Wary governor keeps state spending reigns tight

By Daily Herald Staff Report
Published/Last Modified on Monday, August 17, 2009 9:52 AM EDT

Worried revenues funding the state’s new $19 billion budget won’t start flowing until at least October, Gov. Beverly Perdue ordered state agencies to curtail their spending plans by at least 5 percent.
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School classrooms, law enforcement, health care and public safety are exempt from the limitations, according to published reports.

Perdue spokesman David Kochman said the governor is being cautious since tax increases used to balance the budget won't be available for months. "It's mostly for cash flow … We're early in the new budget. A lot of the revenue streams don't kick in for a while."

The governor’s latest order keeps the tight rein she imposed on state spending immediately after taking office earlier this year. Published reports say most state agencies will not change the way they do business. Most have been limiting expenditures to the necessities since Gov. Perdue’s original order.

The governor’s actions were met by concern by most local lawmakers. Three members of the House of Representatives serving the Roanoke Valley supported her “proactive” approach.

The massive budget approved by lawmakers last week and signed off on by Perdue included nearly$1 billion in new taxes aimed at helping off set an even larger projected budget shortfall of more than $4 billion.

The new taxes include a 1-cent sales tax increase that takes effect Sept. 1. The state treasury won’t see the increased revenue until businesses remit their tax payments in October. The tax is expected to generate nearly $800 million annually. An income-tax surcharge on both individuals and corporations is projected to add $195 million, but that money won’t come until next spring. Higher cigarette and alcohol taxes will mean an additional $68 million, according to state estimates.

State budget experts say the economic outlook is brighter but how much will actually be generated by the public’s spending is uncertain.

State representatives Lucy Allen, Michael Wray and Angela Bryant are keeping a wary eye on the state’s budget problems and all three understand the governor’s cautious approach.

“I think it is a pretty prudent move … It ensures the government will operate at a reasonable level until the revenues start flowing in,” said Allen, a Louisburg Democrat.

“People will feel the cuts and the curtailed spending but it would be much worse without the budget cuts and tax increases,” Allen said, explaining she wasn’t happy with final budget but describing it as making tough choices without a lot of happiness on anyone’s part ... “It was the lesser of evils.”

Wray, a Gaston Democrat, said he was pleased the governor “is being proactive on the front end instead of waiting to see if trouble comes. You really don’t know where the revenues are going to be … Hopefully, the economy will turn around but it is better to be out front and cautious.”

Bryant, a Rocky Mount Democrat, said she understood the governor’s concerns. “It is her job and within her authority,” she noted. The lawmaker said the Legislature did the best it could given the economic factors and the competing needs facing the state when they fashioned the budget plan. She then added, “I am never satisfied when we have to raise taxes especially in this economic environment … but we did the best we could to keep up with the needs … the best for now.”

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