Perdue halts tax package deal

From staff reportsJuly 23, 2009 

Gov. Beverly Perdue succeeded Thursday in blocking a tax package deal struck between the House and Senate just 24 hours earlier.

Senate leaders said they would start over on what taxes to raise and how much because of objections Perdue raised to a proposed 2 percent surcharge on all income tax brackets. Perdue also is insisting on no reduction in per pupil spending for public schools, said Sen. David Hoyle, a Gaston County Democrat and co-chair of the Senate Finance Committee.

"What we're going to do is regroup and replan," Hoyle said.

House leaders generated further confusion when they insisted that the tax deal was still viable. "It's still on the table," said Rep. Mickey Michaux, a Durham Democrat and senior chairman of the House Appropriations Committee.

House leaders also said they would be writing their own version of the spending side of the budget. Legislative leaders, already three weeks late in crafting a budget, reached a tax deal yesterday that included the income tax surcharge, a 1-cent hike in the sales tax and a group of alcohol and tobacco tax increases to raise $982 million.

House Majority Leader Hugh Holliman, a Lexington Democrat, expressed frustration that Perdue blew up the compromise. Perdue's staff has been privy to negotiations.

"We would certainly appreciate it, if she has any problems with that plan, that she'd let us know," Holliman said. Perdue, a Democrat, wants another $200 million, and Hoyle said Democratic leaders don't know where that money will come from.

Republicans criticized the Democratic derailment.

"Either (Perdue) was in on (the tax package) and changed her mind or she wasn't consulted," said Senate Republican Leader Phil Berger, of Eden. "Either way, it's not a good situation."

Berger also questioned why Perdue objects to an income tax increase as penalizing working families but supports raising the sales tax.

"Working families pay all those taxes," Berger said. Sen. Dan Clodfelter, a Democrat from Charlotte and another finance co-chair, said he expects another temporary spending bill extending the budget deadline for a third time past the current date of July 31.

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