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In battling Republican lawmakers over the budget, Gov. Bev Perdue has emerged as a mighty opponent

She can dish it out—and she can take it

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Gov. Bev Perdue gathered 100 of the state's business and academic leaders on May 19 for a free-swinging attack on the General Assembly's savage budget cutting—especially the slashes to public education.

At the meeting in Research Triangle Park, Perdue sat at the center of a long table and called on such business brass as Bob Ingram, formerly GlaxoSmithKline's top U.S. executive, and Cynthia Marshall, president of AT&T North Carolina, to underscore the link between a company's success and its access to a well-educated workforce. "The fact that our state is so focused on education is music to my ears," said Marshall.

Former UNC President Bill Friday recalled how radical it was 50 years ago, when the state's business, academic and political leaders hatched their plan to remake North Carolina's economy using brainpower—via well-funded schools and community colleges and a first-rate UNC system—instead of brawn. "It's a great story," Friday said. "But the question is, where are we headed now?"

Higher education has already sustained $600 million in budget cuts, Friday said. Cutting $400 million more, as the Republicans who control both houses of the General Assembly were proposing, would seriously damage the state's future.

"You're the man, Bill Friday," a beaming Perdue said.

She then called on Jim Goodmon, CEO of Capitol Broadcasting in Raleigh, and a former Republican.

Goodman said it was insulting how Republican lawmakers seemed unfazed that North Carolina could drop from a dismal 47th place among all states in funding for K–12 public schools to 49th or even 50th place if their budget plans prevailed. "I'm mad as hell," Goodmon railed. "I don't want anyone in the House or the Senate to even act like this is pro-business, pro-economic development, pro-job creation. It's not. This is the worst I've ever seen.

"What we're going to do now is fight," he added.

No doubt it is a fight: first, over the $700 million gap between the K–12, community college and UNC system funding in Perdue's budget, unveiled in February, and the budget passed by the Republican-led House of Representatives a month ago. But much larger issues lurk below the surface.

Two weeks after the House vote, the two sides were digging in and heading for a government shutdown when the fiscal year ends June 30. Senate President Pro Tem Phil Berger went so far as to say that when his chamber was finished with the budget, it would be less than the House-passed plan—widening the education gap.

The GOP's strategy was ruthless: They tied a routine measure extending federally funded unemployment benefits for the long-term jobless to a requirement that if June 30 came and went without a budget deal, Perdue would be forced to swallow the Republicans' budget.

Perdue promptly vetoed it, and she met the press halfway between the Capitol and the Legislative Building to tell reporters, in no uncertain terms, that the Republican move amounted to extortion. In no time at all, her office had posted a video on YouTube capturing the moment.

Perdue pushed back hard, campaigning across the state. At RTP, she saluted the business executives who attended for their "bravery," saying their appearance with her was "high-risk"—if nothing less than their duty. "Our commitment to education," she said, her voice rising, "it's in our bones."

She had proposed a three-quarter-cent sales tax increase, but she was open to other ways of raising additional money, she said. "It's not my way or the highway."

But the Republicans weren't listening to anything she said.

"From my perspective as someone who sees the whole state," Perdue said, "there's some high-stakes poker being played."

As Memorial Day approached, however, it seemed the Republicans had blinked first. Instead of cutting, Senate budget writers actually added $100 million to the House plan, and reliable accounts were surfacing that House and Senate leaders were negotiating behind closed doors to add almost $300 million more—although apparently without a tax increase.

Whatever the outcome of the budget fight, though, the contested ground between Perdue and the Republicans extends far deeper than the question of a single year's spending. Brimming below the surface are fundamental issues of fairness in taxation, social justice, the role of the public sector in creating economic growth and how the public education system should be designed—to serve all students or only some of them.

The Republican agenda, as Chris Fitzsimon of NC Policy Watch wrote, seeks nothing less than "the ideological transformation of North Carolina" away from the centrist, pro-business, pro-education policies embraced since the middle of the 20th century by every Democratic governor—and by the only two Republican governors, Jim Holshouser and Jim Martin—and toward the right-wing, free-market conservatism favored by today's Republicans.

Can Perdue fight them off?

In political terms, what's at stake, after eight years of Gov. Mike Easley (who didn't matter much) is will this governor matter? Will Perdue be steamrolled by the Republicans? Will she move so far to the right that, even in victory, she becomes indistinguishable from them? Or will she instead draw strength from the budget fight, use it to thwart the GOP on other issues and successfully reassert the values that roused North Carolina to become the progressive leader of the South?

It's a tough assignment for any governor, but especially one whose first term began so inauspiciously. But Perdue looks to be rising to the challenge.

Perdue's first two years in office were troubled. She was elected in 2008 by a narrow margin: Her 145,000-vote win over Charlotte Republican Pat McCrory was less than half of Sen. Kay Hagan's margin over incumbent Elizabeth Dole. But she won, and in doing so became the first woman governor of North Carolina.

Yet in Raleigh, Perdue's election represented no fundamental change. Her former Democratic mentors in the General Assembly, then-Senate President Pro Tem Marc Basnight and Majority Leader Tony Rand, were still running things. She was too often seen as merely going along with the Democratic Party leadership.

Progressive measures like the Racial Justice Act, which reduced death sentences to life without parole if defense attorneys could demonstrate there had been racial bias in the prosecution, and the Healthy Youth Act, which requires public school kids to receive medically accurate sex education, were not Perdue's initiatives. Neither was the School Violence Prevention Act, which directs school officials to protect kids from anti-gay slurs and bullying. These were products of the Legislature.

Still, Perdue didn't hesitate to sign these bills, despite withering Republican criticism about pandering to blacks, promoting promiscuity and "special treatment" for gays. She also followed through with Democratic promises to beef up the ethics laws governing public officials.

But Perdue took a hit when The News & Observer reported how Basnight and Rand used to—and still did, if not to her face—call her "Dumpling." (Sexist? They said it was a term of endearment.)

And Perdue's record on environmental issues was mixed. She advanced the prospects for offshore wind to generate electricity, a major step toward a clean energy future. But she stood aside as business worked to weaken clean air and clean water enforcement efforts, and she went along as the N.C. Home Builders Association succeeded in diluting a new set of energy-efficiency rules under the state building code.

To environmentalists, Perdue's diffidence smacked of the old "pro-business means anti-environment" politics characteristic of so many previous Democratic leaders. They, too, were pro-education, but otherwise conservative.

Finally, there was the Easley factor. Her predecessor's penchant for flying around in corporate planes with his buddies and the featherbedding of his wife's job at N.C. State University dominated the headlines when they came to light in 2009–10, after Perdue released official records that Easley had concealed.

Easley copped a plea to a single felony involving one of his many unreported campaign flights. Unfortunately, Perdue's campaign also failed to report some flights, a relatively minor transgression that the Republicans gleefully magnified to sound like she was Easley's twin.

In fact she's anything but, in terms of her work ethic. Mac McCorkle is a professor at Duke University's Sanford School of Public Policy but was a political consultant who advised both Easley and Perdue. He didn't want to draw comparisons between the two, but of Perdue, McCorkle said, "She is the most resilient, persevering and relentless" client he's ever had, someone who is busy every day and will "out-work and out-meeting anybody. She's a happy warrior."

That trait, though, was relegated early on to a series of federal stimulus-funded project ribbon-cuttings. Even as the economy began to rebound, Perdue's energies were devoted to what seemed an endless string of visits to some company somewhere that, aided by a state incentive grant, was managing to add some jobs.

With state revenues still lagging because of the recession, Perdue had no money available for grand new programs of her own. Her job: cut the budget. Even after Basnight and Rand helped her enact a $1.4 billion-a-year package of temporary tax hikes in 2009, including a 1-cent sales tax increase and small individual and corporate income-tax surcharges, she was able to balance her first two budgets only with the aid of more than $3 billion in stimulus funding and some $2.5 billion in budget cuts. She furloughed state employees. She furloughed teachers. It wasn't pretty.

And then in the 2010 elections, the Republicans swept to victory in the General Assembly, taking control of the Senate by a veto-proof margin of 31-19 and the House by a 68-52 majority, just four votes shy of the 60 percent needed to override a veto. For the first time since the 19th century, Democrats didn't control the state government.

Basnight retired. So did Rand. Other old, white male lions of the Legislature retired. Suddenly Perdue was left the undisputed leader of the Democratic Party in North Carolina.

"Our savior," said Brian Lewis, the N.C. Association of Educators lobbyist, at an NCAE rally that Perdue attended.

"Our last line of defense," said former Sen. Linda Gunter as she introduced Perdue at a party event hosted by the Democratic Women of Wake County.

Perdue was commanding a thin last line. Any time four or more House Democrats bolted, a Perdue veto wouldn't be sustained.

She thus went cautiously into this new world of Republicanism in Raleigh. In her State of the State message in February, she stole a card from the other side's hand by calling for a cut in the corporate income tax rate from 6.9 percent to 4.9 percent, which would make it the lowest in the Southeast. It was a costly, if audacious ploy: State revenues, still scant, would be reduced by at least $300 million more every year.

And when Perdue unveiled her budget, it contained another less-than-progressive surprise. She wanted the sales tax hike extended, but just three-quarters of it, not the full penny. Plus, she was willing to let go of the surcharges on income tax and corporate tax. What might've been a $1.4 billion tax package shrunk to $800 million—and all of the latter would come from the highly regressive sales tax, which hits poor people harder, not from taxes on the well-to-do.

Perdue's proposed budget was almost $1 billion below what a simple continuation budget would've been. She had cut education budgets—again, from continuation levels—by some $600 million. In political terms, her budget was well to the right, literally daring the Republicans to go further.

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