The Daily Tar Heel

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Thursday December 1st

N.C. House Axes Taxes In Budget

The house will likely drop a proposed alcohol tax and cuts to public health funds from the state budget.

North Carolina House of Representatives say they will not increase any taxes, yet will manage to avoid harsh cuts in the Health and Human Services Department. House representatives have been busily meeting in subcommittees, trying to make changes to the budget the North Carolina State Senate approved and handed to them on May 31.

"There are considerable changes," said Rep. Verla Insko, D-Orange. "The plan is that the House version would not include additional tax increases or loophole closings."

Rep. Paul Luebke, D-Durham, co-chairman of the House Finance Committee, affirmed that the House would more than likely not include any tax increases on specialized taxes, such as the proposed "booze tax" that would add a six percent sales tax on liquor.

House Finance committee members earlier discussed a proposal to apply a six percent state sales tax to liquor, which would have added $22 million in revenue to the budget. But Luebke said it is now unlikely that such a proposal would pass in the House due to the narrow majority the Democrats hold.

"With a 62-58 margin in the House, we cannot move forward with that," he said. "House Republicans have indicated they are opposed to any ongoing increase in revenue."

Luebke also ruled out any success of the loophole closings, which were proposed in the Senate budget.

But a bill that could accelerate the payments of employee income tax withholdings, sales taxes and utility taxes was approved, 24-6, in the House Finance Committee on Tuesday.

"It moves forward the availability of money," Luebke said. The bill will bring in $116 million.

Despite few other indications of new revenue, legislators still say they're committed to reducing many cuts to the Health and Human Services Department. "We're taking out all the dates for closing institutions," Insko said.

The Senate's plan would have closed the Dorothea Dix in January 2003, two schools for the deaf in July 2003, one of five state mental retardation centers in July 2002 and the Whitaker School, for troubled adolescents, in July 2002. "We are committed to restoring some of the mental hospitals and deaf schools," Luebke said.

Although Gov. Mike Easley has used the budget crisis to point out the benefits of a state lottery, House legislators say that has not been a topic of discussion. "The House is not keen on a lottery," she said. "There's not a lot of support in the House Finance Committee or the House."

A proposed budget is expected to be considered by the full House Appropriations Committee by Monday and to the House floor for debate by Wednesday. More than likely, the budget will not be passed by the beginning of the fiscal year, starting July 1.

"At the earliest, it will be the first week in July," Insko said.

Matt Viser can be reached at


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