The proposed $19.9 billion budget unveiled by Gov. Bev Perdue this morning would slash about 10,000 state jobs while seeking to protect funding for K-12 education and the state university system.
As she mentioned in her State of the State address earlier this week, Perdue would cut the state's corporate tax rate from 6.9 percent to 4.9 percent. The cut would make the state's tax on businesses among the lowest in the nation and give Republicans a political victory.
Touting the need to create jobs, Perdue also largely protected funding for corporate incentives programs used to lure new businesses to the state and help existing ones expand.
“This budget stands up to our economic challenges and equips us for the future by resetting how we grow jobs, educate our children and operate state government,” said Perdue, a Democrat. “The cuts are deep, and some are painful. But through careful management of our resources we can also make investments in our core priorities."
However, Perdue's budget also keeps most of the 1-cent temporary sales tax Republicans have pledged to let expire. Perdue's budget keeps the temporary tax at 3/4 cent, making the total state portion of the sales tax at 5.5 cents. Counties impose additional sales taxes on top of that.
Republican quickly slammed Perdue's budget.
“Instead of making tough choices to tighten the state’s belt, Gov. Perdue is balancing the budget on the backs of North Carolina taxpayers and local governments," said Senate President Pro Tempore Phil Berger, a Republican from Eden. "She is breaking her promise to end the taxes she raised, she is underfunding our retirement system and she is saddling local governments with hundreds of millions in additional expenses. This is not how to get North Carolina back on track.”
Perdue elected not to raise new tax revenues through legalizing video poker and internet sweepstakes games, as she had considered.
Perdue's budget proposes eliminating about 5,000 state jobs through eliminating or reorganizing 176 state-supported programs, and another 4,000 positions through mandated cuts at state agencies.
State budget director Charlie Perusse said the majority of the positions to be eliminated are currently vacant. He estimated only about 3,000 state workers would actually lose their jobs, reports The N&O's J. Andrew Curliss.
Another 1,000 jobs are to be shed through offering early retirement packages to state workers. Workers could get payments of between $10,000 and $20,000 to leave, depending on whether they have the years in to be eligible for full or partial retirement benefits.
None of those job cuts would be in K-12 classrooms. Perdue's budget protects all state-funded teachers and teacher assistants. She also gives a modest increase in funding to the UNC-system to help cover the cost of enrollment growth. There will still be cuts to programs at the universities and a tuition increase for students.
Community colleges also fare reasonably well. Perdue has proposed the N.C. Career and College Promise — a new program that provides two-years of tuition-free college credit to state high school students who maintain high grades and meet other standards.
Perdue's budget also trims some popular state services. State parks would be closed two days a week, as would the state welcome centers at interstate rest stops. Another $40 million would be cut from the state's portion of Medicaid.
The budget sets aside $75 million to strengthen the state's struggling mental health system and $77 million for the mobility fund to help reduce traffic congestion and expand the transportation infrastructure.