News-Record.com

So Gov. Mike Easley released his budget Monday and - surprise! - he wants to raise liquor and cigarette taxes.

The reason he gave for the sin tax hikes were:

• * the cigarette taxes were needed to pay for teacher raises.
  
• * the liquor taxes were needed to pay for mental health improvements.

Click here to listen to Easley talk about how he arrived at asking for the two taxes.

Okay...let's get it out of our systems: Yes, if enacted, teachers would have a conflict of interest when they told their students not to smoke. And sure, it's a little funny that alcohol taxes would fund mental health services, which include substance abuse services.

But seriously folks: Easley has sold them right. Who is going to argue that they can't afford to pay a few more cents for beer if it's going to help the mentally ill, right? And you sort of have a choice as to whether to smoke or drink, don't you?

Still, the smart money around Jones Street has been saying the taxes will have a hard time getting through the General Assembly. After chatting with folks all day, here is the short list of things that argue against the taxes getting into the final budget:

• * Legislators don't have a real good mechanism for earmarking revenue (see: Lottery). That means money from the taxes will just get dumped into the general fund. That sort of deconstructs the won't-someone-please-think-of-the-children/less fortunate argument for levying them.

• * Budget leaders aren't looking for a fight. And new taxes of any sort mean a fight will be a brewing. No, it doesn't matter that they're sin taxes. The honorables want this train to pull into the station on time (July 1) and that might not happen if there's a tax fight. (House Speaker Joe Hackney and Majority Leader Hugh Holliman both made variations of this point today.)

  Click here to listen to Hackney chat with reporters about the political realities of the taxes, as well as thoughts on other parts of the budget proposal.

• * Cigarette taxes mean taking on the tobacco industry. No, tobacco isn't king anymore, but it still knows its way around court. Just think about Lorillard in Guilford County, Reynolds in Forsyth County and tobacco farms throughout the state and you get an idea of the number of legislators with a dog in that fight.

• * You think the tobacco industry has some political clout? Go check your favorite politician's campaign finance report for beer and wine money, particularly money from wholesalers.

• * Easley designated his tobacco tax for education. A couple folks who would ordinarily like to do tobacco taxes say they're more logically apportioned to health programs. So Easley's proposal didn't pick up help from some of this idea's most likely supporters.

• * There secondary constituencies that would oppose the increases, such as retailers who sell cigarettes and alcohol.

• * It's an election year. People are already hacked off about gas prices. Voters across the state have just shot down sales taxes. You do the math.

• * There are a couple other places to get the money. Just as an example, the legislature could decide not to put $61 million into the rainy day fund and just about cover the mental health programs Easley wanted to fund.

Does this mean they absolutely won't be in the final budget? No. But they face some serious handicaps. More on this in Tuesday's paper.