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LEXINGTON — The Fancy Pastry Shop hasn’t raised its prices “in years,” says co-owner David Rothrock, taking a break after Gov. Bev Perdue stopped by to tout a $17 million package of small business assistance proposals.

“I’m actually proud that people on fixed incomes can come in here and buy stuff,” Rothrock said, standing near a display case full of pastel-topped cupcakes, piles of doughnut holes and ranks of cannoli.

Among the proposals Perdue floated Friday were grants, training programs, contracting preferences and tax credits, including a credit of $250 per employee for small businesses that offer health insurance.

“That could help me a lot,” Rothrock said. He has seven people on the business’ health insurance plan now and could be adding a few more in the coming months. “That’s a pretty good hit.”

Insurance premiums combined with other rising costs — the price for a 50-pound bag of sugar has risen $12 in the past six weeks — may force him to raise the price for sweets in his shop.

But the same forces that have soured the economy and put the squeeze on small businesses have also squeezed the state budget. Already, lawmakers say they’re looking at what could be a $1.2 billion deficit in next year’s budget.

“I will use a consolidation of the structure of North Carolina’s government, continue to cut services,” Perdue said when asked how she would pay for her proposals. She’s due to present her proposed state budget on April 20.

“I plan to eliminate some of the red tape and the bureaucracy,” she continued. “And I’m going to use some of the savings from the nearly 2,500 positions that we have gotten rid of during the last calendar year to help pay for an infusion of dollars into what creates business opportunity and success.”

Rep. Hugh Holliman, a Lexington Democrat and the House majority leader, said lawmakers were already looking at ways to shift funding from other business programs into Perdue’s new priorities.

Still, small business funding will compete with other programs hoping to survive what is a very tight budget year.

Aside from the health insurance credit, Perdue’s policy proposal included:

• Changing state capital gains rules to favor business investment.
• A new tax break for small business equipment purchases.
• Giving North Carolina businesses preferences when bidding for state contracts.
• Reserving state construction projects under $500,000 for small businesses.
• Providing loan guarantees that can be added to federal SBA-backed business loans.
• Increasing tourism promotion.
• Expanding grants to reinvigorated downtown districts in small towns.
• Creating a hub where North Carolina companies can find suppliers and services provided by other in-state companies.

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