Column: 'Temporary' taxes biggest bone of contention in state budget

RALEIGH — Spending is only one side of the ledger when it comes to compiling a budget. Revenues, including taxes, make up the other side.

The biggest bone of contention in the revenue package, or the entire state budget for that matter, is the continuation of a portion of the “temporary” taxes that were imposed by the General Assembly and signed into law by Gov. Bev Perdue in 2009.

On July 1, the current 7.75 percent (in most counties) combined sales tax is scheduled to drop to 6.75 percent. Perdue’s proposal would keep most of the sales tax on the books, making the combined sales tax 7.5 percent.

That tax alone would bring in $826 million into state coffers during the 2011-12 fiscal year and $863 million during the following fiscal, according to estimates.

Balancing the budget without continuing that sales tax increase was an integral part of a lot of Republicans’ campaigns last fall. And it’s a promise that GOP leaders say they plan to keep.

Other revenue changes would lower taxes or offer credits. A small business tax relief plan, retroactive to the first of the year, would save businesses $65 million this year.

A proposed lowering of the state corporate income tax from 6.9 percent to 4.9 percent, which Perdue proposed Monday night during her State of the State address, would save corporations around $300 million a year when it takes effect next January.

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Opponents of a bill that would require voters to present a photo ID when then go to the polls packed the pressroom at the Legislative Building on Wednesday to voice their opposition.

“Voter fraud certainly exists,” said Rep. Larry Hall, D-Durham, adding that the amount of fraud is “miniscule.”

“Do we have a solution begging to find a problem?” Hall asked.

Rep. Alma Adams, D-Guilford, questioned why it’s important for voting officials to know what she looks like. “The process isn’t broken,” Adams said. “We don’t need to fix it.”

Francis DeLuca, president of the Civitas Institute, took the opposing view outside the room where the press conference was going on. He distributed an information sheet that said the U.S. Supreme Court has upheld Indiana’s voter ID law. The sheet also said that a photo ID bill would provide a provision for voters who cannot afford a government-issued photo ID, which opponents say could cost the state money during tough budget times.

The Civitas information paper also says that voter turnout would not be diminished by a photo ID law.

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Reviews are coming in from across the state capital on Democratic Gov. Bev Perdue’s State of the State address delivered to the General Assembly on Monday night.

Democratic political strategist Gary Pearce said Perdue won Round 1 in the battle with the GOP legislature. “Strong speech. Smart strategy,” Pearce wrote in his Talking About Politics blog.

“Today, Republicans should be asking: Did we misunderestimate her,” Pearce wrote.

Louisa Warren, an organizer for Together NC, a progressive coalition of about 120 groups in the state, had a cautious, mixed response.

“Gov. Perdue hinted at her priorities for her state budget, including preserving education and spurring job creation,” Warren said. “These are essential priorities. However, Gov. Perdue also indicated that her budget would cut thousands of state jobs, privatize and consolidate public services and infrastructure, and cut corporate taxes.”

State Republican Chairman Robin Hayes was a bit critical of Perdue.

“With a $2.7 billion budget shortfall and an unemployment rate near 10 percent, the state of North Carolina does not need to reinvent or reset itself but it needs to spend less, tax less and regulate business less.”

Senate Minority Leader Martin Nesbitt, D-Buncombe, said he agreed with Perdue’s commitment to protecting every teacher’s job in the state.

“Not only is a quality education the foundation for our children’s future, but it attracts new jobs and new investment to North Carolina,” Nesbitt said.

Barry Smith is editor and publisher of M2Mpolitics.com. You can reach him at 919-821-5570 or email him at barrysmith@freedom.com.