Puzzle: Cut Services or Raise Taxes?

In front of the Legislative Building on Wednesday, one group of several hundred people chanted “Keep the promise,” and “Don’t cut children.” Under a tent behind the building, another group of similar size had a decidedly different message: “We want less” and “No new taxes.”

The advocates for the Smart Start early childhood development partnerships and Citizens for a Sound Economy, an anti-tax group, came to the General Assembly with two different visions of North Carolina and how much government should involve itself in people’s lives.

The opposing views reflect a similar tax-and-spending debate going on inside the building. Senate Democrats preparing a state budget are wrestling with how much to cut services and whether to raise taxes or pass a lottery to close a projected $ 2 billion gap.

Smart Start, the signature program of former Gov. Jim Hunt, is among the programs that Gov. Mike Easley has recommended cutting. The program, which received $ 210 million this year, would receive about $ 200 million next year under his budget recommendation.

Jennifer Huntley of Wadesboro said Smart Start had made a difference in the lives of her 2-year-old daughter and other youngsters in rural Anson County, providing vision screenings, speech therapy and education for day-care workers about children’s development stages.

Huntley, like other parents and child-care workers, opposed cuts in funding to Smart Start proposed by Easley.

But at the CSE rally, one speaker after another called for lower taxes and fewer government programs.

“We don’t spend what we don’t have and don’t go with new taxes to find more,” former U.S. Sen. Lauch Faircloth told the CSE members.

Mary Foley, a potter in Yancey County who attended the anti-tax rally, said the state should live within the money it has available just as ordinary citizens do.

“If we don’t have enough money, we don’t buy something,” Foley said. “Sure it’s hard. But every household does this.”

The Senate had planned to announce its budget recommendations this week. But the uncertainty about how to fund the budget, how deep to cut and whether to include a lottery has slowed budget writers. They must reach agreement on revenue sources before they can present the budget.

“We’re struggling over everything,” said state Sen. Aaron Plyler, a Democrat from Monroe and co-chairman of the Senate Appropriations Committee. “We’re hoping not to raise taxes.”

Though Republicans in the Senate oppose tax increases, some Senate Democrats prefer them to the alternative.

State Sen. Ellie Kinnaird, a Carrboro Democrat, is preparing a bill calling for a 45-cent increase in the tax on a pack of cigarettes, the latest of several proposed tax increases. North Carolina has one of the lowest cigarette taxes in the nation, and the proposed tax increase would raise $ 350 million.

“Obviously, cuts are not the answer,” Kinnaird said. “We’ve got to find revenue.”

“What everybody is weighing is, if you come out with a tax increase and it doesn’t go anywhere, what is the attack ad going to look like?” she said.

Meanwhile, state Sen. Steve Metcalf, a Democrat from Weaverville, would like to raise taxes on beer, wine and liquor

— an idea floated a year ago — to generate roughly $ 100 million for mental health programs.

“To me, it’s not the issue of taxes,” Metcalf said. “It’s the issue of services.”

State Sen. David Hoyle, a Democrat from Dallas, is among the Democrats who say that program cuts are inevitable this year and that the state’s budget problems offer an opportunity to ferret out unnecessary government programs.

Hoyle said there is no reason for the Senate to push tax increases that are unlikely to pass the House, which has a 62-58 Democratic majority.

“I would say the cigarette tax is as dead as four o’clock in the morning in Tyrrell County,” Hoyle said. “I’ve told the governor that the lottery is not going to pass the House, so why put the Senate through it.”

“If you raise taxes, you’re hurt,” Hoyle said. “If you cut service to all those people, you’re hurt. We’re damned if we do, and we’re damned if we don’t.”

State Sen. Fountain Odom, a Charlotte Democrat, offered an idea that would save a token amount in comparison to the state’s budget problems but would resonate politically.

In a bill introduced Wednesday, Odom proposed to cut the pay of lawmakers and non-elected department heads by 5 percent and ask the governor, other top-ranking state officials and judges to waive 5 percent of their pay for 2002-03.

“If all agencies in government have to take a budget cut,” Odom said, “I think we should be at the front of the line.”