The state government story that has recently claimed the most news coverage was the General Assembly’s vote to establish a state lottery, which supporters estimate will net the state about $425 million per year in revenue.

Another story was mentioned by the mainstream media, but was given far less coverage than it deserved.

N.C. already suffers from the highest per-capita tax burden of any Southern state. A couple of weeks before the vote on the lottery, the General Assembly made matters even worse by adopting a budget that included over a thousand-million dollars in tax increases.

The state’s budget for Fiscal Year 2005-2006 is about $17.2 billion (seventeen-thousand two-hundred million dollars). It is an increase of about eight per cent, or $1.3 billion (one-thousand three-hundred million dollars) over last year’s budget.

The budget makes permanent the “temporary” half-cent sales tax increase passed in 2001, and extends the state sales tax to candy and other items that are currently exempt. It raises taxes on phone service and cable and satellite TV. Driver’s license fees, vehicle registration fees, and title fees were increased.

The bill raises the cigarette tax by 25 cents a pack, or $2.50 per carton, an increase of about $200 per year for a two-pack-a-day smoker. The tax will increase another 50 cents per carton next year.

The increase in the cigarette tax would affect non-smokers and smokers alike. Many of the cigarettes sold in North Carolina are bought by residents of states with higher tobacco taxes. Iredell County businesses that sell cigarettes to residents of other states provide jobs for scores of local citizens and generate hundreds of thousands of dollars in local sales tax revenues. The recent cigarette tax increase will cause much of this business to be lost to South Carolina, which now has the lowest cigarette tax in the nation.

The tax increases passed the state Senate on a straight party-line vote, with every Democrat voting in favor of the higher taxes and every Republican voting against. In the House, 61 of the 63 Democrats voted for the tax increases. All 57 Republicans and two Democrats voted against the tax hikes.

All the General Assembly members representing Iredell County voted against the tax increases.