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RALEIGH Gov. Mike Easley's proposal to raise taxes on alcohol and cigarettes ran into nearly immediate skepticism from senior lawmakers Monday, who characterized the idea as anywhere between "ambitious" and "unlikely."



What do you think of the proposal? Join the discussion at the Debatables blog.

The General Assembly returns today for its short session, a time traditionally reserved for making quick legislative fixes and adjustments to the two-year budget passed the year before.

"It's going to be a challenge for us to do any sort of tax increase," said Rep. Hugh Holliman, a Lexington Democrat and the House majority leader. He said that legislators don't want to get into a protracted fight over taxes that Easley's proposal would almost certainly entail.

Easley tied the tax increases to specific budget proposals.

He would raise cigarette taxes by 20 cents per pack to

55 cents to pay for raising teacher pay to the national average, something that has been a priority of both his administration and the legislature.

"We just didn't see any way to get there without any cigarette tax increase," Easley said.

The rise in alcohol taxes would hit beer, wine and liquor, raising $66 million to pay for mental health services. Problems in the state's mental health safety net have made news for the better part of the past year.

"It is not a significant amount of money to the consumer but it is a significant amount to help the mentally ill," Easley said.

House Speaker Joe Hackney said that any new taxes would "a hard row to hoe" because of the political environment, with consumers already feeling the pinch from rising gas prices and a slowing economy.

"All taxes on cigarettes are paid by smokers," said Michael Shannon, director of government affairs with Greensboro-based Lorillard Tobacco. "It's unfortunate that they continue to charge a small segment of society for the greater good of everyone in the state. It's unfair."

The push-back on Easley's tobacco tax illustrates how hard such a proposal can be to put into law.

It's not just anti-tax advocates and tobacco companies who oppose it; even some who favor more regulation and taxation of the tobacco industry have problems with the proposal.

"For me, personally, if you're going to do a tobacco tax increase it needs to go to health care," said Holliman, who helped push the legislature's anti-smoking bills

Easley's proposal to increase alcohol taxes to fund social services is not a new one. Senate leaders have floated similar ideas in years past.

But industry lobbyists say they did not expect the governor or legislature to propose any tax increase, much less float the two sin tax proposals.

"To say that we were surprised is an understatement," said Dean Plunkett, who leads the N.C. Beer and Wine Wholesalers Association. "We had no indication they were looking at this."

Plunkett said the state's excise tax on beer is already one of the highest in the nation and that Easley's proposal would amount to an 80 percent rise.

Even if the alcohol and cigarette taxes don't work out, legislators say they're committed to beginning fixes to the state's mental health system.

Easley's budget chips away at some long-running problems. For example, it reduces the number of children on the waiting list for state-subsidized child care by 1,000 spots. However, more than 27,000 children are waiting for slots, which allow low-income families to afford day care.

"It doesn't meet anywhere near the whole need, but it's an attempt to try to get at some of the problem," said Dan Gerlach, a senior budget adviser to Easley.

Of area note, Easley proposes spending $6 million to expand and renovate exhibits at the N.C. Zoo, including expanding and upgrading the polar bear exhibit.

Now, the zoo has only one polar bear and hopes to get three or four more on loan from Canada, said spokesman Rod Hackney. However, Canadian zoos have much higher standards for polar bear care than American zoos, he said, requiring both more space and changing their water from freshwater to saltwater.

Easley also included money to expand the children's area and an African exhibit. All the state funding would be matched by private donations, Hackney said.

There was no mention of the furniture market in Easley's budget. Some funding for the semiannual trade show, such as money designated for transportation, will continue unless the General Assembly acts to stop it. However, money for promoting the show to buyers has come by way of one-time grants.

That money is key to helping fight off a challenge from a new market in Las Vegas, local legislators said. They would like to see it become a regular fixture in the budget, rather than something that has to be sought every year.

"It's not an expense that's going to go away," said Rep. Laura Wiley, a High Point Republican.

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