Budget plan not as bad as feared

Gov. Beverly Perdue's budget is not as drastic as some feared.

Her initial $21 billion proposal would raise taxes on smoking and drinking, cut as many as 268 state employees and shuffle more than 1,000 more, eliminate 20 smaller programs, close seven prisons and increase per-pupil spending. (N&O)

It also expands the Earned Income Tax Credit, makes bonuses to veterans tax-free, extends some business tax deductions and increases licensing and vital records fees. (N&O)

Legislative leaders say the plan is a good starting point, though they cautioned that tobacco and alcohol taxes as well as an accounting change may be a tough sell to lawmakers.

"I don't think you'll see a lot of differences with what she's proposed," said Senate leader Marc Basnight. (GN-R)

State employees are relieved the proposal avoids furloughs, pay cuts and massive layoffs. (Times-News) But tobacco and alcohol interests say the taxes would hurt their industries and put jobs at risk. (Times-News)

Politicians from the rural areas served by the seven prisons also object. (AP)