Gov. Perdue pushing tax increase

Gov. Bev Perdue will propose restoring a 3/4-cent sales tax increase in the next state budget to stop what she called "deep and unnecessary cuts" to schools.

The tax increase would raise $850 million a year, and the revenue would be dedicated to education, Perdue said on Tuesday.

With a 3/4-cent increase, sales taxes would rise in most counties from 6.75 percent to 7.5 percent.

"I'm going to fight for our children's future by doing a fraction of a penny for progress for schools and for children," she said at a news conference.

"Our history is chronicled by our consistent investment in education. Our people always step up and do the right thing for the future. And this is the right thing for North Carolina's future."

A proposal for a tax increase in an election year is sure to become campaign fodder. State GOP executive director Scott Laster said Perdue's campaign slogan would be "For more ... taxes."

The proposal received a cold reception from Republican legislative leaders. Senate leader Phil Berger in a statement called the proposal "dead on arrival in the General Assembly."

House Speaker Thom Tillis said the regressive tax "would negatively impact every level of society."

The early rounds of this year's budget debate could shape up as a repeat of last year's fight, with Perdue proposing a tax to support education in the face of overwhelming legislative headwinds. The legislature returns in May for its "short session" to deal with the budget.

State officials frequently talk of the education budget "falling off a cliff" in 2012 because the last of federal stimulus money for school jobs will be gone. More than $250 million in federal money is supporting 5,000 school jobs this year.

A $74 million discretionary reduction is already built into the state budget for next year, bringing to $503.1 million the amount local school districts must return to the state.

In 2009, Perdue proposed and the legislature approved a package of temporary taxes that included an income tax surcharge on high wage earners and a 1-cent sales tax increase.

The taxes were set to expire last year, but Perdue proposed keeping three-quarters of the penny sales tax increase.

The GOP-controlled legislature ignored Perdue's idea, let the tax increases expire and wrote their own budget without that revenue. Perdue vetoed the legislature's budget, and the legislature canceled her veto.

The state Department of Public Instruction reported that in 98 of 100 counties, 6,383 school positions were eliminated this school year, and 2,418 employees were laid off from prekindergarten through 12th grade. Of those eliminated jobs, 1,723.7 were K-12 teaching positions. More than 530 teachers were laid off.

UNC students, administrators and alumni are locked in a debate over tuition increases at a time when class sizes are increasing and course selections are dwindling.

Polls have supported tax

Perdue called the legislature's education cuts "unnecessary and extreme."

"They've done serious damage to the core of North Carolina's educational backbone," she said.

Groups and individuals who wanted all along for the state to keep the extra 3/4-cent tax applauded the announcement.

Polls last year showed that people were willing to keep the tax if the money was used to support education, said Rob Thompson, executive director of The Covenant with North Carolina's Children.

Durham, Montgomery, Orange and Buncombe counties approved local, quarter-cent sales tax increases last year to raise money for local schools, community colleges, or prekindergarten slots.

Some of Orange County tax revenue is to go to water and sewer lines.

Getting legislative approval of the tax increase is unlikely, Thompson said, but it is Perdue's responsibility to lay out an plan for funding education.

"She's putting a lot more pressure on the legislature to try to navigate that," he said.

"Are we going to go against public opinion and continue to cut education? Are we going to pony up here and continue to do what's best for kids in the state?"

House Minority Leader Joe Hackney, an Orange County Democrat, said he would support Perdue's proposal.

He countered questions about an election-year tax increase with observations about potential education cuts.

"It's a bad idea to do Draconian education cuts in an election year, I do know that," he said. "Absent this, there would probably be other further and deeper cuts."

Republicans were able to override Perdue's budget veto with the help of five House Democrats.

One of them, Rep. Dewey Hill of Lake Waccamaw, said he didn't think his constituents could afford paying higher sales taxes.

"I think it might be a hard sell," he said. "I know it would be in my area down here. It's a very depressed area - high unemployment, jobs are scarce. I expect it would be tough."