news-record.com

RALEIGH — Gov. Bev Perdue’s $21 billion budget proposal would close a $3.4 billion gap by cutting more than 1,000 state jobs, forcing cuts to virtually every state agency, and raising taxes on tobacco and alcohol.

Her plan relies heavily on federal stimulus money to pay for promised increases in education spending.

And though criticism came from predictable quarters — industries affected by tax increases and Republicans who said the Democratic governor did not cut enough — legislative leaders seemed pleased with Perdue’s first draft plan.

“It’s given us a good starting point for our efforts,” said House Speaker Joe Hackney, a Democrat who had harshly criticized the budget then-Gov. Mike Easley proposed last year. Hackney was pleased that Perdue would spend 2.5 percent more on state education programs even as the economy forces cuts elsewhere.

Senate leader Marc Basnight, also a Democrat, agreed. His chamber will be the next to draft its own version of the spending plan.

“I don’t think you’ll see a lot of differences with what she’s proposed,” Basnight said.

Both leaders cautioned that the 5 percent surcharge on alcoholic beverages and $1 tax increase on a pack of cigarettes may be a tough sell for their members.

“We might as well go ahead and get an ax and bring that business to its knees, which is what we would be doing,” said Sen. Linda Garrou, a senior Democrat who represents Winston-Salem, headquarters of cigarette maker Reynolds American.

Other lawmakers said tax increases of any kind would hurt the already flagging economy.

“Elected officials should be concerned about protecting the budgets of North Carolina’s families,” Senate Minority Leader Phil Berger, a Rockingham County Republican, said in an e-mail.

“This budget protects entrenched political and special interests.”

The new budget is due to take effect July 1, and both the House and Senate will draft their own plans before crafting a final compromise deal.

Although Perdue drew very few absolute lines Tuesday, she emphasized that she avoided sales and income tax increases and urged legislators to stay away from those.

Aside from tax increases, the biggest difference lawmakers drew with Perdue was over how salaries were allocated to state agencies, particularly universities.

Typically, the state has given agencies enough money to pay for every salaried position to be filled, even though there are always hundreds of jobs across the bureaucracy that are vacant for at least part of the year. That extra money is used to cover other costs such as equipment and overtime.

Perdue proposes eliminating that extra money, saying it was time for “truth in budgeting.”

Basnight said the flexibility that comes along with lapsed salaries was particularly critical to the university system.

And Hackney warned that eliminating lapsed salaries would leave budget writers with very little margin for error, despite a $170 million reserve Perdue built into her plan.

The Associated Press contributed to this report.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com