Governor wants to close seven corrections facilities

By: GARY D. ROBERTSON | The Associated Press
Published: March 18, 2009

Gov. Beverly Perdue's first budget as North Carolina's chief executive could put hundreds of state and university employees out of work and would boost alcohol and cigarette taxes to help narrow a $3.4-billion budget gap.
Her nearly $21-billion budget for next year, released Tuesday, is $360 million less overall than this year's budget, despite inserting $1.7 billion of federal stimulus money to ease one of the worst shortfalls in decades.
Her tax changes — including a $1-per-pack increase on cigarettes and a 5 percent surcharge on all alcohol purchases — would raise $580 million more next year and $710 million in fiscal year 2010-11.
"The challenges we face in North Carolina are unprecedented in modern times," Perdue, a Democrat, told reporters. But she said policy makers "cannot neglect or ignore the state's more-pressing needs."
Democratic legislative leaders called the plan a good start. But they said passing a tobacco increase would be difficult, the cuts are either too deep or not deep enough and the plan leaves little cash to deal with a prolonged bad economy.
"There's no room for error," said House Speaker Joe Hackney, D-Orange.
Perdue would reduce state spending by $1.3 billion each of the next two years. While health and human services and corrections agencies take the biggest hits, almost all state departments would face significant cuts. Public education would take $511 million in combined reductions, although that pain would be eased by stimulus funds.
"The choices are hard," Perdue said. She voiced regret that the plan doesn't do more for schools.
The overall state government work force would fall by 1,034 positions in the fiscal year starting July 1.
Perdue recommended closing seven prisons (none in Burke County), saving $100 million by freezing Medicaid reimbursement rates for doctors and hospitals, holding back $150 million in agency money earmarked for salaries and eliminating more than 20 programs.
She would close McCain Correctional Hospital, eliminating 343 jobs. She would close Umstead and Guilford correctional centers, which would cut 107 jobs. Perdue would also close Gates, Haywood and Union correctional centers to save 74 jobs. The inmates at the closed prisons would be shifted to other facilities.
Although hundreds of state jobs that Perdue targets are vacant and Correction Department workers affected by prison closings likely would be reassigned, about 270 employees could be thrown out of work altogether, State Budget Director Charlie Perusse said.
While teachers would receive an average 1.8 percent pay increase under Perdue's budget, other state employees would receive no pay raise. Non-teachers would receive additional leave instead of longevity pay.
Perdue would increase the cigarette tax from 35 cents per pack to $1.35, making North Carolina's tax the 20th highest in the nation, compared to the current rank of 45th, her office says.
The budget also could further erode North Carolina's special relationship with the tobacco industry, which still creates tens of thousands of jobs in the state.
Perdue said she didn't believe the higher cigarette costs would devastate the tobacco industry. Anti-tobacco advocates praised the move.
Dean Plunkett with the N.C. Beer and Wine Wholesalers Association said the higher alcohol tax was wrong. He said the budget hole doesn't need "to be filled by the responsible consumers of our products."

Governor wants to close seven corrections facilities

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