decide by the end of 2011 whether they should be eliminated, consolidated or left in place. She had said she would offer a list of 150 panels for legislative review last month as part of her government reorganization plan.
The list was unlikely to grab the attention of the new GOP leadership that took care of last-minute details in advance of Wednesdayís noon sessions. Rep. Thom Tillis of Mecklenburg County was expected to be elected speaker and Sen. Phil Berger of Rockingham County elected the Senate leader.
Lawmakers planned for overflow crowds to watch the proceedings by closed-circuit TV in the Legislative Building. Tillisí office paid about $2,500 to rent several televisions to show the House session in the buildingís atriums, spokesman Jordan Shaw said.
Legislators from both parties also held political fundraisers Tuesday evening. Itís a tradition among lawmakers to collect donations the day before the session begins, when state law prevents political action committees from giving to them.
The Associated Press
01/25/11 17:52

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