N.C. state tax increase may be here to stay

An earlier version of this story incorrectly stated the intentions of Gov. Bev Perdue toward the tax increase. She is unsure if she wants to keep the increase and will announce it when she releases her budget later this month. The Daily Tar Heel apologizes for the error.

The temporary increase in state sales tax instituted two years ago might be here to stay.

The 1 percent sales tax increase initiated in September 2009, set to expire in July of this year, could be made permanent for the state to help make up for the expected $3.7 billion budget shortfall, said Gov. Bev Perdue in an address to the N.C. General Assembly.

The sales tax generated more than $1 billion in revenue.

But the tax increase has caused friction within the state legislature that reconvened last Wednesday.

Mark Johnson, spokesman for the Perdue, said the governor will introduce her budget to the General Assembly in February and is looking forward to working with state legislators to best deal with budget cuts.

“We will put forth budget proposals next month, and our priority is creating jobs and strengthening education,” he said.

However, the sales tax is striking a nerve with Republican legislators.

N.C. Rep. Nelson Dollar, R-Wake, said Republican legislators ran on a platform that included helping the people suffering from the 1 percent increase.

“Ten percent of the workforce is still out of a job, unemployed, and the tax is a burden on low-income citizens and on seniors,” Dollar said.

He said the sales tax is not necessary for education funding.

“We’re going to have somewhere in the range of $18.5 billion and we can certainly ensure that quality education is a top priority in using those funds,” Dollar said.

However, Democrats in the General Assembly are aligning themselves with Perdue’s stance on the tax.

N.C. Rep. Rick Glazier, D-Cumberland, said it might be difficult to make budget cuts without affecting higher education across the board.

“It’s going to be impossible to find $3.75 billion worth of cuts alone to balance the budget without doing some very significant harm to public education and universities and community colleges,” Glazier said.

But he said members of the assembly are ready to work together to reduce spending.

“The most important thing to do is work together in a bipartisan way to find a balanced, responsible budget that allows the state to move forward with the cuts it needs to make, but not in ways that generationally damage the most important institutions in the state,” Glazier said.

While Glazier said he does not think the tax will cause bipartisan friction in the General Assembly, N.C. Rep. Verla Insko, D-Orange, said she acknowledges the possibility of a showdown between Republican and Democrat legislators on this issue.

“We’ll probably not see more disputing than usual, but that’s the way government works,” Insko said.

Contact the State & National Editor at state@dailytarheel.com.