Governor Proposes $19.9 Billion Budget

Feb 17, 2011

Governor Bev Perdue released her proposed budget in Raleigh earlier today. The $19.9 billion dollar plan would protect existing teacher and teacher assistant jobs, but it would eliminate about ten thousand other state jobs through cuts and through the reorganization of state agencies.

Governor Perdue says North Carolina's severe belt-tightening over the last two years has begun to pay off. Services were cut and workers were furloughed, slashing more than half a billion dollars. In a news conference earlier today, Perdue reminded reporters that the state also froze salaries and programs- which saved about 350 million dollars.

"And if you look back to where I was in January or where the state was in January of 2008-2009, the budget that I propose today in comparison to that budget that I inherited is 2.2 billion dollars less, spends 11 percent less per capita, and it does all this in the realities of 400 thousand plus new people moving into our state."

The state is in a better fiscal position than it was two years ago. Revenues are up slightly because of improved employment and economic conditions. Perdue says that means the state's teachers can stay in their classrooms.

"The budget that I've sent to the General Assembly preserves every state funded public school teacher and teacher assistant that is now working in North Carolina's schools- every single funded teaching position."

But the rest of the governor's proposed budget is full of deep cuts to state departments. She wants to consolidate 14 state agencies into eight and eliminate about ten thousand current state positions. Perdue says her budget would pay employees who choose to retire between ten to twenty thousand dollars.

"State employees have an opportunity to take the early retirement, provides a one time incentive you heard me talk about at the State of the State. Every single agency has a pot of money that will allow them to work in their department to help state employees who choose to do that who are nearing retirement age."

The governor estimates about a thousand workers would choose this option. Trimming the number of existing state jobs is expected to save the state more than 200 million dollars. But Perdue's budget also lays out her plan to lower the state's corporate tax rate- currently the highest in the Southeast. She says she hopes it will attract more businesses and jobs to North Carolina.

"The new jobs package that you see in the budget lowers the corporate income tax from 6.9 to 4.9 percent. It reduces the tax burden for corporations and small businesses by almost 500 million dollars."

The governor's budget would also maintain most of a one percent temporary sales tax enacted to raise revenue by the Democratic-led legislature of two years ago. But the Republican leaders who're in charge now don't like that idea. Thom Tillis is the Speaker of the House. He says keeping that temporary tax inflates the state's economic picture by tens of millions of dollars.

" We think that the governor and the Republican members who ran on the promise to sunset those taxes, should sunset those taxes. So we're concerned that three fourths of those about 800 million dollars of the revenue assumptions premised on the assumption that the sunset will not occur, and that those taxes will be imposed on North Carolinians."

Tillis and other Republican leaders say there are some things they like in the governor's proposed budget- protecting teachers' jobs, for example. But they think state government should be streamlined far more than the governor suggested. Republican Senator Peter Brunstetter of Forsyth County is a co-chair of the appropriations subcommittee in the Senate.

"Many private sector entities have already reduced their head counts ten twenty thirty percent in some cases. State government hasn't had a look like that yet. A lot of the positions that I think that're in there are kind of the low hanging fruit kind of positions, they're eliminations of vacancies or positions that've historically have not been filled."

Brunstetter says he and other Republicans will look at eliminating entire programs if they have to, as they search for more ways to save the state money.