Guv proposes, legislature disposes

Just as in Washington, so it is in Raleigh: The governor proposes and the legislature disposes.

That's the key thing to keep in mind with Gov. Bev Perdue's $21 billion budget proposal for next year, which would raise "sin" taxes on alcohol and cigarettes, close seven prisons, give teachers a small pay raise, eliminate funding for 1,400 mostly vacant jobs, slash the budget at the Departments of Corrections and Transportation, pare $360 million from the state budget, increase per-pupil spending in schools from $5,597 to $5,736 and, for the most part, spare layoff or furloughs for state employees.

Some folks love parts of her budget proposal and others have the fantods over the same features, such as the $1 per pack increase in cigarette taxes, boosting the state levy to $1.35 per pack. It would bring in $350 million more in revenue and likely discourage youngsters from taking up the habit, preventing higher health care costs for these citizens somewhere down the line. Others don't like tax increases of any kind -- and not just conservatives, either. Liberals point out that tobacco and alcohol tax increases are regressive especially for lower income residents, despite the fact that these are discretionary purchases. And an increase in the Earned Income Tax Credit won't make up the difference for those low-income workers who qualify.

Perdue's budget proposal spreads the pain around in a lot of places, including programs the public usually strongly supports. For example, there's a $168 million cut for the university system. UNC President Erskine Bowles, who has a lot of experience in figuring out what to cut, stemming from his days as White House Chief of Staff in the Clinton Administration, had asked that budget cuts in the university system be non-recurring, rather than permanent cuts -- and restoring funding once the economy rebounds and the recession ends. Some cuts are non-recurring but most are recurring. I asked Bowles Monday how hard this was going to be. He smiled and said, "I've done this before."

This also brings up the reality that the budget Perdue proposes could be a lot worse if it were not for the availability of federal recovery funds that are going to plug a lot of holes. Without those funds the state would be cutting a lot more programs and jobs and doing a lot less. And it also means that future balanced budgets depend in large measure on economic recovery beginning later this year that will bring in revenue in future years to fill gaps covered by the recovery funds this year. If the economic recovery doesn't begin on schedule, there will be more cuts and more pain in future years.

Finally, it's also worth noting that as many cuts as there are in this budget, the state still will be spending a lot of money on a vast array of programs and services for the public. In fact, considering the depth of this recession, the fact that the Perdue budget proposes spending $21 billion, contrasted with the current year's $21.4 billion, is amazing. So is the fact that the budget doesn't call, at the moment, for workers to lose their jobs, though perhaps 268 would be at risk if they cannot transfer to other state jobs that need filling, such as correctional officers.

It's along time between now and the end of the fiscal year, when legislators hope to have finished work on their version of the budget. They hold the power now, and while Perdue will fight hard for her proposals, it's the legislature that adopts a budget. In my 32 years covering Raleigh, I've yet to see lawmakers give governors everything they want, and there's no reason to think this year will be any different. This fight is just beginning.