© 2009 Evelyn Hawthorne, NCOTA Government Relations Consultant

Lawmakers Close to New Budget Agreement

Reports from the conferees on the finance package for the 2009 NC Budget bill indicate hope. Sen. David Hoyle (D-Gaston) and Rep. Paul Luebke (D-Durham) both indicated that they are close to agreeing on a tweaked version of the finance package previously rejected by Gov. Bev Perdue. Sen. Hoyle indicated that he felt the new package will address the concerns raised by the governor last week.

Finance Package in a Nutshell -- The new package changes the proposal to impose a temporary surtax on personal and corporate income taxes. Instead of the temporary 2 per cent surtax, the new proposal is to impose a temporary 3 per cent surtax on corporate income tax and on higher income returns at $250,000 and up. The temporary personal income tax surcharge on returns from $60,000 to $250,000 would be 2 per cent, with no surcharge at all below $60,000. The proposal includes the following items included in the last proposal:

• State sales tax increase of 1 per cent, estimated to generate more than $803 million in the first year and more than $1.61 billion in the second year. Impose sales tax on digital products and “click throughs” estimate to generate about $11 million.

• Increase “sin” taxes as follows: Cigarettes: 10 cents more per pack; Other Tobacco Products:  2.8% tax increase; Beer:  5 cents per six pack; Wine: 4 cents per bottle; Liquor:  a 5% increase in the excise tax

Gov. Perdue did not indicate definitively whether or not she would accept the new proposal and again raised the concern about cuts in education and the budget’s impact on working families. Early in the week, she reportedly asked lawmakers to raise another $200 million to address the education cuts.

Continuing Saga – Continuing Resolution -- In the meantime, House and Senate members approved third temporary budget resolution July 30. The new “CR” is H 102 and departs from previous measures by not including an expiration date. The measure would expire when a permanent budget is adopted. The bill also has other significant differences, including authorizing the state Budget Director to implement cuts to which House and Senate members agreed as indicated in S 202. Additionally, H 102 has a provision that allows LEAs to use American Recovery and Reinvestment Act (federal stimulus) funds to address staffing issues for the upcoming school year. The funding levels for the temporary measure would continue at 84 per cent of last year’s budget. Gov. Perdue must sign the bill by midnight July 31, when the previous CR expires. Should the budget deliberations go on indefinitely, the governor would be responsible for making the adjustments necessary to comply with the Constitutional mandate to keep the state budget balanced. To read the bill, please view

http://www.ncleg.net/Sessions/2009/Bills/House/PDF/H102v3.pdf

Medicaid Funding To Be Cut

NCOTA learned July 30 that Medicaid providers will experience an average cut of just under 3 per cent. Lawmakers would, however, provide the Secretary of Health and Human Services with flexibility and discretion in application of the cuts. We will share other details as soon as they become available.

To identify your legislators and to find their contact information, please visit www.ncleg.net

For more information about the North Carolina General Assembly, please visit www.ncleg.net . For information about specific issues, please contact NCOTA government relations consultant Evelyn Hawthorne at evelynhawthorne@nc.rr.com.