Heard on the Street Posted: Thursday, July 23rd, 2009 Budget agreement reached
Nobody seems to be happy with the compromise finance package the conference committee reached Tuesday afternoon. The agreement raises some $990 million for the year that started July 1. The Senate’s tax reform package was scrapped, as was the attempt by the House to impose more taxes on businesses and wealthier taxpayers.
The compromise solution imposes an additional one cent sales tax, raising $803 million. It is supposed to be a temporary tax but time and circumstances will determine whether or not this is the case. Cigarette taxes will go up ten cents a pack, generating $33 million; $12.6 million will be raised from an additional nickel tax on a six pack of beer; and increased taxes on wine and alcohol should raise $23 million. In a surprising move lawmakers will impose a two percent surtax on individual and corporate taxpayers who owe taxes at year’s end, expected to add some $212 million. This may be the lightning rod for criticism for the plan.
Governor Perdue was quite obviously one of those not pleased with the compromise. Yesterday she said, "School starts back in less than a month, and principals, teachers and parents still don’t know what they can expect for their children in the classrooms. This is unacceptable. I am once again calling upon the General Assembly to do what they were sent to Raleigh for – to make tough decisions in tough times. From what I’ve seen so far, I remain very concerned about the budget’s impact on the K-12 classroom. Find a way to protect public schools and the core services of safety and public health."
In a written statement today the Governor said, "I have spoken with the President Pro Tem and the Speaker today and told them that I would not support a budget with an income tax increase on North Carolina’s working families. I reemphasized the need to protect public schools”.
Tough talk from our state’s Governor. Some say she is coming late to the party but most we talked with are applauding Perdue for taking a strong position. Even those who may not agree with her tax proposals are applauding her for taking leadership and acting like the state’s chief executive.
One thing that is obvious is that legislative leadership developed this finance plan without Perdue. Perhaps they thought she wasn’t a player and would go along with anything they put together. They may be wrong. Will she veto a budget? How seriously will Speaker Hackney and President Pro Tem Basnight take Perdue’s message? Will they go back to the drawing boards and rework the finance package? If so, will they increase the taxes to the $1.6 billion Perdue proposed over a week ago? How will this delay a budget agreement? What impact will it have on the rest of this legislative session?
We are seeing a new Beverly Perdue. A Governor Beverly Perdue. We can only imagine what has been taking place on Jones Street today. Perdue made the break from being a long time legislator to being a Governor. She’s heard those saying she is a one term Governor and may have decided that if so, she is going to give this her best shot, letting the chips fall where they may. Today the game changed and this next week is going to be interesting. Count on us talking about it next week on NC SPIN.
There are many interesting ramifications as to what is going on this session. All 170 members of the legislature will be up for election in 2010 and in a typical election year lawmakers are unwilling to take on controversial issues that might upset voters. With many big issues still on the table like annexation, beach insurance, tax reform, public school governance, ethics reform, the economy and our probation system, time appears to be running out for many of these issues.
What legislators know that you don’t
Part of what hung up the finance package involved the heated debate about in-state tuition being provided to out-of-state students at our state supported universities. It has become genuine bone of contention for many who believe it a waste of tax dollars. When the dust settled in the budget battle the in-state tuition provision was still in the budget.
SPINCycle has obtained information prepared by the UNC President’s office showing the impact during the 2008-09 year.
This information can be viewed on the online version of this week's SPINCycle.
Note the number of academic scholarships at both NC State and UNC Chapel Hill, the two big scholarship beneficiaries. In the case of Chapel Hill we are subsidizing the Morehead Scholarship, Rams Club and Robertson scholarship programs. In the case of the Rams Club and Morehead Scholarships we are told they each have a corpus of about $160 million. At NC State we are helping the Park Scholars program with reduced tuitions.
What does it say about a state that is willing to charge taxpayers and our students more so as to benefit rich charitable endowments?
Kudos to UNC and Thorpe
While on the subject of higher education, high praise needs to be heaped on UNC Chapel Hill and new chancellor Holden Thorpe for being willing to examine their operations with an eye toward being more efficient and more accountable.
A report released Wednesday indicates that UNC can improve operations by reducing administrative layers, focusing more resources on the classroom, and standardizing and streamlining operations. The report was conducted by an outside efficiency expert and funding by a private donor.
Not only are we seeing accountability but also excellent public disclosure. The full Bain & Company report is available at The Rest of the School Governance Story.
Wake schools busing to end?
What is going on with the Wake County School Board? Four incumbents have announced they will not seek re-election and one member has been appointed to the legislature, leaving only one incumbent member seeking re-election. Insiders tell us forces in communities like Holly Springs, Garner and Cary have pledged to do whatever it takes to replace incumbents with candidates who do not favor moving students from school to school so frequently and pledge to reduce lengthy school bus rides each day.
It doesn’t take a seer to read these tea leaves. Wake County’s program of busing is about to be gutted and serious challenges will be made to the priority for economic diversity. Look for the state’s largest school system to adopt a neighborhood schools approach similar to that in Charlotte, which also abolished large-scale student busing.
News conference to point out benefits of offshore drilling
A news conference called by the NC Chamber of Commerce and NC Farm Bureau for Monday is expected to point out the revenue benefits to North Carolina from offshore drilling. We aren’t privy to the details but we hear that the numbers are staggering.
What is PhRMA trying to gain?
PhRMA, the national trade association for pharmaceutical companies is spending over $100,000 in TV and newspaper ads urging viewers to call Senator Kay Hagan and ask her to support the Health Care Reform package.
Why would a national trade association spend six figure sums targeting Hagan’s support? What are they going to gain if the bill passes? And what are these ads really saying? We’ve read the copy and it is difficult to understand what the message really is. Here’s what the ad says:
"On the issues that matter to working families, Kay Hagan has been there — whether it's fighting to make healthcare more affordable or voting to expand healthcare coverage to 11 million kids without insurance. And now, Kay Hagan's leading the fight to ensure quality, affordable healthcare for every American, so you get to choose your doctor, and your doctor decides which treatments and medicines are best for you. Call Senator Hagan today. Tell her thanks for standing up for us."
What are the drug companies trying to do with this ad?
Demonstrations tomorrow
Look for demonstrations by the State Employees Association of North Carolina and union reps at the Health Forum being presented tomorrow in Raleigh. Not only is health reform a big issue nationwide but people on all sides of the issue are getting involved on the state level. We could see conflicting lobbying groups in play at tomorrow’s event.
House passes annexation
With all the debate about forced annexation, legislators have felt the need to do something and the House has passed a bill which doesn’t make anyone happy. Cities and towns like having the authority to annex property in order to grow and expand their tax base. Residents who are annexed are frequently unhappy at having to pay municipal taxes while receiving few benefits in return. Taxpayers have demanded the opportunity to vote. Cities and towns say that is a fool’s game. Hardly anyone is going to voluntarily vote to increase their taxes.
The House compromise allows a vote if 15 percent of the city’s present and proposed voters sign a petition requesting a vote. This is high threshold for a petition campaign and few votes will likely be held. So what has this bill really accomplished?
Windmills in our future
One issue getting attention is the possibility of generating electricity through windmills. But there is controversy over where the devices could and should be located. Representatives from the western regions don’t want windmills on mountain ridges that will mar the beauty of our mountains. Coastal residents don’t appear to be so disturbed about the prospects.
One wag suggested we install the windmills on Jones Street in Raleigh because there is so much hot air coming from the legislative building that we could generate lots of power. ");
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