RALEIGH — The $19 billion budget North Carolina lawmakers approved Wednesday puts a focus on nearly $1 billion in new taxes and forces spending cuts on local school leaders.
The General Assembly gave the budget final legislative approval on party-line votes, with Democrats voting yes and Republicans voting no. The Senate voted 27-18; the House, 66-52. Democratic Gov. Bev Perdue said she would reluctantly sign into law the package that includes higher taxes and reduced services.
With unemployment raging and some families just making ends meet, opponents argued that this was the worst time to raise taxes for two years.
“They just can’t afford any more, and they ask me as their representative, don’t put any more on my back,” said Rep. Larry Brown, R-Forsyth.
Supporters like Rep. Paul Luebke, D-Durham, countered that the Democrats who run the legislature cut spending by about $2 billion, twice the amount of the new taxes that will maintain state services. Other spending cuts were replaced with more than $1 billion in federal stimulus funds, though that money was not included in the budget. More than 700 state employees will lose their jobs.
The budget includes temporary taxes worth $990 million. About 80 percent of that comes from increasing the sales tax rate by one penny, so that most consumers would pay 7.75 cents on each dollar they spend through mid-2011. Corporate profits face a 3 percent surtax for two years. Cigarette taxes will rise permanently by 10 cents a pack.
Also, individuals with taxable income of at least $60,000 and couples reporting $100,000 to $250,000 would face a surtax amounting to an extra $20 for each $1,000 in tax they owe in 2009 and 2010.
The budget cuts land heaviest on the two biggest parts of the budget: human services and schools.
Health and human services programs were given $1 billion less than the amount lawmakers appropriated last year, though much of that may be replaced by federal recovery dollars.
Lawmakers couldn’t agree how to cut spending on public schools. The budget bars cutting teachers and raising class sizes in kindergarten through third grades. Otherwise, local school districts will have to decide how to cut their share of $225 million in statewide reductions, either by taking money from other sources or turning to federal stimulus funds.
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