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Last weekend, North Carolina’s General Assembly gave final approval to a state spending plan for next year that significantly cuts spending, allows temporary taxes to expire, and offers small businesses a new tax break.  The budget now sits on Governor Bev Perdue’s desk and observers are watching closely to see if she will keep her promise to veto a budget that moves the state backwards in education spending.

New North Carolina Speaker of the House Thom Tillis penned an op-ed describing his party’s approach to the Tarheel state’s $2 billion shortfall as a “new choice for North Carolina.”  This choice includes sticking to a campaign pledge not to raise taxes. It slashes funding to the state’s early childhood education programs, K-12 schools, community colleges, universities, Medicaid, court and prison systems, and substance abuse and mental health services resulting in the loss of thousands of government jobs. 

But, there are alternatives to rolling back North Carolina spending to unprecedented levels, laying off government workers, and securing the economic recovery the state’s new leaders seek.  

As the North Carolina Budget and Tax Center points out, the most damaging cuts in the final legislative budget agreement could be altogether avoided if lawmakers would extend two temporary taxes and close other major tax loopholes in the state. 

First, Governor Perdue included an extension of ¾ of the 1 cent sales tax increase in her budget plan.  Second, advocates have also called on state leaders to extend a temporary personal income tax surcharge for the state’s wealthiest taxpayers as well as a surcharge for profitable corporations. Finally, tax loopholes abound and for years lawmakers have talked about, but failed to act on, comprehensive tax reform that would ensure more fair and adequate revenues in the short- and long-term.

Unfortunately, unless a minimum of 2 of the 5 democratic House members who voted in support of the budget are convinced to change their minds, it appears a veto from the governor could be overturned and the ‘new choice’ for North Carolina will be in effect for at least a year in the state.