Gov. Bev Perdue and GOP agree on gas tax

lbonner@newsobserver.comMay 11, 2012 

DEMOCRATS03-NE-022812-RTW

Governor Bev Perdue

ROBERT WILLETT — rwillett@newsobserver.com

  • Budget highlights Gov. Bev Perdue has proposed a $20.9 billion budget that focuses on education. Her plan includes: • Increasing the K-12 budget by $562 million, bringing the total to about $8 billion. The money would save or create 11,000 school jobs – most of them teachers or teacher assistants – and reduce class sizes in kindergarten through third grades. • A 1.8 percent raise for teachers and state employees • A 1.9 percent cost of living increase for state retirees • An additional $18.2 million for the early childhood program Smart Start, and money for the Governor’s School, an enrichment program for high school students that is running on donations this summer. • A tax credit for businesses that hire unemployed workers and retain them for at least a year. • A tax credit for angel investments in certain small businesses. • Start a film industry workforce training program at community colleges to train up to 400 workers for production crews. • Fund programs to boost clean energy and ag-biotech research

Surprise. Democratic Gov. Bev Perdue and Republican legislators agree on something.

House Republicans said last week they want to cap the state gas tax. Gov. Bev Perdue said Thursday she wants to do the same.

The tax rate is expected to fall July 1 from 38.9 cents to about 37.7 cents, because part of the tax is tied to wholesale fuel prices and fluctuates as they do..

And now that it’s falling anyway, Perdue and the House Republicans say they want to prevent it from rising. They agree on a cap of 37.5 cents. Perdue says this would save motorists $63 million in gas taxes, a tiny sliver of the $1.88 billion the state expects to rake in. Last fall, the House and Senate could not agree on whether to cap the gas tax, but Senate leader Phil Berger said he wants to freeze the tax during the short session that begins next week.

The gas tax may be one of the few points of agreement in what are expected to be drastically different ideas on what the state should pay for next year.

Perdue’s budget, which she released Thursday, has raises for all state employees, a sales tax increase, and $785 million more for education.

House budget writers are set to release their proposal next week, but it will not include the 3/4-cent sales tax hike fueling much of the increase in Perdue’s proposed $20.9 billion plan.

The tax increase would raise about $760 million over 11 months, or $850 million a year. She proposes to keep the sales tax increase for two years.

Perdue’s proposal is about $1.2 billion more than the current budget.

Legislative Republicans have been clear they will not go for a tax increase. They disregarded Perdue’s last budget proposal, which sought to keep in place a portion of a sales tax set to expire.

“I’m hopeful that they will not consider this budget to be dead on arrival,” Perdue said at a news conference Thursday morning. “I’ve offered up one set of solutions paid for in a certain way. Let them find another revenue source. I’m not beholden to the sales tax, but we have to have revenue to do what we need to do.”

Responses to Perdue’s proposal fell along predictable lines.

Legislative leaders bashed it for the proposed tax increase.

“Gov. Perdue’s budget proposal is, disappointingly, more of the same failed approach that led to the fiscal mess the Republican legislative majority inherited,” House Speaker Thom Tillis said in a statement. “The Governor proposes to raise almost a billion dollars in taxes on every citizen and small business.”

Dr. Olson Huff, chairman of the Smart Start state governing board, praised Perdue for increasing Smart Start and N.C. Pre-K budgets.

“Her budget reflects her ongoing commitment to ensuring that children have the opportunities that they need to succeed in school and in life,” he said in a statement.

Perdue angered legislators in February when she refused to start collecting new tolls on two toll-free ferry routes, and higher rates on three toll routes, as ordered in the state budget last year. She cited economic hardship in ferry-dependent coastal communities. Republicans sharply criticized Perdue but shied away from fighting her on it. Both budget drafts, theirs and now hers, would put off the new tolls until July 2013.

But there’s a difference here: What to do about the additional $2.5 million in toll collections that had been expected in the budget? Republicans say DOT should make up for it with unspecified spending cuts. Perdue says the legislature should make up for it by giving the ferry division an extra $2.5 million in tax money.

Meanwhile, House Republicans want to eliminate about 100 DOT staff positions – most of them vacant – while Perdue proposes to hire 99 new workers. Most of these new employees would go to the Division of Motor Vehicles to implement a new statewide system linking car registrations with county property taxes, to start in July 2013.

Bonner: 919-829-4821

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