Senate Democrats have their tax plan ready.

According to a document received by the Associated Press, the Senate Finance Committee will consider a proposal today that would reduce the sales tax rate but expand the services it covers, repeal the food tax and raise sin taxes.

The plan would raise $600 million a year, more than the $500 million in revenue missing from the Senate budget passed earlier this month.

Under the plan:

* The sales tax rate in most counties would drop from 6.75 percent to 6 percent.

* The sales tax would be expanded to cover moving services, building repairs and downloaded music.

* Corporate and individual income tax rates would go down.

* The 2 percent tax on food at grocery stores and other retailers would be repealed.

* The cigarette tax would be increased 15 cents per pack.

* The alcohol excise tax would be increased.

The House is also expected to put together its own proposals for modernizing the tax code.

Tobacco companies and growers bought full page ads in several newspapers across the state today to help boost opposition to a possible increase in the state cigarette tax.

The newly formed N.C. Taxpayers Alliance emphasizes the estimated 50,000 jobs in the state linked to tobacco production and warns that higher taxes will harm the industry. Gov. Beverly Perdue has proposed a $1-per-pack increase, though the Senate is expected to reduce that number.

"It will hurt farm workers and tobacco factory workers," the ad says, "It will hurt convenience stores and their workers."

The ads encourage readers to call their local legislators and encourage them to oppose a tax increase. The advertisements appeared in newspapers in Wilmington, Rocky Mount, Goldsboro, Wilson, Greenville, Burlington, Gastonia and Boone.

The members of the alliance are tobacco companies: Reynolds American, Lorillard, Universal Leaf and Swedish Match, along with the N.C. Tobacco Growers Association and the Cigar Association of America.

See a copy of the ad in the Wilmington Star-News by clicking the attachment.

A LITTLE OFF THE TOP: Gov. Beverly Perdue's haircut of the state budget turned out to be a light trim, not a buzzcut. Using an accounting trick, tax hikes on cigarettes and beer and $1.7 billion in federal stimulus money, she put forth a $21 billion budget. Legislative Republicans howled, while Democrats argued over the tricks and taxes.

LET THE SUN SHINE IN: It was Sunshine Week in North Carolina. Perdue and Attorney General Roy Cooper backed a bill to disclose deaths in mental hospitals, others promoted legislative TV. Legislators continue to balk at releasing e-mails. And an analysis by the Associated Press found that the state third best at putting records online.

COURTING JUDGES: U.S. Sen. Kay Hagan is looking for some help with federal judges. After years of partisan fighting, the Greensboro Democrat has made it a top goal to get a Tar Heel on the Fourth Circuit Court of Appeals. This week she announced she would put together a panel of experts to vet potential candidates.

IN OTHER NEWS: A national liberal group aired a local TV ad to pressure U.S. Rep. Bob Etheridge to vote for President Obama's budget. ... A plan to fix the State Health Plan got caught up in concerns it would hurt independent pharmacists. ... State Sen. Steve Goss backed down on a bill to criminalize blog libel, fittingly telling a local blogger first. ... Meantime, Sen. Paul Stam sought to let towns avoid buying classified ads to publicize town meetings.

Senate leaders said Gov. Beverly Perdue's budget is a good "starting point."

That raises the question: What next?

At least three items in the budget face some skepticism in the Senate: An accounting change and hikes in the tobacco and alcohol taxes. But getting rid of them means finding the money elsewhere.

* Accounting: Perdue calls it "truth in budgeting," but Speaker Joe Hackney and Senate leader Marc Basnight think reducing funding for vacant positions could leave state agencies with less wiggle room in a down economy. Cost: $150 million.

* Tobacco Tax: A longtime health advocate, Perdue says there's a social benefit to a $1-per-pack hike. But Sen. Linda Garrou, a budget writer, represents R.J. Reynolds, and the federal rate is also going up. Cost: $350.4 million.

* Alcohol Tax: Like the tobacco tax, but at a smaller scale. The proposed hike isn't as high and the industry does not have quite as many friends at the General Assembly, but the logic is the same on both sides of the argument. Cost: $157.5 million.

In all, then, senators would need to find another $658 million in the budget to make up for cutting these three items.

Several legislators have signed onto parts of Gov. Beverly Perdue's budget.

Three bills filed today at the legislature echo provisions of the $21 billion proposed budget unveiled by Perdue this morning:

H.B. 619: Earmarks $5 million for N.C. Green Business Fund, Reps. Pricey Harrison, Angela Bryant, Paul Luebke and Joe Tolson

H.B. 640: Increases per-cigarette tax rate to 5.5 cents, directs some revenue to mental health, Reps. Jennifer Weiss, Rick Glazier, Luebke and William Wainwright

S.B. 608: Directs $5 million for the One North Carolina small business fund, Sen. David Weinstein

Naturally, the sponsors hope to tap into momentum created by the governor's proposals, but given the amount of time it takes to write a bill, these weren't simply filed as a "me-too" effort.

The cigarette tax proposal also differs from Perdue's, which simply covers the general fund revenue shortfall.

* Gov. Beverly Perdue proposed eliminating 1,411 positions, of which 444 are vacant now. Of the other 967, 619 would be reassigned.

* Liberal health care advocate Adam Searing says the budget includes "a serious effort to protect critical health services," gives a run down.

* N.C. Chamber head Lew Ebert likes spending on K-12 education and workforce training, small business tax relief and lack of broad-based tax hikes.

* Anti-tax Americans for Prosperity's state chapter, not surprisingly, doesn't like proposed increases on alcohol and tobacco taxes and licensing fees.

Gov. Beverly Perdue says drinking and smoking are voluntary.

At a presentation on her proposed budget this morning, Perdue said she decided to include increases in taxes on tobacco and alcohol in order to avoid more broad-based taxes.

"I just one night, thinking about it all, made the decision... that I was not going to do anything that further diminished the income of a citizen in North Carolina," she said.

But she said products such as cigarettes and beer are "discretionary."

"Those of us who choose to use those two products can afford to suck up," she said.

She said she would be "very reluctant" to increase corporate, personal income or sales tax right now, though she respects the power of the legislature "to do what they may."

"I would believe they're hearing the same conversations I'm hearing," she said.

North Carolina has the sixth-lowest cigarette tax.

According to research by the Campaign for Tobacco-Free Kids, an anti-smoking advocacy group, only five states have lower cigarette taxes: Florida, Virginia, Mississippi, Missouri and South Carolina.

North Carolina's 35-cents per-pack tax is far below the $1.15 median rate of Arkansas and Delaware. The lowest is 7-cents in South Carolina; the highest, $2.75 in New York.

Gov. Beverly Perdue has proposed raising the tax by $1 per pack. The new rate of $1.35 would tie Pennsylvania for 20th highest rate. 

It would also be the highest among neighboring states of Georgia (37 cents), Virginia (30 cents), South Carolina and Tennessee (62 cents).

The tax rates are as of April 1 of this year. The federal cigarette tax will increase to $1.01 on April 31. In addition, a few cities and counties charge local cigarette taxes.

The state cigarette tax has gone up only three times in the past 18 years.

According to research by the N.C. Department of Revenue, the state's cigarette excise tax increased from 2 cents a pack to 5 cents a pack on Aug. 1, 1991.

It increased to 30 cents a pack effective Sept. 1, 2005.

And it increased again to 35 cents a pack effective July 1, 2006.

Those last two increases occurred under Gov. Mike Easley. Easley proposed raising the cigarette tax another time to 55 cents a pack in his 2008-09 budget, but the legislature balked.

Gov. Beverly Perdue has proposed raising the tax $1 per pack.