Perdue promises to protect teachers and cut business taxes, but how will she pay for it? | News
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Tuesday, February 15, 2011

Perdue promises to protect teachers and cut business taxes, but how will she pay for it?

Posted by on Tue, Feb 15, 2011 at 9:30 AM

Gov. Bev Perdue promised Monday not to cut a single teaching job in the budget she'll roll out later this week. She also called for a corporate tax cut and new statewide scholarships for two-year college degrees.

Perdue, in her state-of-the-state address, didn't say how she plans to pay for all that, though she did promise her new budget will recommend shedding "thousands and thousands" of state jobs. She also lowered the state's expected budget deficit for the coming year, which will provide some budgetary relief if the new estimate proves accurate.

Last week that projected deficit went from $3.7 billion to $2.7 billion on the strength of higher revenue projections and spending cuts. Now it's $2.4 billion, Perdue said Monday, without explaining the change.

Details on the governor's various proposals will come Thursday, when Perdue's fiscal 2011-12 budget is released, the governor's office said. But Republican leaders in the House and Senate — who will likely overhaul that budget before sending it back to the governor — questioned Monday how Perdue can pay for her promises without raising taxes.

"Great ideas," said Speaker of the House Thom Tillis. "It's all a matter of where's the money now."

That aside, Republicans heard a lot they wanted to hear from the Democratic governor Monday. They've complained for years about the state's corporate tax rate, which Perdue said is the highest in the southeast, even though North Carolina routinely ranks near the top in annual lists of business-friendly-states.

Cutting the rate from 6.9 percent to 4.9 percent in the coming budget would make it the southeast's lowest, Perdue said.

It's not yet known, though, how much revenue that would cost the state, a Perdue spokeswoman said after the governor's speech. There's also no word yet whether Perdue wants to extend temporary tax increases put in place two years ago to help balance her new budget.

Perdue has hinted that she might back such an extension, though Republicans controlling both the House and Senate have said they won't go along with that. Tillis and Senate President Pro Tem Phil Berger reaffirmed that after the governor's speech Monday evening.

In her speech, the governor also:

• Promised not to cut a single state-funded teacher or teacher's assistant position in her coming budget. She also said the state will demand quality from teachers and administrators "or we will replace them." The details of that process are not set, but there were some new teacher evaluation proposals included in the North Carolina's "Race to the Top" application, which won the state some $400 million in new federal education funds.

• Proposed free two-year job training or college degrees for any North Carolina high school student that signs up for a new "career and college promise" program and meets academic requirements. This would build on an unimplemented proposal the governor put forward during her 2008 gubernatorial campaign.

• Said her budget would shed "thousands and thousands" of state jobs. Early retirement packages will be offered to "as many as a thousand" state employees, she said. The budget would consolidate 14 state agencies into eight, as Perdue has previously announced, and privatize some services. Perdue did not name those services Monday, but has previously said the state's technology functions could be privatized. Perdue said her budget would also continue the state's current hiring and salary freezes, with exceptions for "critical" jobs.

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