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Together NC, a coalition of more than 100 non profits, businesses, unions and trade associations, proposed $1 billion in sales and state income tax increases to restore job and program cuts.

The proposal goes beyond the 3/4-cent sales tax increase Gov. Bev Perdue proposed last week. Together NC suggested raising the sales tax by one penny and adding an 8.5 percent tax bracket for households earning more than $1 million a year. 

The ideas have no chance in the Republican-led legislature, which last year batted away any suggestions to keep part of a temporary sales tax increase. 

"We're not here because we try to do the politically easy thing," said Louisa Warren, a Together NC coordinator.

The proposed budget Gov. Bev Perdue releases tomorrow will include a sales tax increase and an additional $562 million for K-12 schools.

Her proposed budget will total about $20.9 billion. A 3/4-cent sales tax increase is expected to raise $760 million over 11 months, or $850 million a year.

Republican legislative leaders have said repeatedly they do not intend to raise taxes.

Perdue's proposed education budget increase would make up for the loss of $258 million in federal "edu-jobs' money, and reverse the "flex cuts"  school districts had to take last year and are built in to next year's budget.  The $562 million would pay for 11,000 additional jobs in schools, and would be enough to reduce class sizes in kindergarten through third grades. Total K-12 spending would rise to about $8 billion.

In case you missed it, Democratic Gov. Bev Perdue and Republican House Speaker Thom Tillis published competing editorials in Sunday's Charlotte Observer about the governor's plan to raise the sales tax for education funding. And they didn't hold the punches. Here are excerpts with links to the full pieces:

Perdue: "The Republican leaders of the General Assembly and I disagree about the value of education. Last year, they passed a budget over my veto that made deep and unnecessary cuts to our schools in order to eliminate a penny from the state's sales tax. That's bad for business. ... It may not be the popular thing to do politically, but it is the right thing to do for our children, and the future of our economy."

Tillis: "(Perdue) tries to sell the plan as a tool for education funding, but she fails to offer any meaningful strategy ensuring the money will be spent wisely. ... Now is not the time to raise taxes - especially on single moms, senior citizens and the unemployed. The governor will say "It's just a penny." It is not a penny. It is $800 million from the pocketbooks of people, many of whom are just making ends meet."

Gov. Bev Perdue will propose restoring a three-quarter cent sales tax increase in the next budget to stop "deep and unnecessary cuts" to schools.

Perdue announced her proposal Tuesday afternoon, when she was scheduled to speak at a Greensboro elementary school. Revenue from the increase would be dedicated to schools, Perdue said.

Perdue proposed extending three-quarters of the temporary sales tax increase in her proposal last year. The legislature rejected the idea. 

North Carolina's sales tax rises tomorrow by a penny from 6.75 percent in most counties to 7.75 percent.

The increase was pushed by Gov. Beverly Perdue and adopted by legislative leaders, all Democrats, as part of a $1 billion tax increase package and a series of spending cuts to balance the state budget this year.

The local portion of the sales tax can vary, as in Mecklenburg County, which includes and additional 1/2-cent transit tax. Its rate will be 8.25 percent starting tomorrow. Alexander, Catawba, Cumberland, Haywood, Martin, Pitt, Sampson, and Surry Counties will have rates of 8 percent.

The sales tax accounts for about 30 percent of state revenue, but it also is the quickest source when legislators are looking for a cash infusion. Consumers start paying it right away, while income tax increases are mostly paid the following year.

The sales tax is criticized as disproportionately burdening middle and lower class taxpayers and also because the tax base for it is shrinking. Consumer spending has been shifting toward services, many of which are not taxed.

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.

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.

Rep. Paul Luebke
Durham Democrat
Tenth Term

What two things would you cut in the state budget? "It's important to stress alternatives to incarceration," reducing the need to build prisons.

Are there any taxes you would be in favor of increasing? Raise the cigarette tax: "It combines public health benefits and some revenue."

— Mark Johnson

Sen. Doug Berger
Youngsville Democrat
Third Term

What two things would you cut in the state budget?  He said there could be savings in merging worker safety programs in the Industrial Commission and the state Department of Labor.

He also said there was a lot of duplication in education programs, such as anti-smoking efforts, in the Department of Health and Human Services.

Are there any taxes you would be in favor of increasing? He said additional revenue could be found in removing the sales tax cap on the purchase of automobiles.

— Rob Christensen 

North Carolina could fall short of projected revenue by 10 percent.

According to a presentation on the budget outlook prepared by the legislature's Fiscal Research Division, the state could fall short of its expecations by approximately $2 billion.

Through December, tax collections were down 6.6 percent.

Particularly hard hit by the recession are three taxes that make up 86 percent of general fund revenues: the personal income tax, the sales and use tax and the corporate income tax. All three are directly tied to the economy.

But state budget officers won't know exactly how bad the recession has hurt tax collections until after April 15, when corporate and personal income taxes are paid for the year.

The presentation says it is "highly probable" that the state's tax collections won't return to the projected amounts until the 2010-11 budget year.