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Perdue's budget slashes state jobs, protects education

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.

VIDEO: See Perdue discuss her proposed budget

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.

Perdue to unveil budget Thursday

Gov. Bev Perdue has scheduled a media conference for Thrusday at 10 a.m. to present her proposed state budget. State Budget Director Charlie Perusse will also attend to answer reporters' questions.


THE CLAIM: During her speech, Gov. Bev Perdue touted the state's performance on job creation.

"Businesses have pledged to create 58,000 jobs and are investing $12.5 billion dollars into the Tar Heel state and our people," Perdue said. "We are moving forward."

THE STORY: The key caveat in Perdue's statement is "pledged to create."

Tim Crowley, spokesman for the N.C. Department of Commerce, said the source for the figure is a database of "announced jobs" through the state's corporate incentives programs and from local economic developers and chambers of commerce.

However, the numbers of jobs announced with a project rarely translate into immediate jobs. It can often take years for businesses to hire the promised number of new employees, if they ever do. In the case of companies that receive state incentives money, the negotiated time to create the number of pledged jobs is typically 3 to 5 years.

Perdue's figure also makes no mention of jobs lost.

According to the state Employment Security Commission in 2010, there was a net gain of 10,400 jobs statewide.

That was not nearly enough to make up for the jobs shed since Perdue became governor.

According to the U.S. Bureau of Labor Statistics, North Carolina's economy lost a total of 128,260 jobs between January 2009 and December 2010.

THE BOTTOM LINE: While Perdue's statement is technically true, it is also misleading. Those listening to her speech could think that the state has added thousands of jobs over the last two years. That is not the case.

UPDATE: Larry Parker, the acting public information director for the N.C. Employment Security Commission, e-mailed to quibble with The N&O's citing of a federal survey showing there were 128,260 fewer people employed as a measure of jobs lost over the last two years.

"There are two different measures of jobs and employed persons, which are derived from two different surveys," Parker explained. "The Current Employment Statistics employment estimate is not a measure of Full Time Equivalent (FTE) jobs, it is a measure of jobs. Persons are counted for each job they hold. ... The Local Area Unemployment Statistics Program provides estimates of the number of individuals in the labor force, the number employed and the number unemployed. Individuals can hold more than one job."

Parker said that according to the CES survey, North Carolina shed 111,800 jobs (seasonally adjusted) between January 2009 and December 2010. 

Response from GOP chairman Robin Hayes

State Republican Party Chairman Robin Hayes released the following statement in response to Gov. Beverly Perdue's State of the State address:

“ With a $2.7 billion budget shortfall and an unemployment rate near 10 percent, the state of North Carolina does not need to reinvent or reset itself but it needs to spend less, tax less, and regulate business less. Republicans in the legislature are working to restore these conservative principles and restore trust that our elected officials will be moral and ethical leaders who will get North Carolina back to work. It is now up to Gov. Perdue to work with them.”

VIDEO: Perdue on Business

Gov. Bev Perdue proposed cutting the state's corporate tax rate from 6.9 percent to 4.9 percent during her 2011 State of the State address.

VIDEO: Perdue on Education

During her State of the State address, Gov. Bev Perdue proposed a program to provide North Carolina high schoolers a path to earn a 2-year college degree at no cost to them. She also pledged not to cut K- 12 classroom teachers or teacher assistants as part of her proposed budget. 

VIDEO: The GOP Response

The Republican response to Gov. Bev Perdue's State of the State address was delivered by Senate President Pro Tempore Phil Berger of Eden.

GOP Response: State of the state's economy is grim

During the Republican response to the governor's State of the State address, Senate President Pro Tempore Phil Berger said the new GOP majorities at the legislature will make cut taxes and make government smaller.

“The state of our economy is grim," Berger said. "And North Carolina faces serious challenges. These demand our undivided attention – and Senate and House Republicans already have taken steps to get our state back on track.

“But instead of maintaining the status quo, and continuing the failed policies that got us in this mess, we’re working to usher in a new era of government responsibility and accountability.

"For far too long, decision-making in these halls has been driven by the belief that government has all the answers.

"Over the past decade, Democratic officials insisted government incentives and programs create jobs better than the private sector. They said government knows what’s best for our kids, government should provide your health care, and government can fix almost any problem."

Read the rest of Berger's speech by clicking on "Read More." 

Perdue: No job cuts for teachers and classroom assistants

Gov. Beverly Perdue hinted at big cuts coming in the state budget she will propose later this week, but offered no speciffic details about where the ax might fall.

She did rule out cuts to K-12 teachers and teacher assistants feared by many educators.

"I have made deep and painful cuts, and I will listen to any suggestion for cutting waste, finding savings and stretching our limited resources," Perdue said. "But there is one thing I will not do — I will not sacrifice our children's future. We will not eliminate teachers, whose job it is to build that future and the future of our state. No governor or legislature in our history has ever walked away from that core responsibility, and I refuse to be the first."

Perdue proposes new community college plan

In her speech, Gov. Beverly Perdue proposed North Carolina's Career and College Promise — a consolidation of existing programs that would allow high school students who meet certian criteria to earn a college associate's degree at no cost to them.

"The students of the Career and College Promise will have a new reason to stay in school — because for what may be the first time, for many of them or their families, they will have a clear, attainable path to success," Perdue said. "They will have the ambition to conquer tomorrow. They will be the workforce we depend on to propel our futures. These students will be the workers who fill our 21st century industries and workplaces."

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