.C. Senate Democrats Sell Need for More Taxes

Senate leaders continued their call Monday for additional taxes or lottery revenues to help balance the state budget, but saw a carefully scripted meeting undermined by anti-tax protesters.

Senate Democrats had lined up a number of educators – including university system president Molly Broad and state community college system president Martin Lancaster – to speak about the destructive effects of more budget cuts at an afternoon meeting.

But several dozen members of the anti-tax group Citizens for a Sound Economy greeted them, denouncing tax hikes and a lottery as unnecessary.

“You have just about broken our backs,” said Robin Stout, a CSE member from Orange County. “Please consider the taxpayers. We are watching.”

The Senate and House are locked in budget negotiations, with House leaders saying they have given as much as possible on the issue of taxes.

The House and Senate have agreed to keep sales and income tax hikes adopted in 2001 as temporary measures in place for another two years. House budget negotiators have also agreed to a Senate proposal to make the sales taxes on soft drinks conform to the 4.5 percent for other nonfood items.

Senate leaders, though, want additional revenue in the form of either alcohol or cigarette tax hikes, or a lottery. Despite a one-time federal infusion of $510 million, they say a weak economy and lower-than-expected tax collections means that projected revenue growth in a $15 billion state budget should be scaled back.

Lower revenue projects, along with sluggish tax collections this year, means the state will have to plug a $600 million hole in the budget.

House leaders look at the federal aid as largely fixing the budget problems for the next fiscal year, which begins July 1. Their plan does leave what is essentially a $200 million hole in the second year of the two-year budget by designating unspecified Medicaid savings.

Sen. Tony Rand, D-Cumberland, said the state’s taxpayers should be prepared for some unpopular budget cutting if they don’t want to discuss additional steps to raise revenue.

“I want to know what people think about cutting $600 million out of where we already stand,” Rand said. “What, $360 million out of education. Is that OK?”

Broad added that the university system, despite enrollment growth and money designated by lawmakers to meet it, has still seen its budget decline.

“It is no longer achievable to protect the classroom with these budget cuts,” Broad said.

The House and Senate are trying to put together a budget deal before the July 1 start of the fiscal year. By doing so, the Legislature would prevent the 2001 tax hikes from expiring and eliminate the need to pass a separate revenue bill.