Most of the House budget was released Friday and it generally matched the pre-release rumors described in yesterday’s Fitzsimon File. But there is still plenty to be decided, raises for teachers and state employees, the premium increases for the state health plan, and of the size of the cigarette tax increase.
Those decisions may not be released until the House Appropriations Committee considers the budget bill Tuesday morning. Reportedly, the budget spends revenue raised from a 35-cent increase in the cigarette tax.
But after the committee reports were printed, the House leadership lowered the tax to 25 cents, which may require more cuts to keep the budget balanced.
Several House Democrats continue to oppose the tax increase, with Rep. Bill Faison the most insistent on a small tax increase if there is one at all.
The other developing budget story is the inevitable loss of perspective of folks during the House and Senate budget disagreements. It is almost impossible in the legislative world not to judge one budget against the other, instead of both budgets against the needs in the state.
It is clear the House budget will be better than the Senate’s. But the House budget cuts $87 million from human service programs, pays for enrollment increases in public schools and universities by cutting their budgets in other areas.
Most areas that receive additional money just get enough to keep services at current levels. The temptation is to resort to the "it could have been worse" mindset. It could have been worse is simply not good enough.
You have to hand it to North Carolina Citizens for Business and Industry. The group gets what it wants in the General Assembly, then asks for more and gets that too. The saga of a complicated corporate tax loophole called the throw out rule is a case study.
In non-accounting terms, the throw out rule has to do with how North Carolina calculates income tax liability from companies that operate in many states, including states that have no corporate tax.
North Carolina’s formula is set up differently from most states to give North Carolina’s multi-state corporations a break—it is basically a tax preference, a business loophole.
The Senate budget included that proposal in a small attempt to balance its reduction of the corporate income tax rate and the cut in the personal income tax of the wealthiest taxpayers.
Raleigh, NC
