NC governor seeks higher taxes on smokes, alcohol
RALEIGH, N.C.—In the final budget of his eight years in office, Gov. Mike Easley proposed Monday to raise the state's taxes on alcohol and cigarettes to pay for hefty raises for public school teachers and to boost the state's struggling effort to reform its mental health care system.
Easley released his $21.5 billion spending plan, which is an adjustment to the second year of the state's two-year budget passed last year, on the eve of the General Assembly's return to Raleigh for its 2008 session.
The governor's budget also calls for phasing out the $172 million annual transfer from the state's Highway Trust Fund to the general operating fund, creates a sales tax holiday on energy-efficient appliances and a more than $650 million increase in education spending.
The state expects a $150 million revenue surplus, so Easley balances the budget with the new taxes and nearly $400 million in spending cuts.
Budget-writers in the Legislature have been working for weeks on their adjusted second-year budget, which they want to present to Easley for his signature by the time the new budget year begins July 1.
"This budget makes progress in education, human services, public safety and economic development," Easley said in a prepared statement. "I look forward to working with the General Assembly to get this budget enacted before June 30."
The governor wants to raise the cigarette tax from 35 cents per pack to 55 cents starting Sept. 1 so that about $100 million can be generated to help pay for a proposed average 7-percent increase for teachers.
Most other state employees only would see raises of 1.5 percent, in keeping with Easley's preference to differentiate between teachers and rank-and-file employees.
Easley pledged in 2005 to raise the average teacher salary above the national average in four years. The General Assembly agreed in 2005 to raise the cigarette tax from 5 cents to 35 cents by mid-2006. If approved, the tax would remain less than half the current national average of $1.14 per pack.
"It takes real revenue to make real progress in education," Easley said.
Taxes on beer, wine and liquor also would go up to generate $66 million next year for mental health needs. The state's mental health system is struggling with reform efforts that began seven years ago.
But legislative leaders have said there is not much appetite to raise taxes or fees in an election year. However, Senate leader Marc Basnight, D-Dare, has supported raising alcohol taxes to pay for mental health needs in previous years.
Easley also wants more than $700 million in new construction projects for state government, of which $550 million would be paid for with new debt.
The budget proposal plans offers no statewide referendum for road-building or university construction, as some lawmakers and outside groups are seeking this session. But Easley does recommend a $25 million reduction in the annual transfer from the general operating fund to the Highway Trust Fund.
Easley's budget also:
-- Spends $39.8 million to increase enrollment in Easley's More at Four preschool initiative to 35,000 students, an increase of 6,345.
-- Give $6.6 million to expand the Learn and Earn program, which lets high school students take college courses, to another 16 schools.
-- Spends $11 million to carry out recommendations of a university campus safety task force formed after the Virginia Tech shootings of April 2007.
