NC budget impasse builds hope for tax alternatives

The Associated Press Tuesday, July 28, 2009
RALEIGH, N.C. — Lawmakers and interest groups who sense an opening in North Carolina's budget talks over taxes tried Tuesday to build support for alternative methods to generate more revenue or cut costs beyond what Democratic leaders are seeking.
House and Senate Democrats remain at odds again over how to generate nearly $1 billion in new taxes because Gov. Beverly Perdue nixed a proposal that would have raised income taxes on all individuals and corporations with tax bills.
So groups are working to fill the vacuum caused by a broken deal.
Amusement machine owners and lawmakers held a news conference to unveil endorsements for legislation they argue could raise nearly half that amount by repealing the 2006 ban on video poker machines and regulating them instead while the state takes a 20 percent cut from the games.
"It's time for us to look under every rock that we can to find legal dollars to help alleviate this deficit this state is in the middle of right now," said Rep. Kelly Alexander, D-Mecklenburg. "This particular source of revenue is low-hanging fruit."
Separately, Republican leaders said they could locate $633 million in cost savings or more money by making about a dozen simple changes to state law. And Senate Democrats held a finance committee meeting to build bipartisan support for a tax overhaul they said has been needed for decades.
"I urge you to be statesmen and women on this issue," said former Charlotte Mayor Richard Vinroot, a Republican who co-chaired a blue-ribbon commission of business leaders urging tax reform, told lawmakers. "Don't let this opportunity go to waste."
At the video poker news conference, the State Employees Association of North Carolina and the N.C. Legislative Black Caucus said they support removing the ban.
Supporters of the state regulating and taxing the machines argue it would eliminate the industry's past sullied reputation and generate an estimated $498 million in revenues without having to raise taxes on all citizens as high as the previous revenue deal required.
"We believe that this is a viable option," said Rep. Alma Adams, D-Guilford, the Legislative Black Caucus chairman. "We have, I think, an option that we should not pass up."
The legislation, introduced by fellow Guilford Democratic Rep. Earl Jones, received a hearing in a House committee three weeks ago, but no vote was taken or scheduled. That's because legislative leaders say their members want video poker machines to remain illegal in North Carolina.
"We're not ready to go back to legalizing video poker," House Majority Leader Hugh Holliman, D-Davidson. "A lot of members remember having to get rid of video poker."
One of the industry's biggest supporters was then-House Speaker Jim Black, D-Mecklenburg. whose campaign donations from video poker distributors were investigated extensively by state election officials. He is currently serving a federal prison sentence for corruption unrelated to video poker.
The amusement machine industry wants to be taxed and regulated to show that they are reputable, Entertainment Group president William Thevaos said.
A Superior Court judge in February ruled North Carolina couldn't prohibit videopoker machines while allowing the Eastern Band of Cherokee Indians to operate the same games.
In recent weeks, other trial courts suggested that so-called "sweepstakes" machines, which provide cash prizes when people purchase Internet or phone card time, are exceptions to the ban.
"These gaming systems are alive and well in North Carolina," said Dana Cope, executive director of the State Employee Association, a 55,000-member union.
Republican lawmakers said earlier Tuesday the state could avoid having to raise additional taxes by diverting money North Carolina gets from the 1998 national tobacco settlement and by opposing the expansion of a tax credit for movie makers who film in the state.
The state also could save $50 million by expanding through the University of North Carolina system on a consultant's efficiency study that found UNC-Chapel Hill has too many administrators, GOP members said.
"We can save this kind of money and not harm the education of children," said Rep. Hugh Blackwell, R-Burke.
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