Berger, Tillis: Governor’s illegal plan endangers taxpayers’ refunds

Senate, House will attempt to override SB 13 to protect taxpayers

Raleigh – Gov. Beverly Perdue’s plan to raid nearly $500 million from various state accounts to pay state tax refunds exceeds the power granted to her by the North Carolina Constitution and breaks state law, according to non-partisan professional legislative staff. It also will jeopardize the state’s ability to pay tax refunds in a timely manner.

Part of the governor’s proposal would borrow about $100 million from an Employment Security Commission reserve fund, which non-partisan professional legislative staff says violates Article V Section 5 of the Constitution. Staff also stated that Goldston v. State confirmed that the governor lacks the legal authority to redistribute these funds without authorization from the legislature. The governor vetoed SB 13, which would have solved the problem.

Senate President Pro Tempore Phil Berger (R-Rockingham) and Speaker of the House Thom Tillis (R-Mecklenburg) today announced the Senate and House will attempt to override the governor’s veto of SB 13, the Balanced Budget Act of 2011, which would give her the authority she requested to cut $400 million in the current fiscal year and target another $400 million in immediate savings. The Senate plans to vote on an override later this afternoon.

“We must get North Carolinians their refund checks promptly, but the governor’s plan to pay them is irresponsible and illegal,” said Berger. “She has an alternative — Senate Bill 13 gives her the authority to legally meet her obligation to our taxpayers.”

“If the governor is truly serious about seeing that taxpayers get their refunds, she will allow at least four of her Democratic colleagues in the House to support an override of SB 13,” said Tillis. “After last year’s debacle — her decision to allow taxpayer refunds to be delayed — you would think the governor would have gotten ahead of this. Instead, she devises a financially unsound and an arguably illegal scheme at the eleventh hour that risks legal action against the state.”

Background

State Controller David McCoy notified a member of Sen. Berger’s staff late Monday evening that the governor directed him to divert up to $491 million from various state funds to secure enough money for state tax refund checks. On Tuesday, Berger and Tillis said the governor has known for months they would need to pay refunds and that she should have taken steps to address the problem long ago. They also said it was highly inappropriate to borrow $100 million from a reserve fund within the Employment Security Commission, which needs to be used to help pay a $2.6 billion debt owed to the federal government.

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