Taxes, raises may stymie budget

Governor scolds lawmakers over teacher salaries and tax cuts. Lawmakers have shunned Easley's tax increase proposals

RALEIGH -- Gov. Mike Easley accused legislative leaders Sunday of seeking to "shaft" public school teachers in favor of a tax cut benefiting the wealthy.

With the end of the fiscal year looming today at midnight, members of Easley's senior staff met Sunday morning with House and Senate leaders in an attempt to hammer out a state budget.

A couple hours later, the governor issued a searing statement saying legislators are using dated revenue projections rather than newer numbers from his office that reflect the economic slowdown of recent months.

Easley will not sign a budget that is not realistically balanced, the release said.

"The General Assembly cannot ignore reality," said the statement attributed to Easley. "The very latest numbers verify that we remain short of the estimates that legislative budget writers are currently using. We recommended specific and sensible ways to fill the budget gap. ... I am concerned that this message keeps falling on deaf ears."

Sen. Linda Garrou, a Winston-Salem Democrat among those who met Sunday with Easley's aides, said the strident tone of the media release was less than helpful.

"It doesn't make me feel that great," Garrou said. "I'm disappointed he's not willing to say, 'Well, hey, wait a minute, there's some things I could do.' I'm disappointed he feels the need to throw these stones at us this morning, and I hope he'll have a better day."

In an election year with top statewide posts on the November ballot, the fight over the proposed $21 billion budget is largely a squabble among the Democrats who control the executive mansion and both chambers of the legislature.

Barred from seeking a third term, Easley proposed tax hikes on cigarettes and alcohol to pay for increased spending for education and shoring up the state's floundering mental health system. Legislators, many facing tough re-election fights, pronounced the tax increases dead on arrival.

A proposal to cut taxes on gifts of more than $12,000 has proven hard to kill, however. The governor's office says 54 percent of the total gifts affected are of $1 million or more.

A separate proposal would boost tax rebates provided to low- income families.

"It makes no sense to provide almost $20 million in tax cuts to the wealthy in this economic environment," Easley said.

The governor reserved his sharpest language for proposals on teacher pay and pre-kindergarten programs. Under the legislature's proposed budget, beginning teachers would get only a $470 annual pay increase while other state employees would get $1,100 or more, the governor said.

That won't help North Carolina cure a chronic shortage of teachers, nor will it allow legislators to keep their pledge to meet the national average in teacher pay, the governor said.

"Teachers get shafted in this budget," the governor said. "This is mind-boggling."