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Group Says State Can Avoid Tax Increases

BY Scott Mooneyham
by Scott Mooneyham on 6/5/01.

Conservatives urged lawmakers Tuesday to cut spending and avoid tax increases, countering earlier rallies where protesters urged tax hikes rather than cuts in state services.

Chanting "We Want Less," about 200 members of the anti-tax group Citizens for a Sound Economy also called on the Legislature to defeat any legislation to establish a lottery in North Carolina.

"The economy, while it was good, the legislators were just grabbing all they could. Now that the economy is going bad, they look to us for a tax increase," said Lorrie Hedgecock, a CSE member from Stokes County.

The group's rally was held less than a week after the Senate approved a $14.7 billion budget plan that included $190 million in targeted tax increases and tax loophole closings.

The plan also includes numerous cuts to social programs. The proposed cuts, denounced by advocates for the poor and disabled, are intended to help balance the budget and avoid a broad tax increase during the state's worst budget crisis in decade.

The Senate proposals to raise a handful of sales taxes, particularly those targeted at out-of-state long distance telephone calls and satellite television, are expected to be dropped from the House version.

However, House leaders are exploring the closing of additional corporate tax loopholes, raising taxes on alcohol and giving local governments the ability to raise sales taxes in exchange for pulling back $330 million in state reimbursements.

Senate leader Marc Basnight also has said he was willing to consider a tax on beer, wine and liquor, even though no such increases were included in the Senate budget package.

Speaking at Tuesday's rally, Rep. Leo Daughtry, R-Johnston, called the Senate budget proposal "a joke."

"Tax loopholes are nothing but thinly disguised tax increases," said Daughtry, the House minority leader and a GOP candidate for governor last spring.

Daughtry is among 61 House members who have signed a no-tax pledge circulated by Citizens for a Sound Economy prior to last year's election.

Daughtry said it is up to the group's members to make sure lawmakers keep their pledge.

"I am committed to not raising taxes," he said.

But many of the lawmakers who signed the pledge, both Democrats and Republicans, have sponsored bills that, if approved, would allow counties to raise sales taxes. Some of the legislation is targeted at individual counties while other bills would allow all counties authority to boost their sales tax rate.

U.S. Rep. Walter Jones, R-N.C., also told the crowd they could influence what their lawmakers do.

"We the people are the government. You are the government," Jones said. "Stay involved."

Jones also urged lawmakers to reject a state lottery, which Gov. Mike Easley has endorsed as a way to pay for improving the public schools.

"I hope that the state of North Carolina and this General Assembly do not turn to gambling to educate the children of North Carolina," Jones said.

Also attending Tuesday's rally were former U.S. Sen. Lauch Faircloth and CSE 's national president, Paul Beckner.

Following the event, organization officials met with Attorney General Roy Cooper to lobby him to drop the state from those involved in the antitrust action against Microsoft.

Citizens for a Sound Economy has faced criticism in the past for weighing in on the Microsoft debate after the software maker gave $380,000 to the group's tax-exempt foundation.